Will rooftop solar unlock 1,000GWh of storage?

BY RICHARD HEAP

  • Rooftop solar market must be paired with storage if it is to reach full potential, says report
  • Study adds that households and businesses could accommodate 1,000GWh of storage by 2050
  • Adjustments to the export rates solar owners receive could incentivise more storage installations

Rooftop solar could potentially be the catalyst for a new surge in energy storage installations.

Ten years ago, solar was dominated by rooftop installations. Then developers and utilities hit on the idea of building utility-scale projects, and kickstarted the booming market we see today. In 2020, 132GW of solar was installed globally, according to Bloomberg New Energy Finance. That could grow to 194GW this year.

But there is still great potential in the rooftop solar market, which could unlock major growth in energy storage too if regulators put in place the right policies.

That is the key finding of a report called ‘Realizing the Potential of Customer-Sited Solar’, which was recently published by BNEF and Schneider Electric. It said the potential of rooftop solar was still “largely untapped”, but that the falling cost of solar panels – as well as policies to support energy storage developments – would change that.

The report said 167 million households and 23 million businesses could accommodate their own clean power by 2050 – specifically, that would equate to 2,000GW of rooftop solar and 1,000GWh of energy storage.

Australia and France lead

We are currently seeing pockets of growth in rooftop solar. In Australia, rooftop solar projects totalling 2.5GW were installed in 2020 – this was a result of the falling cost of solar panels, which means payback periods for these schemes are now less than ten years.

France is another good example of a flourishing rooftop solar market. Existing incentives mean that residential solar can be installed with payback periods as low as five years, with commercial installations offering payback periods of nine years. Such incentives meant that 500MW of rooftop solar was added in France in 2020, according to the report.

But to reach its true potential, rooftop solar needs to be paired up with sufficient storage capacity. Policymakers will need to support energy storage if rooftop solar is to hit that 2,000GW target. This is because rooftop solar will introduce more intermittency to the grid, and so it is important to find ways of encouraging rooftop solar users to install batteries as well.

Solar needs storage flexibility

Yayoi Sekine, head of decentralised energy at BNEF, said that the current focus on solar-only rooftop installations would need to shift towards solar-and-storage schemes.

“The evolution of customer-sited solar is to add some form of flexibility, which has the ability to unlock a much higher penetration of solar,” she said. “The most obvious form of flexibility is batteries, but energy storage will come in many forms, including shifting demand and using electric vehicles.”

The research also identified potential policy mechanisms that could prompt rooftop solar users to install energy storage too. These include adjusting the export rates that solar owners would receive when exporting energy to the power grid. It argued that if California reduced ‘export rates’ to 35% of retail electricity tariffs then it would be an incentive for rooftop solar users to store and use the electricity they generate rather than selling it to the grid, while ensuring solar-and-storage remains profitable.

Storage will make solar more attractive

Other proposals included time-of-use electricity rates to reflect the lower generation costs of solar during the daytime; payments for storage to provide grid services; and giving business customers access to demand charges that incentivises them to cut their energy use at times of high demand. The report said these proposals could all encourage additional storage installations and make rooftop solar even more attractive in the years to come.

Rooftop solar could form the bedrock of the clean power revolution, but it must be paired with storage if it is to truly realise its undoubted potential.

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