Storing Energy Close to Home
Empowering User to Control Their Own Energy
We’ve all been introduced to the idea of “the cloud”. You can store a file locally on your laptop or in some poorly understood place “in” the internet. It might surprise you to learn of a similar trend gaining popularity in the energy sector. Residential BESS (Battery Energy Storage Systems) are large battery packs – picture one unit as a 50 in. flat screen TV just double as thick and 250 pounds – and connected to your circuit breaker. Larger commercial versions also exist, but in either case energy is stored locally instead of relying entirely on the grid. Together, these technology segments are called Behind the Meter (BTM) – meaning they are owned and controlled by the entity paying the power bill: the home or business owner – you! This distributed system gives an individual power (literal and metaphorical) where they historically had none. Is this a trend we will continue to see?
With >30% of the segment’s market share, the most popular brand of this technology is the Tesla Powerwall (“Megapack” for commercial users). Other brands are giving the company competition in recent years: EnPhase, SunPower, LG, and other players have entered the market (Source). The typical residential system is 10-15 kWh – which isn’t all that much. In a power outage it will power your fridge, phone, and some lights for 24 hours, but turning on your air conditioning and that number drops to 4 hours (depending on the size of your unit) (Source). At Telsa, their 13 kWh PowerWall 3 will cost you $10-15k (including the federal 30% tax incentive). Notably, about $7k of this is auxiliary (inverters, electrical work, etc.) with the battery pack itself costing ~$8k.
Why pay so much for so little? Maximizing BTM Storage
Customers are realizing a phenomenon that has existed at grid scale for decades: load shifting. Peak residential energy demand occurs in the evening (6-10 pm) when everyone comes home, cooks dinner, runs the dishwasher, and cranks the air conditioning. This strains the grid, and providers are increasingly passing this cost to the consumer with rate premiums during peak hours. With a BESS unit in your garage, you can charge when power is cheap and discharge whenever you want – shifting the load at your leisure. This adds a daily benefit to the obvious relief during major outages – when even four hours can be precious.
Consumers are also realizing the potential of a paired solar+BESS package and increasingly they are installed together. The percent of solar units sold with BESS “attached” has grown from 11% to 25% since January 2023, a steep increase compared to the 5% it grew in the three years prior. In total about 40,000 Solar+BESS units were installed in the first quarter of 2024 (Source). This is largely driven by California, where half of those units were installed. Californian owners of residential solar panels have historically sent excess electricity back to the grid and received a credit to be used later. Recent statewide policy changes now allow electricity providers to scale the value of this credit with the market price of electricity – which fluctuates. Meaning, all that afternoon power generation from residential solar is now less valuable than before because it is generated during an energy surplus. California customers are now incentivized to load-shift and they need residential BESS to do it (Source). There’s no reason to believe this trend will slow, but solar is a tough market. Installations per quarter have largely flattened as consumers experience the inflation and shift spending away from the luxury of solar (Source). No matter which direction the solar industry goes, it seems clear that we will increasingly begin to see those panels wired to onsite batteries and sold as a pair. In doing so, consumers have greater energy autonomy than ever before as they operate their own microgrids and rely less on the larger grid.
Technology Snapshot
Across all segments, BESS consumers value cost, safety, and product (cycle) life. Compared against their grid-level counterparts, residential and commercial users value safety over all else. This makes sense considering the devices are sitting in garages and closets instead of the more controlled environments at the grid-level. Given the daily cycles of slow charging from solar and discharging completely each evening, BESS places relatively high importance on cycle life and doesn’t require fast charging compared to EVs. While everyone wants a smaller and lighter battery pack, the stationary aspect of BESS means cost is king over energy density.
When designing electrolytes for this market, LiNK-BT looks to improving electrolyte flammability and overcharge protection (safety) without compromising cycle life. While we still see some NMC/graphite cells in this market, similar to the global market trend, LFP is increasingly popular. We also look toward Na-ion as the next generation of BESS, a perfect fit for this application with its lower cost, safety, and stability.
