Tyler Mason has made a career out of renewable energy.
But it wasn’t until last summer that Mason, who serves as vice president and installation manager for Sol Power LLC, invested in a battery energy storage system for his home in Westerly.
The reason for his delay? The price. The lithium-ion batteries aren’t cheap.
Indeed, the two batteries, which are the size of mini-fridges and are designed to store the power harnessed by his solar panels, cost $20,000, Mason estimated. But unlike in the past, he now felt the price was worth it, thanks to reimbursements for energy his batteries discharged back into the power grid.
The payment, through National Grid’s ConnectedSolutions program, is one of several financial incentives aimed at increasing battery energy storage for residential and commercial uses in Rhode Island and across the nation. And so far, it’s working.
“Before, batteries were kind of a luxury-market item, but with these incentives, they’re more cost-effective than generators,” said Eric Beecher, founder of Sol Power. The Charlestown-based company, which offers solar and battery storage installations, has seen demand for battery storage systems paired with solar arrays skyrocket: 100 in the last year, compared with about five over the five years before that.
Nationwide, the fourth quarter of 2020 brought in 700 megawatts in new energy storage projects – a majority of which are battery storage systems – up 37% over the prior quarter and almost 3.5 times as much as the fourth quarter of 2019, according to a report by Wood Mackenzie, an energy research group.
In Rhode Island, quarter-over-quarter increases have been small since 2018, but the R.I. Office of Energy Resources forecasts a pipeline of 80 projects totaling 2,200 kilowatts of power over the coming years.
Battery storage is crucial to decarbonizing and increasing renewable energy, including hitting Rhode Island’s ambitious 100% renewable by 2030 target. It also provides power to property owners during severe weather or disaster-related outage events.
‘Right now, we’re just starting to really kick-start the market.’
CARRIE GILL, R.I. Office of Energy Resources administrator for grid modernization and systems integration
Resiliency during outages was the main reason why customers in Rhode Island were adding battery energy storage systems to their homes, according to a National Grid survey.
For National Grid, the main benefit is in reducing demand on the grid during peak times.
The ConnectedSolutions program, which began in 2019, pays residential and commercial customers to discharge power from their battery storage systems. There are regularly scheduled discharge dates, designed around expected peak usage, such as hot summer nights when air conditioners are on full blast. A residential customer with a 5.5-kilowatt battery system could earn up to $2,200 a year, according to Paul Wassink, National Grid senior engineer and demand response manager.
To further cut costs for prospective battery storage system participants, OER in October launched its own incentive program, offering $2,000 grants through R.I. Commerce Corp.’s Renewable Energy Fund to cover upfront costs of small solar and battery-paired projects – and up to $40,000 for larger, commercial projects.
The U.S. Department of Energy through its investment tax credit also allows home and business owners to deduct 26% of the cost of battery storage systems from their federal taxes, although the batteries must be tied to a solar project to qualify. Legislation introduced by U.S. Rep. Michael Doyle, D-Pa., would expand the federal credits to apply to standalone battery storage projects, too.
Jason Burwen, interim CEO for the Washington, D.C.-based U.S. Energy Storage Association, said the legislation would be “catalytic” for states such as Rhode Island that have goals for decarbonizing and increasing renewable energy alternatives.
Current incentives that require battery storage in conjunction with a renewable energy system can leave out people who don’t own their homes – and don’t have authority to add rooftop solar panels, for example – or those who live in areas where sun or wind can’t be harnessed for power.
The legislation also stimulates research into how to improve the technology – for batteries and other systems such as thermal and hydro-powered storage.
“A grid that moves expeditiously to clean energy technology is not just going to have battery storage, but it is also going to need incentives to develop that next generation of storage technology as well,” Burwen said.
Battery storage remains the most accessible and affordable option in part because the technology is well-tested and recognized, and because market demand has increased availability, Wassink said.
But batteries can only hold a limited amount of energy for a short time. Long-term seasonal energy storage will present “significant challenges to balancing a heavily weighted renewable energy generation portfolio,” according to a 2020 OER report reviewing how Rhode Island can achieve the 100% renewable energy by 2030 goal.
“Right now, we’re just starting to really kick-start the market,” said Carrie Gill, OER’s administrator for grid modernization and systems integration. “We know it’s going to take a lot more going forward.”
Nancy Lavin is a PBN staff writer. Contact her at Lavin@PBN.com.