Commercial segment set to lead solar storage market by 2017

18. September 2013 | Global PV markets, Markets & Trends, Industry & Suppliers | By:  Edgar Meza

While the commercial sector currently makes up the smallest part of the global solar energy storage business, it is projected to expand by a factor of 700 in the next four years and dominate the market in 2017.

IHS storage graph 9.13

North America is expected to lead the world in commercial PV storage with more than 40% of installations in 2017.

Global installations of PV storage systems for commercial use are set to rise to 2.3 GW in 2017, up from a mere 3.2 MW in 2012, according to a new report by market research group IHS entitled The Role of Energy Storage in the PV Industry.

As a result, the commercial segment’s share of PV installations will rise to 40% in 2017, up from 5% in 2012.

"Just last year, commercial was the smallest market for PV storage systems, far behind the residential and utility-scale segments,” said Abigail Ward, PV analyst at IHS. "However, facing rising energy prices and the growing need for backup power supplies, commercial enterprises are turning to PV storage solutions that work in concert with their solar-power systems. This will allow commercial to surge past residential and utility to become the largest market for PV storage in just four years."

The commercial solar market consists of PV systems installed in businesses, including factories, offices and other enterprises.

Electricity rates drive demand

Intelligently managing the use of PV energy to reduce electricity costs is the major reason commercial enterprises are installing energy storage solution, the report found.

"Utilities increasingly are imposing both peak demand charges and time-of-use fees on their commercial customers," Ward noted. "These costs can be minimized by using a PV energy storage solution."

An energy storage solution can be used to shift PV energy from when it is generated for on-site use during periods when these charges apply.
"As a result, the amount of energy imported from the electricity grid during these times is reduced, and customers can attain huge savings on their electricity bills," Ward observed. "These demand charges are being introduced to relieve pressure on limited electricity grids during times of high energy demand."

The backup plan

PV energy storage in commercial applications can also provide back-up power in regions where there are weak and unreliable grids. "Electrical blackouts can have a tremendous impact on commercial operations, and often can result in significant financial losses," IHS said. "Rather than exporting PV energy to the electricity grid when generation exceeds on-site demand, the energy can be stored to be consumed during times when the electricity grid has failed, avoiding any disruptions."

North America to take lead

North America is expected to lead the world in commercial PV storage, accounting for more than 40% of installations in 2017.

Storage is also being encouraged by the California Self-Generation Incentive Program (SGIP), which provides a financial subsidy against upfront costs of an advanced energy storage system. Installations will likewise be boosted by California Energy Storage Bill AB 2514, which includes targets for investor-owned utilities to procure by 2020 a given amount of energy storage in its electricity network, including individual targets for the customer markets.

Japan, where electrical blackouts have been common since the Fukushima nuclear disaster, is another lucrative region for commercial PV energy storage. Also on a fast growth track is Germany, where self-consumption of PV energy is becoming increasingly financially attractive.

Supply-side constraints

IHS notes that the size of the commercial PV energy storage segment is currently limited by the small number of suppliers and products serving the segment.

"At present, many of the suppliers active in the PV storage business are targeting the residential PV market, where systems are largely being installed to increase the on-site self-consumption of a PV system owner," Ward said.

"However, installations in the commercial PV sector potentially can reach the point of payback much more quickly than those in the residential area. This will encourage many PV storage suppliers to enter the business in the coming years."


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