Batteries! Batteries! Batteries!

2025 will be the year of the battery

Geeks of certain age will remember Steve Ballmer on stage shouting Developers! Developers! Developers!

Inject the same energy here to shout: “Batteries! Batteries! Batteries!”.

2025 is the Year of the Battery

Last week I wrote a note explaining how I switched from a Solar-First to a Battery-First perspective in the residential space, and I want to expand on the timing. There are multiple factors aligning right now, and I believe 2025 will be the year of the battery here in California.

Prices are going down

Here are two very recent reports on prices.

RMI Report

RMI’s recent Cleantech Revolution Report highlights the rapid adoption of multiple technologies at a global scale, including batteries. Check these two graphs on costs and adoption of batteries:

EnergySage

EnergySage is a national marketplace for clean energy at the residential level. We used them last year to get additional estimates on our Solar Panel installations. EnergySage regularly provides reports on the residential market and their most recent Report shows lower prices for the US and for California in 2023.

The report also says that the California’s average price was down to 1,090 in H2’23. Residential prices are also going in the right direction!

Better Batteries

Another good indicator is the improvements in the newer batteries entering the market. Mostly all new residential batteries are using the LFP chemistry, which is cleaner, safer, and cheaper than NMC chemistry. The new Powerwall 3 is LFP-based. So are the Enphase iQ 5P, and the Franklin WH aPower.

The new batteries are also more flexible. I like how the Powerwall 3 can expand in both capacity and power by stacking different types of modules.

A key challenge of residential batteries has been installation, as well as permitting and inspection. The UL organization now has multiple electrical storage standards (UL-1973, UL-9540A), that are supported by the new generation of batteries.

Improved Permitting and Inspecting

California passed a law in 2022 (SB-379 Wiener 2022) to simplify the permit and inspecting process in California. The new UL standards, and initiatives like NREL’s SolarApp+ are also helping, making it easier for local jurisdictions to comply with the law. The long pole in the transition is usually the Fire Departments, but I’ve already seen significant improvements this year.

Adoption Support from Multiple Sources

Multiple programs encourage installation of residential batteries. I cannot cover all the programs, but they come from the federal, state, county and city levels. Our Community Choice Aggregator (CCA) is Peninsula Clean Energy; they also have programs encouraging batteries. Even the California Public Utilities Commission (CPUC) has battery-friendly programs - the most recent decision by the CPUC was against the NVBT proposal but it supported changes to the SGIP (Self-Generation Incentive Program) that specifically encourages installation of batteries.

Value of Batteries

In the world of renewables, the cost and value of electricity depends heavily on location and time. With a battery in our households, we can change from “when should I run my appliances?” to “when should I charge, and discharge, my battery”, and this surfaces as different values.

Import/Export Value: Time Shift

When the electric rate has a time of use component, a battery can be used to buffer and time-shift the consumption and the imports. The battery can charge, from Solar Panels or from the grid, when the grid has abundance of cheap and renewable energy, and your appliances can later use this energy when they need it.

Batteries are natural partners to rooftop solar but they are valuable even in households without access to rooftop solar.

Export Value: Transition to NBT

The NEM 3.0 (NBT) CPUC decision in late 2023 strongly encouraged adding batteries to any solar panel installations. There is value with Solar Panels under NBT even without batteries, particularly if you are part of a Community Choice Aggregators (CCA) like Peninsula Clean Energy, but a battery certainly helps. I’ll write up a bit more about this in another post.

Grid Value: Diminished Load

You may have read that California has hit record-breaking milestones in renewable electricity generation leveraging Wind, Water, Solar, and Batteries. As Mark Jacobson pointed out in that Scientific American article, a key contributor to this record has been reductions to the load, attributable in part to behind-the-meter resources: rooftop Solar Panels and Batteries.

Grid and Revenue: Virtual Power Plants

In September 2020, FERC (the Federal Energy Regulatory Commission) signed FERC 2222 to “better enable distributed energy resources (DERs) to participate in the electricity markets run by regional grid operators”, providing a much bigger role for Virtual Power Plants (VPP).

Here in California, VPPs will be able to participate in CAISO in 2025 (actually Nov 1st, 2024), and then our stationary batteries will be able to export, help the grid, and get compensated.

We have already seen some VPP activity this year: Renew Home was created earlier this year by combining OhmConnect and Nest Home. I believe we will see much more activity in the second half of 2024 from companies already doing VPP elsewhere, like Tesla and SunRun, and others.

VPP should make a significant difference. And recall you do NOT need solar panels to participate; just a dispatchable resource, and batteries are exactly that.

Batteries! Batteries! Batteries

I believe 2025 will be the year of the residential battery; we will see!