Linking solar with energy storage and EV technologies

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From Growatt Special Edition 2020

Shifting tides of investment

Solar power has become a given element of the world’s energy systems. However, investment trends are constantly changing thanks to evolving technologies, lower costs, and new remuneration policy mechanisms supporting energy development. Such a dominant trend is exemplified by the phase out of old, stable remuneration schemes, which are being replaced by more dynamic mechanisms that not only value the output of electricity generation but also the management and operation of the energy technology.

Britain and Germany, for example, are two of the top four solar PV and EV markets in Europe. The United Kingdom ended all residential solar PV subsidies on March 31, 2019, replacing the old feed-in tariff (FiT) policy with the so-called smart export guarantee (SEG) scheme. Launched January 2020, the new market-led scheme requires that all electricity suppliers with at least 150,000 retail electricity customers to offer at least one SEG tariff to new residential PV systems. The government does not prescribe the tariff rate, type, or duration, but the purchase tariff must offer a rate per kWh of export above zero at all times, thus providing income for households’ surplus solar – differing from the past FiT system where generators were paid for all electricity they generated. The United Kingdom has approximately 3 GW of rooftop PV capacity installed for projects under 10 kW in size.

In Germany, 581 MW of solar capacity of projects up to 10 kW were added in 2019, while German market research institute EuPD Research recently surveyed more than 1,000 homeowners and found that 20% of them are actively making decisions to invest in solar PV. Survey participants said that they were motivated to invest in PV to reduce their electricity costs while contributing to the protection of the environment, but also to benefit from the state-guaranteed FiT.

Germany recently had a cap of 52 GW on the subsidy, which EuPD Research suggested would be reached by July 2020. Once the cap was hit, no new PV systems under 750 kW would be eligible for the subsidy. In May 2020, Germany’s government abolished the photovoltaic cap and the country’s residential and commercial PV sector is now waiting for the new measure to be implemented.

Other countries, such as Italy and Greece, replaced their FiT schemes many years ago with retail net metering (NEM) mechanisms that issue credits to electricity generators for the power they supply to the grid. Other countries, such as Portugal, have opted for self-consumption schemes that are similar to NEM policies but typically do not allow electricity credit transfers. Non-FiT mechanisms tend to reward residential solar generators based on market indicators, such as the electricity wholesale rate and retail prices in a given electricity market. In this expanding financial policy landscape, can solar PV systems develop in tandem with energy storage and EV technologies to enable the transition towards decarbonization?

Solar, storage and EVs: stronger together

“EVs, residential solar, and storage [can] absolutely go hand in hand,” Frank Gordon, head of policy at the UK’s Renewable Energy Association (REA) told pv magazine. As nations move away from fossil fuels and towards net-zero electricity systems, the energy structures we have come to know will have to change. We are moving away from the centralized form, revolving around a small number of power stations, towards a decentralized form with cities, towns, and houses acting as their own mini power stations. “EVs, residential solar and storage offer an efficient and cost-effective way of achieving this type of energy system,” argued REA’s Gordon.

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A recent report from the US-based Institute for Energy Economics and Financial Analysis (IEEFA) states that “strong mutual benefits make these technologies even more disruptive together than in isolation.” The IEEFA report, which focuses on Britain and Germany, argues that batteries and EVs can boost the economics of rooftop solar, by enabling households to use more of the solar power they generate, therefore increasing savings on their electricity bills. “These savings rise over time, as the cost of rooftop solar, batteries and EVs fall,” says the IEEFA.

In Australia too, households have seized the opportunity to cut relatively high electricity bills with solar PV. According to a separate IEEFA report, the country’s installed capacity was around 11 GW for distributed generation rooftop PV systems under 10 kW at the end of 2018. Government support for solar in Australia includes a solar FiT provided from retailers for energy exported to the grid and varies in price, both within and across territories in the country; and a capital expenditure rebate, which provides households with a rebate on a portion of the initial cost of a solar PV system. The IEFFA report projects that by as early as 2024, it will be cheaper for Australian households to invest in solar, storage, and an EV in combination, than in a solar system alone.

Regulatory and technological input

Calculating the payback period for either a PV-only system or a combination of PV, storage, and an EV depends on many factors. State support for either of these technologies is one of these factors, with the structure of the electricity market and grid charges certainly being crucial factors. But there have been setbacks.

The IEEFA calls for regulators to reform grid services and markets in a way that puts solar, storage, and EV technologies on a level playing field with conventional power generation. Smarter domestic tariffs that reward consumers for using off-peak power can further drive demand for all three technologies, as will smarter EV chargers that support grid stability. But the question that emerges is whether retailers will introduce such tariffs and services alone, or if they will need to be pushed by governments.

Apart from regulatory issues, another emerging question is whether the choice of hardware plays an increased role in the new era of dwindling public subsidies. The choice of inverters, says Ray Cheng, overseas marketing head at Growatt – is critical. “Our inverters and related GroHome smart management system have integrated the solar power system with storage, smart EV chargers, water heaters, and IoT devices to increase a household’s rate of PV self-consumption,” says Cheng. “Through smart energy management strategies, reducing the household’s overall energy consumption, it is now possible to achieve 100% green energy to power your home.”

The industry agrees that with lowered costs and dwindling state incentives for solar PV, energy digitization is paving the way forward. With the emergence of community microgrids and virtual power plants (VPPs) – the aggregation of assets such as solar PV, energy storage, and EVs on a cloud-based distributed power plant – combined with new technological megatrends such as 5G, IoT, and AI – will be the medium for the future energy transformation.

 

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