Fifteen years ago solar photovoltaic (PV) energy was mostly used to power small off-grid installations such as roadside signage systems. Today, it provides a significant share of Europe’s electricity mix, covering 2% of demand and roughly 4% of peak demand. In 15 regions in the EU 27, PV covers nearly 10% of the electricity demand on a yearly basis – and as much as 18% in Spain. However, as solar PV becomes competitive with conventional sources of electricity generation, the time is coming to re-think the way its contribution to the energy mix is managed. And a key element in this transition will be local, decentralised storage, recently given a kick-start by the German Federal government, with a new scheme to subsidise the purchase of storage systems for small domestic rooftop PV installations, up to 30 kilowatts (kW).
According to a recent report by the European Photovoltaic Industry Association (EPIA),1 over the past century or so electricity generation has moved from small, decentralised generation systems to large, centralised power plants and is now moving back again to more local, decentralised generation, particularly through the use of smart grids. “In this transition,” says the report, “a new figure will emerge: the ‘prosumer’, producing and consuming his or her own electricity. By covering on-site part of the final user’s electricity needs, PV systems will generate new opportunities.” Decentralised local storage is set to play an important part in this process, for a number of reasons.
As a recent report from the EC Energy Directorate2 explains, “locally, storage can improve the management of distribution networks, reducing costs and improving efficiency. In this way, it can ease the market introduction of renewables, accelerate the decarbonisation of the electricity grid, improve the security and efficiency of electricity transmission and distribution (reduce unplanned loop flows, grid congestion, voltage and frequency variations), stabilise market prices for electricity, while also ensuring a higher security of energy supply.”
Solar PV is already moving towards grid parity in some EU countries, so that new incentives, beyond state-subsidised feed-in tariffs, will be needed to maintain the impetus in take-up that these subsidies have so successfully facilitated over the past 10-15 years. For example, in Bavaria, in southern Germany, there are already about three solar panels per household, equivalent to about 600 watts per person. One driver of future developments will continue to be economics. Particularly where the price of electricity from the grid is high, as in Germany (at about EUR 0.28 per kilowatt-hour, or kWh), the domestic ‘prosumer’ can potentially save money by consuming his or her own electricity, which currently costs around EUR 0.15 per kWh to produce from PV in Germany, almost half the grid price.
There may, however, be an obligation to feed a certain percentage of the electricity produced into the grid, in order to qualify for feed-in tariffs. And it may mean that the consumer is not free to choose the optimal time for self-consumption. This is further complicated by the fact that the output from a solar PV installation is variable, producing its maximum power around noon –but this is not necessarily when the demand is greatest. Also, a few times a year, if the peak energy output from PV is fed directly into the grid, it can produce a potentially damaging spike. Grid operators protect themselves from this by limiting the proportion of the maximum power output of a PV unit that can be fed into the grid, known as peak shaving. Without local storage at these peak times, if the ‘prosumer’ can’t use this excess electricity, or feed it into the grid because of peak shaving, it would have to be dumped. But, with storage, the electricity can be saved for use later, for example in the evening, when the output of the PV panels is lowest. It can then be fed into the grid if required, or used to power household lighting and appliances, or even to charge the batteries of an electric car.
Local storage systems also give ‘prosumers’ the option potentially to control their electricity use in increasingly sophisticated – and financially beneficial – ways, through demand-side management. “You need energy management systems to coordinate production and demand,” explains Felix Kever of SMA Solar Technology, “but you can also optimize the storage. It’s good if the storage is part of an energy management system with a consumption forecast and planning of energy flows.” And, he adds, “it’s a much better use of the grid infrastructure if you don’t build the grid to meet these power peaks, which occur only for a few minutes or hours in a year. In the year you lose only 2% - 5% of the energy produced [through peak shaving] but you have a lot more reserve in the grid and can put more PV systems on the same grid, without having to spend money to expand or strengthen the grid.” If owners of PV installations consume at least some of the electricity they produce, especially with local storage and some form of demand-side management, there is less need to expand the grid as more PV units are connected.
Despite the increasing advantages of local, decentralized storage for PV, the units are still too expensive for take-up on a scale that would attract investment in the technology and bring prices down, as has happened for both wind and solar power installations themselves. This is why the German Federal government has recently introduced an attractive system of grants for domestic PV owners. “From May 1, the purchase of new battery storage for photovoltaic systems will be subsidized up to EUR 660/kW of solar power,” explains Germany’s solar industry association, BSW-Solar. “Plant operators can apply for financial support for photovoltaic projects that are installed in 2013 and have a maximum capacity of 30 kW.” The grants will come from a EUR 50 million fund set aside by the government – EUR 25 million in 2013 and a further EUR 25 million for 2014. A lower rate subsidy of EUR 600 per kW is available for the storage component of combined PV plants installed in or after 2013.
According to BSW-Solar, the incentives can cover about 30% of the battery costs, with a couple of provisos: the PV power plant that the battery system supports must feed in up to 60% of its installed capacity into the grid over its lifetime, or at least for 20 years. And the battery systems must have a guaranteed life of at least seven years. BSW gives some examples of the savings. For fitting a 3.3 kW lithium-ion battery costing EUR 8000 as part of a 5 kW combined PV system costing EUR 19 500, the PV plant owner would get EUR 3000 (the maximum grant of EUR 600 per kW x the 5 kW output of the system) back from the State. And for retrofitting an existing 4 kW PV system with a 3.3 kW lead-acid battery costing EUR 6000, the owner would receive EUR 1800, at a rate of 30% of the cost per kW (or EUR 450 per kW in this example).
At present, lead-acid batteries are still the main technology for decentralized local storage. But they have an efficiency of only around 80%, compared to the latest lithium iron phosphate and lithium titanate batteries, which have a charge-discharge efficiency of over 90%. These batteries are also smaller and lighter than lead-acid and have a lifetime of 10, perhaps even 20 years. But they are expensive and, until a new market emerges, there is little incentive to attract investors in developing new technology. Indeed, the German Federal subsidy was introduced precisely to help create a market and attract investment in research and development.
“Today, developments are coming from the automotive industry”, explains Winfried Hoffmann, of SMA Solar Technology and President of EPIA [see interview]. “But the main challenge for automotive batteries is to optimise both weight and volume. You have to transport the battery in the car, so you need a high energy density and less weight per kWh. At the same time it shouldn't take up too much space. In a decentralised PV system at home you don’t care about the volume and weight. You only care about decreasing cost and price. In time and with the right incentives for investment, there will be specific batteries for PV storage that are built for the least cost and price.” This being said, electric vehicles can also be used as a form of storage for domestic PV systems, so both may stimulate the drive for more efficient batteries.
Felix Kever is more circumspect when it comes to the immediate effects of the German support programme for local storage. “It probably won’t cause any immediate take off,” he says. “It still just ‘relieves the pain’, as these systems border on being economically viable. But this will change sooner or later. The main driver is the price difference between self-generated PV electricity and electricity drawn from the grid. As soon as this difference is great enough to pay for the storage costs (consisting of investment costs + energy losses + battery wear), people will increasingly use local storage systems.”
In Germany the price difference is already large enough to motivate homeowners to take up the offer of help to buy storage. But in several countries, such as Spain, even if grid parity exists, electricity is still too cheap and/or feed-in tariffs too high – for self-consumption to be an incentive at present. But according to a report by Sun Edison,3 “as from 2013 PV will progressively reach competitiveness for a range of electricity consumer segments in key EU countries. Investment in a PV system for self consumption will then be financially attractive for self consumers.” And, once the cost to the consumer comes down, probably with state subsidies in the first instance, decentralised local storage will play a significant role in ensuring the place of PV in the smart grids of the future.