Helping Renewables Shine On: Analyzing the New Business Cases Where Batteries Make Sense for Solar Systems

Deployment of solar installations is increasing on a global level with rising demand for distributed installations on residential and commercial sites. Energy storage in the form of batteries is a natural extension to solar installations, but have remained sidelined due to high costs. Meanwhile, supportive policies have enabled the business case for distributed solar systems, promoting energy independence for homeowners and businesses. However as the penetration of solar resources has increased on the grid, governments are reducing incentive levels while utilities are responding with a mix of open hostility and reluctant acceptance. As utilities maneuver to survive in the face of distributed generation, rate changes and punitive policies are decreasing the value of solar installations, creating an opportunity for the partnership of solar-plus-storage to create new business models for consumers and provide benefits to the grid. We find growing activity among existing solar installers, battery suppliers, and system integrators that is beginning to shape four distinct use-cases: self-consumption, renewable smoothing, grid independence, and grid services. The momentum is just beginning to build up and - aside from early adopters and policy support - we find that a purely investment case for solar-plus-storage systems will not be present for some years to come, but that within 10 years, the addition of storage will increase the distributed solar market size by 25 GW per year. Moreover, we identify developing opportunities in three first-mover markets: California, Germany, and Japan.