Sharp’s money magic makes storage more viable

New Sharp energy storage finance packages and solar plus storage bundles are being pushed at the commercial and industrial market in California.

New Sharp energy storage finance packages and solar plus storage bundles are being pushed at the commercial and industrial market in California. Photo: Miyuki Meinaka

By Jason Deign

Sharp is relying on financial nous as well as technical expertise to improve the numbers for commercial and industrial energy storage in the US.

Tricks such as providing financing packages or bundling storage with solar to take advantage of investment tax credits are helping to make projects more viable, said Carl Mansfield of Sharp’s Energy Systems and Services Group.

The moves are in response to complications with California’s Assembly Bill 2514 incentive scheme, he said.

Earlier this year, “one of the things that changed in California was that the incentive programme became log-jammed,” said Mansfield, who is general manager and founder of the Energy Systems and Services Group.

“We’ve been working through the past several months with models where the deployment doesn’t really need that incentive in order to be viable.”

Storage costs coming down

It has helped that energy storage costs have been coming down over recent months, he said.

Also, rising tariffs are making it more and more imperative for commercial and industrial customers to avoid demand charges in a number of utility coverage areas.

In the past four years, for example, Pacific Gas & Electric has gone through around three tariff increases a year, with an annualised average increase in demand charges of around 10% to 12%.

Plus, said Mansfield: “We’re focusing a little bit more on hybrid PV and storage installations because as a combined new installation like that a storage component can be eligible for some of the investment tax credits as well.”

This can “push the economics in a more favourable direction,” he said.

Solar propping up viability

So far, then, solar power is helping to prop up the viability of storage.

But by the time the current 30% US solar investment tax credit (ITC) drops to 10%, at the end of 2016, Mansfield believes the tables will have turned because of the way storage can help large energy users avoid demand charges.

“We’re pretty confident that once the solar investment tax credit drops, hybrid installations of storage combined with solar will allow solar to remain a viable installation prospect,” he said.

“There’s a pretty mad rush by the solar industry to fill their pipeline and get as much developed as they can through the end of December, because a lot of them are nervous about how that is going to impact their business.

“We think our solution helps them ride beyond that 30% to 10% drop. Also a lot of developers are seeing they can increase the amount of solar they can deploy by adding storage to some sites.”

Viable without incentives or solar

With storage costs coming down rapidly, Sharp sees commercial and industrial projects nearing viability in certain Californian markets even without incentives or solar.

As it stands, said Mansfield: “I don’t think we would claim we can deploy in San Diego today with every participant in the value chain happy at what they are getting. But we can deploy without losing money.”

He says battery costs are not yet at the USD$250/kW claimed by Tesla, but further reductions of up to 20% might be expected over the next year to 18 months. Furthermore “there will be a split in the batteries,” he predicted.

“There will be options that are really trying to push the price side down but may have slightly weaker performance, and then there will be mainstream batteries that have a more favourable performance but might be a bit higher [in price].”

In August, Sharp announced a tie-up with Energy Toolbase, making it easier for third-party energy storage installers to calculate potential commercial and industrial demand charge savings.

The almost completely automated quotation system provides a variety of purchase options, including financing. “This allows us to expand and support more channel allies,” said Mansfield.

Rolling out finance options

Sharp has not made any formal announcements regarding its finance options but Mansfield confirmed the company was in the process of rolling out something akin to a solar leasing package, with a third-party provider.

“We own the asset,” he said. “It’s not a financed sale.”

Back in April, Sharp revealed plans to sew up $100m in commercial and industrial energy storage deals within two years.

The company has so far been focusing on customers of San Diego Gas & Electric, which has the best rate structure for demand-charge mitigation.

But it is also pursuing opportunities elsewhere in the US and currently has projects underway in territories covered by Southern California Edison and Pacific Gas & Electric.

“California in general is ground zero for this type of product,” Mansfield said.

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