Not too long ago, making and selling your own electricity via rooftop solar was a novelty. Today, with 784,000 homes and businesses in the United States already on solar, such transactions are taking place every day in 44 states.
Now comes Bring Your Own Battery (BYOB), the latest technology trend to disrupt the utility business as we once knew it.
Homeowners take pressure off aging grid
Current regulations still reward most utilities for putting steel in the ground and producing ever-more electricity. So a California energy company raised eyebrows this year when it proposed to test a new type of business relationship with residential customers – by hooking up their own batteries to the grid.
With more homeowners investing in batteries to store electricity produced by their solar panels or to use as a back-up source, San Diego Gas & Electric sees an opportunity.
Such batteries would take pressure off the investor-owned utility to upgrade or maintain portions of an aging grid, and let it tap into stored energy when demand for power goes up.
The model would allow the company to aggregate individual batteries, first in those weak spots along the grid and, eventually, throughout its service territory.
A new role for utilities
BYOB creates a new role for utilities to facilitate, rather than fight, the expansion of homegrown clean energy.
Importantly, it would also help accelerate a more efficient and environmentally friendly utility business model in which an energy company’s traditional role as the owner, provider and distributor may gradually become obsolete.
In this new energy paradigm, the utility acts more as a facilitator or air traffic controller of energy generated by its customers, than as a traditional power company.
San Diego Gas & Electric will be vetting its initial pilot project in a state regulatory proceeding investigating how to source energy resources provided by customers, notably by connecting home batteries to the grid.
Will other utilities follow suit? Probably so.
Nascent market for batteries taking off
Vermont’s Green Mountain Energy last month became America’s first utility to sell and install Tesla’s famed Powerwall battery to its customers.
Tesla, meanwhile, is building a $5-billion gigafactory in Nevada, the second-largest plant in the world, to produce batteries for homes and electric cars in anticipation of a rapid market growth.
The residential market for energy storage remains small compared with commercial deployment. By the third quarter of 2015, only 4 megawatts of home energy storage projects in the U.S. had been connected to the grid.
As homeowners increasingly look for power backup options or to fully capitalize from their solar panels, however, such investments are expected to escalate. When they do, look for more utilities to embrace and profit from the technology.
This is a trend worth watching.