Illustration of home battery storage for utility customers

Battery Storage: What Energy Utility Customers Need to Know

Electricity is typically consumed as soon as it’s produced. Rechargeable batteries can store electricity at times when demand is low and power generation is high. It sounds simple, but your residential customers need to be educated about how battery energy storage works, the difference between battery types and what it takes to integrate batteries with solar panels.

Alternating current (AC) from your energy utility is first rectified to direct current (DC) to charge storage batteries. Home batteries require an inverter that later converts the DC energy stored in the batteries into AC power for use in the home. Battery energy storage applications include increased solar PV self-consumption and time-of-use rate management. However, most homeowners buy energy storage for backup power.

The battery unit is usually installed near a customer’s main distribution panel and then rewired to a critical loads panel. This is expensive and complicated. For the critical loads panel, the homeowner specifies the rooms or appliances they want to have powered during an outage. Unfortunately, many battery systems alone cannot provide the startup current for even low horsepower motors like well pumps or small air conditioners. However, high-power inverters or add-on soft-start kits are available to make this possible at an extra expense.

Types of Batteries for Home Energy Storage

There are two major types of batteries used for residential energy storage.

1. Lead acid batteries

These batteries are made up of numerous lead plates separated by a porous insulator. This assembly is immersed in an electrolyte made from a sulfuric acid solution. They are designed for 77-degree F ambient temperatures, are three times larger for the same kWh rating as lithium-ion and only allow for 50% depth of discharge. They are very heavy and require close monitoring of the battery’s state of charge and fluid levels. More expensive valve regulated lead acid (VRLA) and absorbed glass mat (AGM) batteries are sealed, requiring less maintenance.

2. Lithium-ion (Li-on) Batteries

A rechargeable lithium-ion battery uses a cathode made from a lithium oxide material (not metallic lithium). The highest power capacity li-ion systems (used by Tesla) incorporate a cathode combination of nickel-manganese-cobalt (NMC). However, charging too fast can promote thermal runaway due to the cobalt content and could potentially start a fire. Lithium iron phosphate batteries (used by Sonnen and others) are cobalt-free but provide much less energy storage capacity. Li-on batteries can be discharged to below 10% capacity, which essentially doubles the useful storage capacity compared to lead acid for the same capacity rating (kWh).

How Much Does a Home Energy Storage Battery Cost?

According to BloombergNEF, the cost to manufacture li-on battery packs has steadily dropped and is now around $137/kWh, less than half the cost in 2016. BNEF forecasts the li-on battery price to drop to $100/kWh in 2024 and $75/kWh by 2030. According to EnergySage, a 5 kW (13.5 kWh) battery storage system today will cost around $6,000 to $7,000 for batteries, plus $4,000 for other equipment and installation. Major home battery storage suppliers include Tesla, LG Chem, Sonnen, BYD, Enphase and Pika Energy/Generac.

What is the Capacity of a Home Energy Storage Battery?

The required battery size depends on the amount of power a home uses, the time periods it uses power and the peak electricity demand required to meet their maximum load. The average home consumes about 28 kWh daily. Going completely off-grid would require a large bank of batteries. Residential battery storage suppliers offer units with ratings of 3 to 8 kW of continuous power and 3 to 20 kWh of storage capacity.

Battery Storage for Home Solar Panels

Battery storage is a great option for homes with solar panel systems. There are two ways solar battery storage operates:

AC coupling feeds solar panel DC power to an inverter, which then supplies AC power to the home and (when needed) draws power from the grid. Battery backup is added on the grid side with its own inverter to store excess solar energy or to charge from the grid. Any electricity that is stored in the battery system needs to be inverted three separate times before use.

DC coupling feeds solar panel DC power to a charge controller, then to the batteries. A single inverter then converts the DC battery power to AC power for the home. Stored electricity is only inverted once before use. Note that DC coupling cannot be used with microinverters and cannot store power from the grid.

Hybrid systems combine both DC and AC coupling to take advantage of the benefits of both.

Are Permits Required for Home Batteries?

Some authorities may require re-permitting of the existing PV system if a new inverter is installed. Restrictions on permissible battery locations and clearances from existing equipment may also be enforced.

Recommendations for Energy Utilities

As customer interest continues to grow, how should energy utilities address energy storage batteries for homes?

  • Emphasize the non-backup power benefits of energy storage such as time-shifting or arbitraging their solar-generated energy.
  • Encourage customers not to piecemeal a system together. The battery subsystem, inverter and control software should be an integrated package.
  • Confirm ahead of time that every critical component in the battery system is acceptable for interconnection by your energy utility.
  • Make sure battery units are listed to UL 9540, the Standard for Safety of Energy Storage Systems and Equipment.
  • Check ahead with the city building department or other authorities to understand permitting requirements.
  • Make incentives easy to apply for and paid directly to the customer.
  • Verify that the scope and terms of the battery warranty meets your customers’ expectations.

Energy storage is on your customers’ radar. This resource can provide backup power, improve the grid’s efficiency, potentially lower energy costs for customers and play a key role in the smart grid of the future. Energy utilities need to make educating customers about energy storage a priority.

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