Energy Trends Archives - Questline Digital

How to Tap the Power of Energy Prosumers

As solar and other renewables become more affordable, many of the electric power consumers of yesterday are now active energy consumers and producers, or energy prosumers.

These utility customers invest in and install rooftop solar panels to generate the electricity they need and feed the excess electricity they produce back to the grid in exchange for credits or reductions to their energy bills.

Many households are also looking to battery electric vehicles and home battery storage systems that can be combined with solar panels to power their homes during outages. Some utilities, like PG&E in California, offer financial incentives to customers that install battery storage systems.

As electric consumption by U.S. households continues to climb, these energy prosumers will be a growing segment of a utility’s customer base. With approximately 4% of U.S. homes generating electricity from small-scale solar arrays, they already account for nearly one-third of all solar energy produced in the U.S. The International Energy Agency estimates that approximately 100 million households will rely on rooftop solar by 2030.

What is an Energy Prosumer?

An energy prosumer is a utility customer who generates their own power. For residential customers, this typically includes rooftop solar panels and home battery storage. Business customers may use larger-scale distributed energy resources (DERs), such as wind generation, solar arrays and battery storage.

Prosumers may sell their excess power back to the grid, becoming energy producers as well as consumers.

Building Relationships with Energy Prosumers

Energy prosumers are quickly changing the way utilities do business. Now that more and more customers are engaging with power production, these active customers will play a significant role as more renewable energy flows to the grid.

Utilities will be well served by educating and empowering these essential players, working with them as allies in meeting several mutually beneficial objectives:

Meet renewable energy mandates. With many states now requiring utilities to generate a specific percentage of their power from renewable sources, utilities are encouraging their energy-supplying customers to help them meet their net zero goals. In those states, many utilities offer customers a solar renewable energy certificate (SREC) with rooftop solar systems for each megawatt-hour of electricity they generate. Homeowners can use these SRECs to generate income.
Support solar investments. To encourage the adoption of solar, some utilities offer upfront rebates for installing solar panel systems that can, on average, reduce the cost of the system by as much as 20%.
Build trust. Utilities are building portals that provide their most active customers with straightforward and comprehensive access to information about installing solar systems or designing microgrids, assistance connecting their systems to the grid, access to the real-time grid and market data, and more. This encourages them to rely on the utility as a trusted energy partner.
Offer incentives. Forward-thinking utilities like Consumers Energy offer bill credits to energy prosumers for the extra energy they produce and discounts on the electricity they purchase. Utilities can also support their prosumer partners by providing discounts on maintenance and installation of solar equipment or technical support and educational services.

Building the utility-prosumer relationship benefits everyone. Customers are happier with lower bills and a reliable power supply during outages, while utilities can make progress toward their sustainability and customer satisfaction goals.

Marketing Tools to Encourage More Energy Prosumers

With the promise of a mutually beneficial relationship, why don’t all consumers become prosumers? It comes down to awareness, education, access and cost.

Awareness and Education

Many customers still don’t know they can return energy to the grid and get paid. Or that they can store power in batteries for future use. And if they do, many need help knowing where to get started.

For example, Super Bowl ads that showcased a Ford F-150 Lightning powering a home during an outage caught the attention of many customers previously uninterested in EVs. They were introduced to the idea of bidirectional charging but were left asking questions about its feasibility.

These newly interested customers need information on equipment, installation and safety. While the idea of sending energy back and forth might sound relatively simple, it’s a complex power conversion process that requires special chargers and careful installation.

Utilities can stand out in today’s crowded landscape with content — like email promotions, landing pages, checklists, blog posts and videos — that educate customers about the benefits of becoming a producer of renewable energy and guides them on how to get started.

Access and Cost

Even if an energy customer knows they want to become a prosumer, there are still hurdles to getting started. Finding reputable installers can be intimidating and the cost can feel out of reach.

For example, the Ford Charge Station Pro carries a price tag of $1,310, not to mention the F-150 Lightning vehicle, which ranges between $55,000 and $97,000.

Solar power storage systems aren’t cheap, either. Batteries can cost anywhere from $12,000 to $22,000.

Previously mentioned portals, incentives and rebates can make all the difference. Utilities that provide easy-to-access resources, like PSEG Long Island’s contractor list or PG&E’s incentive site, allow customers to act independently. Many customers want their utility to be a knowledgeable resource but still want to make home improvements on their own.

Opportunities to Grow with Energy Prosumers

The increasingly important role that energy prosumers play creates new opportunities for utilities to add value to their services and ramp up their efforts to ensure a resilient power grid. By using digital marketing tools and educational content to communicate with customers, the beneficial segment of prosumers can continue to grow.

Learn how a customer engagement strategy from Questline Digital can help build strong relationships with energy prosumers.

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7 Ways to Offer Energy Rate Relief to More Customers

Energy prices are expected to continue rising this year and next, making it imperative that utilities have an energy rate communication strategy in place to help customers navigate rising bills.

Average U.S. residential electricity prices will reach an estimated 15.33 cents/kWh in 2023, jumping from 13.72 cents/kWh in 2021. To put this into perspective, the average U.S. residential customer uses about 886 kWh per month. This means the average energy consumer will pay $136 per month in 2023 when they only paid $121/per month in 2021 — a potential increase of $180 per year.

While this may not seem like a life-changing sum, it greatly impacts the day-to-day life of many residential customers, especially low-to-medium-income customers or those who are behind on electricity payments. Some regions of the country are also getting hit harder with price increases than other regions.

Unfortunately, most customers don’t seek financial help from their utility or even know it’s available. Worse, many find the promises of payment assistance programs too good to be true. And others are just plain angry that costs are rising.

To mitigate this frustration and offer aid to more customers, Questline Digital recommends a proactive and empathetic energy rate communication strategy. Specifically, we’ve seen success when utilities implement the following tactics:

Increase education
Don’t leave it to PR
Use more video
Provide energy-saving tips
Share program information before customers need it
Promote home assessments and energy audits
Use customer testimonials

Increase education

It’s common for customers to blame their utility for rising rates, even when it’s not the utility’s fault. Help customers understand what causes high energy bills. With more knowledge comes less frustration.

When customers Google questions like, “Why are electricity costs rising?” they are met with a barrage of news stories and social media complaints, and they’re not always sure which to believe.

Your utility should be the trusted authority. Use content marketing to explain how the rising cost of fossil fuels is impacting electricity rates, where renewables fit in the puzzle and what specifically your utility is doing to reduce the costs of power generation and distribution.

Be transparent and show proactive steps, even if the savings won’t be tangible for some time. Let customers know your utility is working hard to help.

Don’t leave it to PR

While media relations is an incredible tactic for sharing news with the community, it shouldn’t be the sole tool in your tool belt. If your customers only hear about available financial aid or what’s driving higher prices from local publications, they aren’t going to think highly of their utility. Get ahead of the news cycle and share updates and aid directly with customers.

Example of two emails from a utility used to communicate rising energy rates

See this example from a Questline Digital client. Knowing that holidays and winter months can be a stressful time for finances, the utility proactively shared payment assistance programs with a segmented email campaign to targeted customers.

Use more video

Video content should be included in your energy rate communication strategy. Why? Because explainer videos can make complex topics easier to understand. Images and animation aid with learning, while short video lengths and fast action keep viewers’ attention.

Create and share clips that illustrate the forces at play behind higher energy costs, promote programs and explain billing options. Share the videos on your website, YouTube channel and social media, along with newsletters, advertisements and email promotions.

Provide energy-saving tips

The U.S. Department of Energy estimates that the typical household can save 25% on utility bills with energy efficiency measures. That’s significant, particularly during a period of rising rates. With educational energy-saving advice, your utility can help customers make necessary home improvements or behavioral changes.

We Energies, an energy provider serving areas of Wisconsin and Michigan’s Upper Peninsula, uses an animated video to show customers how they can update their homes to save energy. At just over two minutes long, the video focuses on stopping air leaks by doors, windows and attics.

Questline Digital provides clients access to an extensive video series titled “You Can” to help homeowners and renters with energy efficiency projects. The videos provide step-by-step instructions on DIY improvements that customers can make no matter what their budget is.

Example of content marketing for an energy rate communication strategy

Share program information before customers need it

While education on energy-efficient products and behaviors can certainly help, utilities shouldn’t rely on efficiency messaging alone.

Utility-specific payment programs and federal assistance programs like LIHEAP and WAP should be promoted widely and proactively. Often only shared with customers who have fallen behind on payments or who have qualified in the past, assistance programs go underutilized. While audience targeting is highly effective, current economic conditions require that more customers are made aware of these programs, including customers who may be eligible for the first time.

MCE, a nonprofit renewable energy provider in California, uses simple animation to highlight assistance programs available to customers and explain how they can apply. Housed on YouTube, the utility can call out key moments with time stamps. This makes it simple for customers to find what information they need.

Example of YouTube video used to communicate rising energy rates to customers

PG&E, an energy provider located in Northern California, uses this 30-second animated video to tell the story of a family and their experience with the utility’s financial aid programs. Short and sweet, this video can be used on social media and in digital advertising placements.

Promote home assessments, installation and energy audits

Just like financial aid programs, complimentary home assessments and installation services are often unknown to many customers. Utilities should expand the promotion of these value-added services as part of their energy rate communication strategy.

TECO Energy, an energy holding company based in Tampa, Florida, shares its Online Home Energy Audit Tool via TV advertisements, reaching a mass audience. These clips connect with viewers emotionally while reassuring people of the convenience and positive impact audits can have on their energy bills.

Example of email from a utility energy rate communication strategy

This email example from a Questline Digital client promotes complimentary installation and tune-up services for electric appliances and fixtures. Reaching customers directly in their inboxes, recipients are encouraged to take advantage of available services to reduce energy consumption.

Include customer testimonials

Financial aid and energy efficiency programs can often feel too good to be true. Dispel skepticism by telling customers about the positive experiences their peers have had. Ask customers who have made efficiency upgrades or used utility services if they would be willing to share their stories through testimonial videos, articles and quotes.

Example of social media post from utility to communicate rising energy rates to customers

Here, Philadelphia-based energy company PECO shares a residential customer’s experience on Facebook, showing other community members how they might take advantage, too. Social proof is highly effective when shared on social platforms or between peers.

Help Customers with an Energy Rate Communication Strategy

Overdue balances and rising energy costs will continue into 2023 and beyond. Get ahead of customer misconceptions and pain points with proactive communications that focus on education, peer validation and widespread awareness.

Learn how a digital engagement strategy from Questline Digital will help your energy utility connect with customers in need.

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How to Communicate Rising Energy Costs to Customers

It’s imperative that your utility prepares a proactive communications strategy to educate customers about rising energy costs and help them take control of monthly bills.

“Having a proactive and cohesive strategy around changing costs is no longer a nice-to-have,” says Mary Malone, Questline Digital Director of Account Development. “It’s become imperative to sustaining a trusting relationship with customers.”

Customers want to know:

Why are energy costs rising?
How do I reduce my energy consumption?
How do I save money on my energy bill?
What can I expect from my bills moving forward?

Your energy utility should explain rising energy costs and rate changes as clearly and directly as possible.

Remember to:

Keep messages simple by avoiding jargon
Highlight your utility’s commitment to keeping costs affordable for customers
Provide energy-efficiency resources and education
Clearly explain bill assistance programs or payment options

Why Are Energy Costs Rising?

The first question for many customers is, “Why are energy costs rising?” Although the answer is complicated, it’s important to explain as much as you can about the situation. The more customers know, the more understanding they’ll be to price shifts.

Many factors are causing spikes in energy costs, including the pandemic, Russia’s attack on Ukraine, supply chain issues and climate changes.

“The cost of natural gas that’s delivered through pipes was up 24% in February from the year prior, while electricity went up 9%,” The Guardian reported. “Price spikes are notably higher in places where electricity is generated from natural gas, such as the Northeast, which saw a 16% increase in January from the same time last year, with prices dipping down to a 6% increase in February.”

The unpredictable natural gas market, which powers much electricity generation, is also attributed to increased production costs. The addition of extreme weather conditions, including the Texas Freeze and Hurricane Ida, pushed oil production to stop on the Gulf Coast. These conditions led to higher energy prices as the demand increased.

Richard Berkley, Executive Director of the Public Utility Law Project, explained that the situation would be different if the U.S. didn’t rely so heavily on energy sources that depend on the supply chain and global market. “Now with sustained disruption of the world energy markets, we should expect to see higher prices till the end of the year,” he said.

Although customers may be aware of some of these situations, they may not know the direct impact these factors have on rising energy costs. Explaining this information in clear, easy-to-understand ways through emails, newsletters, alerts and more will help keep customers informed and educated.

How to Address the Cost of Energy

Besides world and weather events, customers don’t always understand why energy costs fluctuate throughout the year. Generally, electricity prices reflect the cost to build, finance, maintain and operate power plants and the grid.

Do your customers know this?

The more customers understand the various elements behind the cost to generate and distribute energy, the more empathetic they’ll be when increases occur. In other words, this has a major impact on long-term customer satisfaction.

According to E Source, customers want to understand how price increases and rate changes affect four areas:

Their families, businesses and personal lives
The environment
Future generations
Their communities

Tactfully explain to customers why some factors drive rising energy costs, including:

Fuel prices: Clearly explain that when demand increases, so does the cost. With supply chain challenges and the demand for fuel increasing, these higher fuel prices can lead to higher costs for generating electricity.
Power plant costs: Let customers know about the costs that go into operating and maintaining generation facilities and what cost increases your utility is seeing in daily operations.
Transmission and distribution systems: The systems that connect power plants to customers also need continuous maintenance. Describe where these costs come from.
Weather conditions: Most of the U.S. has been battered by high temperatures lately, which puts a strain on the grid as the demand for cooling increases. On the other hand, rising energy costs can also occur in the winter when frigid temperatures require increased heating. Customers may not realize that these things affect the cost of energy.
Regulations: Some states have regulated prices or a combination of regulated and unregulated prices. Be upfront about what your utility experiences when it comes to government and state regulations and how it impacts energy costs.

Transparently describing how energy prices are determined can help customers feel “in the know” and showcases your energy utility as a trusted resource.

Example of content marketing to educate customers about rising energy costs

Rising energy costs affect customers in different ways

Develop communications strategies for both residential and business customers. Their different needs and concerns should be addressed in distinct ways.

For example, retail electricity prices are usually higher for residential than commercial customers because of different distribution costs. However, supplying electricity to industrial customers is often less expensive and more efficient because they can receive the electricity at higher voltages.

For residential customers, it’s important to educate them on peak and non-peak hours and how these can affect their electric bills, especially if you offer time-of-use rate plans. Typically, electricity demand is high in the early afternoon and evening, which means costs will increase at these times. If customers change when they do some activities, such as charging their EV or running loads of laundry, to non-peak hours they can see a decrease in energy costs.

Provide this information to customers through newsletters, social media, text or emails where you can share content pieces that teach customers about energy use and lowering consumption.

Reach Customers With the Right Message in the Right Channel

Communicating with customers should go beyond basic energy efficiency advice. Instead, provide direct ways that customers can lower their energy consumption and combat rising energy costs. It’s important for customers to know that increased energy efficiency ultimately leads to lower costs.

Additionally, provide resources like payment assistance programs, budget billing and content that speaks to the needs of customers impacted by rising energy costs.

A multi-channel communications strategy is key to reaching as many customers as possible. Recommended channels include email, direct mail, social media, text messaging and any other communication methods your utility’s customers prefer.

Email Example: Rate Change Message

Example of email communicating utility rate change to customers

The above email from Pioneer Energy Management in Ohio directly tells customers how much their rate is changing and when the change will be effective. It doesn’t include any fluff or introduction — it gets straight to the point. Once readers know that their rate is increasing, they can continue to read on for helpful tips to manage their electric bill.

Direct Mail Example: Rate Increase Message

Example of direct mail communicating rate increase to utility customers

Novia Scotia Power created a direct mail campaign that answered customers’ direct questions, including “Why are rate increases so high?” In its direct mail flyer, NSP shares that the utility is working toward distributing cleaner energy and switching to renewable sources. This transparent information allows customers to better understand why price increases are occurring and where the extra revenue is going.

Web Page Example: Rate Education

Example of utility website educating customers about energy rates

Southern California Edison has a page on its website titled “How Rates Are Set” that provides an FAQ section and clear explanations for how the utility determines the price of electricity and what affects those costs.

The utility also helpfully breaks down where each dollar of the customer’s energy cost goes:

46 cents – generation: Costs of energy sources, including solar, wind and natural gas, and generation SCE owns, including hydro and natural gas plants.
37 cents – distribution: Grid maintenance and new equipment, including poles and wires and substations.
8 cents – transmission: Investment in operations and maintenance for high-voltage transmission lines.
5 cents – wildfire: Insulated wire, vegetation clearing, enhanced inspections, weather stations, HD cameras, insurance.
4 cents – public purpose programs: Mandated state programs, including incentives for energy efficiency and protection for low-income customers.

Customers appreciate transparent, direct information. When customers see your utility as a trusted resource they have higher overall satisfaction.

Social Media Example: Peak-Hour Reminders

Example of social media post communicating peak hour rates to energy utility customers

UniSource Energy Services, located in Arizona, provides reminders on its Facebook posts for customers to be aware of peak and off-peak hours when choosing activities. The utility then provides a link to more tips on cooling homes in the summer. Customers do not always know when off-peak hours are — sharing this information in a quick social media post acts as a helpful reminder.

Social Media Example: Bill Assistance Programs

Example of social media post communicating energy bill assistance programs to utility customers

AEP Ohio shared this post on Twitter to inform customers that their bill assistance programs were expanding eligibility requirements, even for customers who were not past due with their payments. This proactive post helps customers who may be struggling but were ineligible previously.

Urgent Need for Proactive Communications

With rising energy costs, there is an increased urgency to provide valuable information to customers for combatting high energy bills. Helping customers understand how to lower their energy consumption and how increased energy efficiency ultimately leads to lower costs can build positive relationships among customers.

Connect customers with the right payment programs and billing options. Learn how Questline Digital’s customer assistance solutions can help.

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Energy Spotlight: Robert Raker

Working for a small electric cooperative, Robert Raker wears many different hats.

Currently, as Manager of Communications and Public Relations for West River Electric Cooperative, Raker uses his technical background as a master electrician to effectively communicate complicated information to members.

“I never went to school for marketing or public relations,” Raker says. “While it wasn’t traditionally my background, my technical knowledge about electricity allows me to effectively speak about it to our members. At a small coop, you wear so many different hats that you become a jack of all trades.”

Raker joined West River in 2008 as a marketing representative where he was tasked with “selling things that generate load,” specifically electric heat and water heaters. Now, the emphasis is on selling time-of-use (TOU) rate programs, opening the market for electric vehicles. For example, West River developed a residential EV rate with unlimited charging on nights and weekends for $30 per month. The goal of the program is to reduce the burden of EVs on the electric grid.

“Human nature takes a long time to change so you need to change it early and often,” Raker explains. “A flat rate of $30 takes away the unknown. Customers know what it’s going to cost to charge an EV. As long as members charge when the peak demand is low, we can keep it at a low price.”

Recently, Raker was responsible for communicating a three-month rate reduction to membership. Thanks in part to a Payment Protection Program (PPP) loan during the coronavirus pandemic, West River was able to give members a lower rate for three months via a power cost adjustment.

“Early on when COVID-19 started, we were watching our energy sales decline as commercial businesses were scaling back,” Raker explains. “We applied for the PPP loan and got it. Fortunately, our sales didn’t plummet dramatically like we were anticipating. We ended up getting the loan forgiven, and that was a portion we were able to give back to our members.”

To reach members of all ages, Raker says it’s vital to communicate on multiple platforms. For older audiences, he utilizes Facebook and West River’s Cooperative Connections magazine. He also takes advantage of LinkedIn and Questline Digital eNewsletters to connect with Key Accounts customers, along with Instagram to connect with younger generations.

In the early days of social media, Raker says he remembers pitching Facebook to leadership and receiving initial resistance. He didn’t give up, and eventually, West River became an early adopter of Facebook. Fast forward to today, and he is once again communicating the benefits of a popular social media platform — this time with TikTok.

“We have younger members, and they won’t be reading an article in our magazine or coming to our annual meeting,” Raker explains. “We have to go where they are, and where are they? They’re on TikTok.”

As West River’s primary social media manager, Raker has been successful at building a presence on the trendy video-focused platform. In fact, one TikTok video received more than 1.1 million views. Other electric cooperatives are following West River’s lead and creating TikTok videos of their own.

When he’s not managing PR for West River, Raker is wearing yet another hat: law student. He is in his final year at Mitchell Hamline School of Law and hopes to use his degree to expand to other areas of the industry like legislative affairs. To break up the long days of working and studying, Raker takes advantage of the amazing mountain bike trails and skiing areas in western South Dakota.

Questline Digital connected with Raker to get his thoughts on impactful customer campaigns, connecting with younger generations and the changes he foresees in the industry.

How did you get started in the energy utility industry?

I started as an apprentice electrician for a local electrical contractor, and I worked with utilities to provide services to both homes and businesses. I eventually worked my way up to journeyman and master electrician, while keeping my eye open for opportunities to get my foot in the door of a utility.

In 2008, I got the chance as a marketing representative. I have since furthered my education while working at the co-op. I’m currently in my final year of law school, all while working full-time for West River Electric Cooperative.

What has changed the most about your job in the utility industry over the course of your career?

When I started, my time was primarily spent selling products to promote load growth, for example water heaters and electric heat. Today, we are still focused on load growth, except now we emphasize using the energy at the right time. This means pushing demand response and dusting off the old time-of-use (TOU) rates. As for the technology, West River Electric Coop has had its TWACS AMI system since the early 2000s. That is what I learned on, so I don’t know any different.

The major changes in technology that I have seen relate to the way we communicate with our membership. There is so much “noise” in people’s lives, we are forced to meet them where they are, and that requires different platforms. We have our monthly magazine that we have always had, but we now have Facebook, Instagram, LinkedIn and, most recently, TikTok. We leverage Questline Digital for our commercial accounts and use the content on our LinkedIn page. Our co-op is experiencing exponential growth, and we must try and squeeze out more with less. That’s why we need to use content across multiple platforms.

What excites you the most about the energy utility space?

The canned answer is the changes and challenges ahead. I’m excited about the future changes, but more specifically, the new workforce that is replacing those retiring. We (those in the utility industry) are standing on the shoulders of giants, and they are definitely giving up something that is better than when they took over. So, now it is the younger generation’s turn to do the same thing. These new leaders come with a different perspective, and it will be exciting to see what that looks like. I use the analogy of a puzzle that lost the lid. I don’t know what the picture is going to be, but my job is to just keep trying to put the pieces together.

What campaign or initiative are you most proud of?

We recently lowered our rate for three months to return margins back to the membership via power cost adjustment. In a time when prices are going up, and many utilities are trying to recover costs from last February’s cold spell, we are returning money back to the membership. This demonstrates good management and the power of sticking together. It also makes for a high open rate in your email.

What’s a marketing campaign you wish you’d thought of (inside or outside the energy industry)?

The Budweiser “Wassup?” campaign because it was very catchy. I can appreciate how it focused on a specific demographic using a common platform, TV. Target marketing is nothing new, but we can get more granular and precise with our messaging now.

What is the hardest part of working in the energy industry today?

Keeping up with the growth and changes. The industry has some of the brightest people working in it, but it needs more. Another part is showing the true value of electricity because it is human nature to expect things like electricity. Today, our members expect uninterrupted service and instant notifications.

Finish this sentence: If I weren’t working in the utility industry, I would be…

A self-employed electrician/building contractor. I enjoy putting in hard work, and the real estate market is rewarding and lucrative. Homeowners deserve a quality and sustainable product. A house is typically someone’s largest purchase, and contractors work very hard for their money.

How do you anticipate the world of energy evolving in the coming years?

The world of energy will become more known, transparent and open because of peer-to-peer energy trading and artificial intelligence. We will have consumers and producers in one, known as “Prosumers.” Energy will be transferred and sold via artificial intelligence and electric utilities will be more service oriented. “Prosumers” will value electricity and energy because they are a potential revenue stream.

On a side note, they have always been a potential revenue stream, but we don’t often view it that way. However, the older generation does because they have gone without it before. We will experience that same shift in perspective in the future because of the options that are available to anyone connected to the grid.

What advice would you give to those entering the utility space?

First, make your bed in the morning to start the day off with a win. Next, read “Who Moved My Cheese,” become a lifelong learner and be OK with being surrounded by smart people. The utility space is full of smart people, and it is OK to not be the smartest person. In fact, if you are the smartest person in the room than you are in the wrong room. Finally, put your head down, work hard and appreciate the small wins because the utility space doesn’t always change fast, but it will be worth it.

Participation in Questline Digital’s Energy Spotlight series does not indicate an endorsement from utility partners.

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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