As energy providers look to strengthen relationships with their customers, many are launching utility marketplace websites to sell energy-related products and services.

Energy utility marketplaces are appearing in two distinct categories:

  • Project marketplaces connect customers interested in energy efficiency and home improvement solutions with certified professionals. These marketplaces include installation services for EV charging stations, solar panels and even home security and smart home hubs.
  • Product marketplaces are e-commerce-style websites where customers can purchase smart thermostats, ENERGY STAR® appliances, LED lighting, advanced power strips and other efficiency-related products directly from their energy utility.

Energy utilities face an uphill battle to break through the crowded field of marketplaces dominated by titans like Amazon and Walmart. This competition, coupled with the fact that the average e-commerce site conversion rate is between 2% and 3%, reinforces how energy utilities are fighting for a slim share of a very crowded market.

How can energy utilities break through the noise?

A Trusted Marketplace For Energy Products

Though challenging, energy utilities actually have a few competitive advantages over established e-commerce players.

If you search on Amazon for LED lightbulbs, you’ll find more than 10,000 results. However, there are few recognizable brands to choose from and it’s hard to compare the many features and prices.

Your customers are busy and don’t have the time or patience to wade through the overwhelming number of options.

In comparison, your utility marketplace offers fewer products that have been vetted by your energy utility, ensuring authenticity and reliability.

Customers want a simple recommendation they can trust, and your energy utility can provide that.

What’s Missing From Today’s Energy Utility Online Shops?

Currently, most utility online shops aren’t built to match the e-commerce shopping experience customers have come to expect. Shoppers are used to having an easy-to-use search tool, personalized recommendations, product reviews, linked tutorials, and more. Without these features, online shoppers are apt to jump over to more user-friendly sites.

Most utility marketplaces also lack search engine optimization (SEO). Product listings are not discoverable to consumers and remain reliant on marketing promotions. Yet, promotions have historically been limited to occasional bill inserts and mass messages to all customers.

In order to be successful in today’s crowded smart tech market, energy utilities will need to embrace the advanced marketing tactics used by e-commerce brands.

“Energy marketplaces are really an e-commerce business, and they need to be treated as such,” explains Mark Wilkinson, SVP Products at ibex Digital. “Utilities should really embrace the e-commerce philosophy. It comes down to personalized, timely and relevant marketing. Something that direct-to-consumer brands do very well.”

Driving repeat and regular traffic to utility online shops is now essential. 

How to Market Your Energy Utility Marketplace

In order to fully realize the potential of marketplaces, energy utilities should implement a multifaceted marketing strategy to drive awareness, traffic and conversions.

Here are a few impactful ways to better market your utility marketplace:

Content marketing:  Before making a purchase, customers need to learn about the energy efficient or smart home products in your marketplace. Why do they need them? How do they use them? What are the benefits?

Content is great for boosting awareness and developing interest. Use blog posts, videos, social media and infographics to educate customers on utility marketplace products and how they fit in their daily lives. Share content across eNewsletters, social media and on your marketplace itself.

Incorporate links to related products and calls-to-action within your content to create an organic buying experience. For example, include a CTA to your marketplace in an article about smart home technology or an infographic featuring energy-savings tips. Content marketing leads your customers to the next step naturally.

Be relevant and timely: Purchases are also tied to triggers and events, making relevancy and timeliness key for e-commerce marketing. Get in front of customers when they are making buying decisions.

Capitalize on seasonal changes and holidays; put rebates and product promotions in front of customers when they are most likely to make a purchase.

Behavioral emails: Use scheduled email cadences to encourage action and build a positive customer experience. Build timelines that match customer behaviors.

Let’s say someone bought a new smart thermostat. Send them an instructional email after their shipment is delivered with tips on how to install. Then send an email three or four days later that helps them learn how to take the next steps with program enrollment. If they don’t enroll or open that email, have a reminder sent a few days later. Then in a month, follow up with suggested products that complement their previous purchase.

“We always recommend tackling behavioral promotions in small chunks,” explains Wilkinson. “Offer recommendations and cross-promotions (people who bought this also liked…) and follow-up emails related to customer’s purchases to really help the experience. It doesn’t have to be overly complicated and can lead to immediate results.”

Abandoned cart emails: Emailing customers who have abandoned shopping carts is a successful strategy for driving incremental conversions. By sending an automated message, you can offer additional incentives such as a coupon to complete the sale at a lower cost. These easy-to-implement emails achieve success rates between 27% and 30%.

Audience segmentation: Energy utility customers encompass a vast set of demographics. Understanding the wants and needs of different groups is monumental for utility marketplace promotions.

Let’s say you identify a segment of empty nesters who also have pets. This audience is primed for streaming cameras or security systems that allow owners to check in on their animals.

“Segmentation can really benefit topic and tone for utility marketplace promotions,” explains Wilkinson. “Customers get interested in the same product in very different ways, so understanding the customer personas really helps develop traffic and ultimately sales on a utility marketplace.”

Tie in program promotions: The biggest win for utilities may be tying marketplace sales to program enrollments. For example, when customers are checking out for their smart thermostat, utilities can incorporate prompts to sign up for time-of-use (TOU) rate programs.

Program prompts can be built into the marketplace itself, or they can function more like a follow-up email. Today, consumers expect an effortless shopping experience. Take the extra step to make the connections between products and programs.

Examples of Great Utility Marketplace Promotions

The energy utilities finding success with energy marketplaces are those who actively promote and follow e-commerce standards. Check out these examples:

First Energy Home

Experimentation with social media, display ads, content, email promotions and search engine marketing (SEM) has allowed First Energy to build brand recognition for their utility marketplace.

Examples of digital marketing for First Energy Home utility marketplace

Holiday Promotions

In an effort to be timely and relevant, this Questline Digital client has seen success with promoting its marketplace and product rebates around holidays.

Examples of email marketing promotions for energy utility marketplace

Examples of Great e-Commerce Content

Still not sure how to promote your utility’s marketplace? Pull inspiration from brands that have mastered e-commerce. 

Williams Sonoma is great at using content to sell. Their emails often include how-to cooking videos with links to products used during tutorials. Plus, emails are sent to customers based on previous shopping and site visitation behaviors.

Were you looking at their bread mixes? Then you might receive an email in a few days that highlights their baking and pastry tools, bakeware and easy-to-prepare croissants. It will likely be paired with a supplementary video that provides a few baking tips or links to fan-favorite bread recipes – all the things you might need next after your initial purchase.

Williams Sonoma understands their customers and their buyer journey. The retailer knows that basic purchases tend to lead toward future specialty products.

Similarly, smart thermostats are often the first smart tech product purchased. After an initial trial period, customers who found value in the product tend to expand their smart tech collection.

Take inspiration from brands like Williams Sonoma and build content strategies that ensure your utility is present when customers are ready for the next step. Offer help and guidance.

Be the Trusted Expert for Energy Products

While it can seem like an uphill battle to compete with colossal retailers, energy utilities should use their industry expertise to their advantage.

Your customers trust your energy utility and the products you recommend — and that’s a great place to start when promoting your marketplace.

Complement your competitive advantage with helpful content and timely promotions, and your energy utility will see results.

Learn how to boost engagement and grow sales with an Energy Marketplace Content strategy from Questline Digital.

Ensuring the reliability of your customers’ energy supply is one of the most important jobs for any utility — yet it’s often taken for granted by customers. By participating in commercial demand response programs, business customers will better understand the role they have to play and directly contribute to making the electric grid more stable.

How do energy utilities encourage business customers to participate in demand response? By sharing the benefits of these programs, addressing common objections and offering energy-saving education, utilities can enlist the participation of more businesses and ensure the success of demand response programs.

What Is Demand Response?

Demand response is an effort to manage the capacity of the electric grid during peak events, or times of extremely high power draw. If businesses and households demand more electricity than can be produced — say, during a hot August afternoon when the air conditioning is running full blast — it may lead to outages. Producing more electricity by constructing new power plants can be costly and take years of planning. Plus, it often it means adding more fossil fuel generation to the grid instead of renewable sources.

Demand response programs seek to minimize the impact of peak events and prevent the need for building more power plants. Commercial demand response programs pay business customers to reduce their power draw during peak events, ensuring the stability of the grid for other customers and ultimately reducing the cost of energy for everyone.

How Does Demand Response Impact Commercial and Industrial Customers?

Customers can look at demand response events in two ways: the (potentially temporary) inconvenience of participating and the (potentially detrimental) drawbacks of not participating.

Commercial and industrial customers who participate in demand response programs may be asked to reduce their power draw during peak events. This can lead to minor inconveniences like reducing HVAC use or major impacts like closing the business for part of the day. On the positive side, program participants receive financial incentives that may include cash payments or reduced rates — even if a response event is not needed. The amount of advanced notice varies by program.

Businesses that don’t participate would not receive these incentives, of course, but they still might suffer the negative effects. An unexpected outage during peak events could cause devastating business interruptions. Long term, without effective demand response programs, a utility might have to add more carbon-based generation to the grid and rely less on renewable sources — increasing the cost of energy for everyone.

How to Promote Demand Response Program Benefits

The importance of demand response programs to your utility is clear: Managing the load during peak events is critical to ensure the reliability and stability of the grid. But why are these programs important to businesses? When promoting demand response, the key is to focus on the benefits to your customers, not the benefits to your utility.

Commercial demand response programs benefit your customers in three significant ways:

  1. Financial incentives. Businesses get paid to participate in demand response programs and can benefit from upfront payments, rebates and/or lower energy rates.
  2. Operational planning. Program participants can prepare for demand response events and ensure smooth transitions. It’s much better than being caught off guard by unexpected outages.
  3. Green reputation. Businesses are partners with the utility in ensuring a cleaner and more stable energy supply for their community — which both employees and consumers appreciate.

Overcoming Common Hurdles to Demand Response Program Adoption

Despite these benefits, commercial and industrial customers may be wary of demand response programs. After all, reducing power draw could be a significant interruption to business operations. It’s important for energy utility marketers to acknowledge these objections and clearly address customers’ concerns.

Make it easy to participate. The thought of interrupting business operations or reducing power draw at a busy commercial facility may be overwhelming. Help customers participate, and demonstrate how easy it is, with clear guidelines and processes for demand response events.

Share testimonials. Who knows the benefits of demand response programs better than current participants? Look for success stories among your customers and capture video testimonials to share with businesses that are considering the program. Spoken in their own words, such videos are authentic and relatable to other business customers.

Segment messages by new/returning customers. If you require past participants to sign up for your demand response program each year, it’s important to remind them of the benefits even though they may already understand the program. New prospects, on the other hand, will require a more detailed explanation and may need repeated outreach.

Segment messages by industry. Reducing power draw during a demand response event will affect a healthcare facility much differently than, say, a factory or warehouse. It’s important to address each industry’s specific concerns with a segmented communication strategy and offer relevant participation advice for each type of facility.

Examples of Effective Commercial Demand Response Promotions

Commercial demand response programs may seem complex or intimidating to potential participants. It’s not enough to simply market the benefits of these programs with a typical campaign. Demand response promotions need to include a healthy dose of education to fully explain how the program works, the benefits of participation, and advice about compliance, including industry-specific efficiency information.

Questline Digital produced a comprehensive campaign for a major IOU in the Midwest to promote its demand response program. The campaign was a success, exceeding the utility’s participation goals and reaching customers in multiple channels with a variety of content formats:

  • Website landing page with full program details and benefits
  • Video testimonials from current participants
  • Infographic with energy-saving advice
  • Email campaigns to past participants and prospective new participants, including behavioral follow-up messages to both audiences
Example of email promotion for commercial demand response program
Example of email promotion for commercial demand response program

Business customers have an important role to play in maintaining the reliability of the electric grid. In addition to financial benefits, demand response participants can be proud of partnering with their utility to ensure a cleaner and more stable energy supply for the entire community.

Learn how to promote the benefits of your demand response program with a digital engagement strategy from Questline Digital.

Just as AMI replaced analog electric meters, the old-fashioned flat-rate bill will soon give way to a more dynamic and variable way for residential customers to pay for their energy use. An increasing number of energy utilities are introducing time-of-use (TOU) rates.

But are customers ready for the change? Those of us in the utility industry have been thinking about AMI and TOU for so long now it’s easy to forget that this idea will be brand new (and probably quite unexpected) for most customers.

In fact, TOU options represent a major paradigm shift for consumers, not just in how they pay their bills but in how they think about their energy use.

To ensure the successful rollout of these rate programs, energy utilities will need to educate customers, explaining how time-of-use electricity rates work and demonstrating how customers can benefit from taking control of their energy use.

What Are Time-of-Use Rates?

Time-of-use rates (TOU rates) refer to energy metering plans that charge a utility customer based on when they use energy. Rates can vary according to the time of day, season and day (weekday, weekend or holiday). Energy utility companies charge more when electricity demand is higher to encourage customers to spread out energy consumption to off-peak times and promote a more efficient and sustainable electric grid.

Educating Residential Customers on TOU Rates

Getting customers on board with TOU rates may sound daunting, but it doesn’t have to be.

To encourage customer enrollment, the first step is awareness, then education and finally action. You can’t expect program enrollment without the first two steps.

Infographic showing how to promote enrollment in time-of-use rates for residential customers

A study from the Smart Energy Consumer Collaborative (SECC) found that fewer than 40% of customers are aware that any kind of alternative rate plan even exists and many people don’t fully understand how their electric bills work. Utility marketers have their work cut out for them.

Indeed, the SECC study found that nearly half of residential consumers do not know what type of electricity rate plan they currently have. Of those who are aware, nearly all of them said they have a flat-rate plan with static kWh pricing.

But there’s hope. The right content can help educate residential customers about TOU rates.

In fact, 70% of consumers say they prefer to learn about a product or service through content rather than an advertisement. So, promotional emails, ad buys and bill inserts won’t always do the trick, but content can.

Include educational articles, videos, calculators and infographics in emails, eNewsletters, social media and on your energy utility’s website. Provide an FAQ page and resources that help customers answer the question, “When is the best time to use electricity to save money?”

The same SECC survey showed that most customers are open to trying time-of-use rates, especially if they offered the potential to save money. These customers just need some help understanding their options. Use education to lead customers toward TOU rate programs.

Benefits & Messaging for Time-of-Use Rates

Your customers are now aware of TOU billing, and you’ve educated them on your different rate programs. How do you bring them toward action?

To reach customers more effectively, it is important for energy utilities to understand the unique needs of customers and communicate how new rate structures can benefit them specifically.

The advantages of TOU billing are obvious for energy providers: By charging higher rates when energy is more expensive, utilities can either recover the cost of peak generation or prompt customers to shift their use to off-peak hours. With fewer peaks to manage, renewable energy sources can be utilized more consistently, making the grid cleaner and more stable.

That all sounds great for utilities. However, a reliable energy supply isn’t really seen as a benefit by customers. It’s an expectation.

When a customer flips a switch, they expect the lights to go on; at the end of the month, they pay a bill. They don’t spend a lot of time thinking about all the steps in between or even how much it costs. Electricity just happens.

So, how do you get them to care? Researchers have found a few main factors are driving customer enrollment in TOU rate programs:

  • The opportunity to save money
  • Environmental impacts
  • Taking control of energy use

When it comes to savings, the incentive must be big enough. Mark Nabong, a senior attorney and transportation specialist at the Natural Resources Defense Council, explains, “Generally, the savings a customer gets from charging off-peak must be two to three times what they might save if they charged during peak hours.”

Customers are also more likely to enroll when they don’t have to pay extra fees for metering or green power premiums. Added fees erase the feeling of savings, even if the final cost is still lower.

Maybe your customers aren’t responding to your messages about supporting a clean and stable energy supply or the potential for savings. Instead, they may be intrigued with the idea of taking control of their energy use.

For the first time, residential customers will have the power to decide how much they pay for energy with TOU rates.

In the past, customers could save energy through behavioral changes or home improvements that reduced their overall consumption, but they paid the same for energy no matter when they used it. There was no benefit for, say, running the dishwasher overnight instead of during the day.

With TOU billing, customers can save money by simply shifting the same energy use to a different time of day — or benefit even more when their efficiency efforts reduce energy use during peak hours. Customers can control when and how they save, making a real impact on their bills.

Effective Program Promotions for TOU Rates

Alright, you’ve boosted awareness, educated customers and refined your message to talk about benefits. How do you handle program promotions?

Segment your TOU communications.

You could try to reach everyone at once, but we’ve found segmentation to be much more effective. Luckily, you can leverage research that shows who is more likely to enroll in TOU rate programs. Focus your attention on those groups instead of exhausting unlikely customers with mass marketing messages.

  1. Electric vehicle owners tend to be more willing to try alternative rate structures like TOU billing. Get in front of customers when they’re purchasing an EV or charger and are most engaged. Another idea is targeting customers who are known EV drivers with personalized messaging around TOU rates.
  2. Those who indicate they care about savings potential over absolute comfort are also more likely to enroll. When onboarding new customers, ask them to rate what’s more important. Those who are interested in savings will be more interested in the benefits of TOU. If you don’t have this level of data, look at demographics to determine lower-income groups who are likely to respond to savings opportunities.
  3. Customers who have taken zero action on their rate plan and remain enrolled in default programming are primed for TOU communications. They are likely unaware of the options that exist and need to be educated on what’s available. Send them a personalized message and boost awareness.
  4. Smart thermostat users and utility marketplace customers are also hot targets. SECC’s research found that nearly half (44%) of residential respondents indicated that they would be willing to participate in a time-based pricing program if automation technologies were deployed in their home to shift electricity use to off-peak times. Smart home technology can do just that. Customers can set their thermostats to save during peak hours and never think about it again. When a customer buys a smart home product from your utility marketplace, consider talking to them about TOU rates and how their new purchase plays a role.
  5. Customers already enrolled in energy efficiency (EE) programs are also more likely to be interested in TOU rates. They have shown actionable interest in reducing their bill and energy footprint. Targeting these individuals with a savings message is likely to increase conversions.

Try a TOU opt-out campaign.

More utilities are choosing to automatically enroll customers in TOU rate programs with the option to opt-out. Pilot programs have shown increased customer satisfaction scores, mostly due to savings. But keep in mind, opt-out campaigns require an extra level of communication and education.

Multi-channel marketing for TOU rates.

You can’t rely on just one marketing tool to reach program enrollment goals. You must reach customers where they are. During a webinar with SECC about TOU programs, Karen McCord, Marketing Specialist at SMUD, shared her TOU promotions and said her team found success with educating residential customers through:

  • Media relations
  • Digital and search display ads
  • Print ads
  • Billboard and bus ads
  • Social media
  • Mobile alerts
  • eNewsletters
  • Bill inserts
  • T.V. and radio
  • Door hangers
  • Web content
    • Videos with TOU tips
    • TOU cost estimator tool
    • Program landing page
    • Interactive energy-efficient home
Examples of content to educate customers about time-of-use rates

Show don’t just tell.

Shadow billing is a strategy that can help energy utilities show customers exactly how time-of-use rates would affect​ their monthly bill. With usage data from smart meters, utilities can look at a customer’s electricity use patterns and determine how they would fare on an alternative rate. Utilities can then show this information to customers on their monthly bill to encourage them to make the switch.

Education Will Boost Time-of-Use Rate Adoption

Time-of-use billing will revolutionize the way utilities distribute energy — and the way customers pay for it. By boosting awareness and educating customers on how TOU benefits match their unique motivations, energy utility marketers can boost the adoption and acceptance of new rate options.

Rachel Gold, Senior Manager of the utilities program at the American Council for an Energy-Efficient Economy, says it best: “Pairing automated technology with customer education on the value of off-peak electricity use will help customers understand why this is important while also allowing them to save money more easily.”

Educate your customers about time-of-use rate options with a digital engagement strategy from Questline Digital.

The advent of beneficial electrification has put natural gas suppliers on their heels. The electric utility industry is touting the trend of reduced CO2 emissions per MWh from electric power generation over the last decade. Plus, the electric industry is promoting the lack of site emissions from wind and solar power and raising questions over natural gas leaks in the pipeline infrastructure. How should suppliers respond to customer concerns about the environmental impact from natural gas consumption?

Carbon Impact: Source Emissions vs. Site Emissions

To begin the conversation about environmental impacts, the case first needs to be made based on a level playing field. This means comparing emissions from source energy, not site energy.

To supply an electron of electricity to our homes or businesses, a coal-fired power plant has to mine and burn coal, produce steam, turn a generator and then deliver the electricity over a relatively long distance through a transmission and distribution (T&D) infrastructure. Similarly, shale gas for a gas-fired turbine generator must be extracted from the ground by a drilling or fracking process, transported to the power plant, and combusted in the turbine to produce electricity. This electricity must also be delivered through T&D infrastructure to homes and businesses.

Carbon dioxide (CO2), a greenhouse gas, is often associated with global warming. According to the Environmental Protection Agency (EPA), only 30% of CO2 emissions in the U.S. came from the production of electric power in 2019 compared to 35% from transportation. But let’s compare electric power generation emissions from coal plants versus combined cycle natural gas-fired turbine generators (CCGT) on a source CO2 equivalent (CO2e) basis.

The CCGT generates electricity directly from the turbine and subsequently from the turbine exhaust, which is used to make steam that powers a steam turbine generator. To properly compare, we will need to account for upstream CO2 and methane emissions from mining, drilling and processing as well as natural gas leaks and emissions from the combustion processes. With that said, a recent study by Stanford University estimated that CO2e emissions from a coal plant are twice that of a CCGT gas-fired plant for the same output (g/kWh) over a 20-year lifecycle. Reduced CO2 emissions per MWh from overall electric power generation is primarily due to natural gas replacing coal.

In addition, coal-fired plants (19% of all sources, the same as renewables) emit much more nitrous oxides (NOx) compared to gas-fired plants and copious amounts of sulphur dioxide (SO2) and particulate matter (PM) as well. NOx is nearly 300 times more powerful than CO2 and 12 times more powerful than methane at trapping heat in the atmosphere. SO2 is a toxic irritant to our lungs and forms acid rain. PM also causes respiratory problems.

The same EPA data also shows that total methane (CH4) emissions from enteric fermentation (cow digestive systems) is greater than either natural gas systems or landfills. Although methane emissions have 25 times the effect on global warming as CO2, they represent only 10% of total source greenhouse emissions (CO2, methane, N2O, HFCs, PFCs and SF6), compared to 80% for CO2.

What Customers Should Know About Beneficial Gasification

Because natural gas is the cleanest-burning fossil fuel, it’s an ideal complement to solar and wind for power generation. As evidenced by the recent power crisis in Texas, low-cost gas-fired power generation is needed to compensate for the intermittent operation of renewables. In addition, both biogas derived from organic materials and renewable natural gas (RNG) are environmentally friendly renewable fuels used to generate electric power.

While renewable energy sources like solar and wind have no site emissions, they do have positive carbon intensity (CI) profiles over their lifecycles due to emissions during manufacturing. According to Stifel Equity Research, RNG using animal waste has a large negative CI lifecycle.

Clearly, the use of natural gas in its various forms can have important environmental benefits compared to the alternatives. Educating your energy utility’s customers about the relative impact of natural gas consumption on the environment compared to other fossil fuels and renewable energy can help them better understand the benefits of natural gas.

Educate customers about the benefits of natural gas with a digital engagement strategy from Questline Digital.

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.

Need to educate customers about new energy technologies? Learn how to build engagement and keep them informed with a monthly eNewsletter.