A Peace Treaty: How Utilities Can Benefit From Residential Energy Storage


The war between solar homeowners and utility companies has been an ongoing, fierce fight. Homeowners with rooftop solar want to be compensated at retail rates for the energy they feed back into the grid. Meanwhile, utilities want to maintain lower rates and keep control over the centralized grid. Residential energy storage could help solve these issues.

Through a collaborative and cooperative effort, utilities and residential solar storage owners could build a stronger, more reliable distributed electrical grid. To move forward, it’s necessary to take advantage of new technology, open up communication and give up control. The technology is here, and costs are down, making a battery-based distributed grid more possible now than ever. With a distributed grid, everyone wins.

Using advanced tech and communication
The growth and advancement of technology, especially in the solar and energy storage sector, has been on an upswing in the last decade. The electrical grid infrastructure, however, remains largely unchanged. Systemic change on the utility side will inevitably be slow, but it’s time for utilities to catch up with the growth of energy technology. The companies that do this will be able to do their jobs better – namely, continue to reliably meet energy demand.

Solar photovoltaic installations are on the rise, and more and more solar homeowners are looking for a way to store the energy generated by their panels. As a result, the battery business is booming, with many big brands unable to meet the growing demand. This means that residential energy storage capacity, especially in locations like Southern California, is rising, even though that storage capacity isn’t owned by utilities.

But just because utilities don’t own it, that doesn’t mean they can’t or shouldn’t use it. Another area of major technological advancement is the progress of communication. It’s time for utilities to start using that, too.

In a world of lightning-fast information exchange, it’s surprising how little utilities and customers are communicating. There have been many compromises proposed to wage peace between solar homeowners and power companies, but there hasn’t been a lot of talk of the free-flowing information. Communication, itself, could be the compromise everyone is looking for.

Energy storage systems are sprouting up everywhere in the residential sector, but because it’s all behind the meter, utilities are not even aware of where and how much new storage capacity there is. On the other hand, solar homeowners are often unaware of the plight of the utilities – the fact that when demand is high, especially in specific areas, electric utilities struggle to keep up. When utilities look for solutions to the demand problem, they often turn to increased generation, through renewable sources or otherwise, or the shutdown of commercial customers. They don’t, and really can’t, take into account the available, ready-to-use resource that already exists in residential energy storage.

Utilities and solar homeowners need someone to facilitate a flow of information – a conversation about how to share information and resources in a way that everyone wins. But giving up information means giving up some control, the reigns of which utilities and customers alike hold in a tight fist. If both parties could loosen their grips, there might be space for a great partnership.

Giving up control
Electrical utilities have long preferred to hold all the cards. But having all the power, so to speak, isn’t necessarily the only way – or the best way – for utilities to get their jobs done. What is that job? To provide sustainable, uninterrupted electricity to customers. Nothing about this description necessitates that the utilities supply the demand themselves. A new approach, one in which utilities are willing to relinquish control, could yield a more sustainable, less interrupted, more reliable way to supply power.

We’re talking, again, about a distributed energy grid – one in which the storage and generation of power isn’t just a one-man show, but a cooperative effort between utilities and consumers. If residential energy storage owners are willing to let utilities know that they have storage capacity, and utilities are willing to use a resource that isn’t under their own thumbs, a new grid structure could be forged. In this new system, utilities could communicate with storage owners, letting them know – and maybe even letting them control – when to use stored energy instead of drawing from the grid, lowering demand during peak hours and easing the strain on the grid.

It would take a paradigm shift not only on the side of utilities, but also on the side of consumers, as well, many of which installed batteries to break free from the grid in the first place.

Joining up instead of breaking free
Breaking free from the vulnerability and unreliability of the power grid is what motivates many solar homeowners to store the energy generated by their solar panels for use in the nighttime hours when the sun isn’t shining. But if solar homeowners joined forces with utilities, they could help remedy the vulnerability and unreliability they are trying to escape.

One of the big problems customers have with the grid is an obvious one: The power goes out, and homes have little control over when it comes back on. This is an issue both utilities and customers both want to fix, but when acting independently, there are limited, less-effective solutions than if customers and utilities were willing to team up.

With a distributed grid, the centralized aspect of the power grid melts into a network of smaller storage and generation sites in various locations. This means that a malfunction resulting in the shutdown of a single site can easily be compensated by another nearby component of the overall system. Common sense dictates that various, distributed sites are less vulnerable than a few centralized plants, and with increased strength comes increased reliability. A distributed grid would give solar customers the reliable power source they’re looking for – more reliable, even, than just breaking free and managing their own energy (not to mention the slashed costs energy storage owners would still enjoy).

Solving an energy crisis
Many customers aren’t aware of the trouble utilities are in. Take the case of Aliso Canyon, Calif., for example: Homes across Southern California are at risk of rolling blackouts due to a shutdown of a massive natural gas storage plant in Aliso Canyon, and the darkness – and the lack of air conditioning – could take many by surprise.

The crisis here has to do with a shortage of natural gas, which is necessary for many electrical utilities to meet the electrical demand in the region. Instead of plants shutting down completely in times of high demand, utilities may consider intentionally shutting down power for a few hours at a time from one neighborhood to another in an attempt to lower demand to a level that plants can handle.

This situation reveals how easily electrical utilities can be thrown into crisis mode and how limited the options are to remedy it. Neither of these has to be the case. If utilities and solar+storage homes worked together to form a new, revitalized grid network, the shutdown of a natural gas plant like the one in Aliso Canyon could be compensated by an organized effort to shift the time-of-use of electrical customers in neighborhoods where demand was high. This could result in lowering the level of peak demand without rolling blackouts. The power stays on. The A.C. stays on. Everyone’s happy.

Though residential solar storage owners and utilities would have to give a little to restructure the system, a distributed power grid really is advantageous for everyone. When the utilities have the resources to meet electricity demand – along with a strong, reliable grid – solar homeowners no longer need to break ties and take their solar power into their own hands. Instead of utilities and customers fighting each other for power, a collaborative, cooperative effort could keep the power on.

Anna Gretz is the residential energy writer for Swell Energy, retailer of home batteries based out of Venice, Calif. She writes for the company’s blog, The Swell.

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