As utility rates and solar incentives continue to evolve, so will the energy storage market. ES&D talks to Paul Nahi, the Silicon Valley entrepreneur who has helped Enphase Energy pioneer the world’s first microinverter and become a global provider of energy management solutions.
In a few months, California-based company Enphase Energy will spearhead its Home Energy Solution in Australia, where high energy costs, large penetrations of solar on the grid and declining utility incentives for solar have created markets ripe for residential storage.
The company has high hopes for the technology’s uptake in Australia, confident local consumers – residential and commercial – are in the right frame of mind to herald in the new age of electricity; one where they, not the utility, hold the cards. In fact, Enphase expects Australia to become a multi-hundred-million-dollar-a-year market for home energy storage in the coming years, with Morgan Stanley estimating the Australian storage market alone could soon be worth upwards of $24 billion. No wonder Tesla Motors and Panasonic are jumping on board.
“Australia is leading the global charge for storage, and the fact its photovoltaic market is so strong and stable reinforced our decision to invest heavily in this area,” the company’s president and CEO Paul Nahi says, acknowledging differences in feed-in tariffs and retail rates is making a very strong economic case for storage.
“In New South Wales we are seeing a reduction of the feed-in tariff going from 60c down to about 6c, and in Queensland we are seeing similar reductions. So now, the feed-in tariff is 6c but the cost of energy is say, 35c, and in some locations up to 50c. Do you feed-in the energy from your solar system and get paid 6c only to buy it back later at 35, 40c, 50c, or do you store it and use it yourself?” he asks.
Of course, it’s a no-brainer
The Enphase Home Energy Solution debuted at the US Energy Storage Summit in December. In a room full of energy storage products, the most obvious point of difference was its size. While many of the devices on the market would struggle to fit in the back of the ute, the Enphase system could fit under a Christmas tree. It’s fully controllable through communications and upgradable through software, giving homeowners total control of their energy usage. What’s more, residential solar system owners can easily retrofit their homes by adding the storage system to keep excess energy in reserve and use it later, instead of selling it at a reduced price.
The company is called Enphase Energy not Enphase ‘solar’ for a reason. The platform delivers generation, storage, control and management all in one. As global energy companies question how the nascent market for grid-tied batteries will evolve, Enphase presents a clean and intuitive finished product, demonstrating how homeowners can immediately maximise the value of their electricity system.
You can finely tune the amount of storage to the amount needed for any particular household. This level of granularity and simplicity just hasn’t been seen in the residential storage market to date.
The installation process has been simplified to a point where it’s ‘plug and play’, where an entire home energy system – not just the storage system – can be put up in half a day with a crew of just three people. Essentially, the complexity of energy management is abstracted from the consumer, deep in the cloud, so all the consumer sees is a system that reduces bills and provides clean and reliable energy. Better still, it does this in the simplest way possible.
“The genesis of the company really came from our chief technology officer who was building a solar system and recognised there were some very fundamental deficiencies with the technologies that existed at the time,” he says.
“Both he and our other co-founder, vice-president of product, Raghu Belur, had a view of what a system should look like and came up with the concept of a micro-inverter system.”
That was in early 2006. By the end of that year the pair had brought in Paul – a computer science engineer with a strong background in semiconductors and systems – to help understand the challenges and risks behind the concept. It soon became clear a micro-inverter, a very small device that fits under each solar module and converts the DC energy coming out of each panel into AC, was the undisputed way forward.
“The modular approach governed our view to the entire architecture of the system. If we look at storage, for the first time we have what we call a DC battery. This is a small device, say, less than 20kg, that sits inside the one box with all the associated electronics including the inverter. It can be easily lifted and hung up on the wall, much like a picture, and there is one cable coming out that can be plugged in for a 1.2kWh storage system,” he said.
“You can finely tune the amount of storage to the amount needed for any particular household. This level of granularity and simplicity just hasn’t been seen in the residential storage market to date.”
While the idea of home storage does pose critical questions to utilities, Paul says the technology also opens up a tremendous number of possibilities to optimise networks. In fact, Enphase Energy has engaged with SA Power Networks, Genesis Energy (NZ) and other utilities for some time, exploring how to leverage behind-the-meter storage to help stabilise the grid. It’s too early to see exactly how this will pan out, but with the product already available and testing starting in the first quarter of this year, Paul’s confident the ROI of solar is getting better and better.
“Across the world, it’s true the cost of utility energy will continue to go up while the cost of solar energy is coming down precipitously. This requires we continue to reduce the cost of the total system, and that’s everything from the solar module, the inverters, the storage, as well as the labour necessary to do the install. All of this has to come down and reliability has to continue to increase because now this energy system is a more integral part of your total energy solution,” Paul says.
“Then there has to be, and this is very critical now, an energy management system that is looking at what is being produced, what’s being consumed, what the state of charge of the battery is, and be able to make real-time decisions that optimise your energy use – and therefore optimise your ROI. For us, it’s a cloud-based system.”
As the head of a technology company, Paul believes Enphase Energy has the right business model for tomorrow’s solar energy industry. To create the next generation grid, however, he says it’s imperative technology companies continue to work with utilities. After all, they are the ones who are going to have the hardest time adapting, he says.
We must continue this build-up of distributed energy resources in a way the utilities can remain healthy and strong, so they can do their job and we can work in contra with one another… this is the way forward
“Utilities have been built with the view there are a finite number of central energy generation facilities, and the business models, technologies, distribution and transmission technologies have all been built for that. Not to mention the fact the utility industry itself has been rewarded for steady, consistent delivery of energy – and rightly so, they’ve done a remarkable job up until now,” Paul says.
“That environment isn’t necessarily conducive to going out and exploring renewable energy or new forms of energy or technologies. But now we’re disrupting everything, and we have to do so in a way that works very closely with the rest of the industry.
“We must continue this build-up of distributed energy resources in a way the utilities can remain healthy and strong, so they can do their job and we can work in contra with one another… this is the way forward.”