How Storage Can Enhance Your Solar ProjectBy Alan Russo, Chief Revenue Officer | May 26, 2020
A solar installation is a good first step in achieving many goals – whether it’s reducing dependence on fossil fuels, lowering energy costs or addressing concerns about grid reliability. But it takes more than simply installing panels to realize the full promise of solar. The addition of intelligent storage can dramatically improve the economics of a project, for both solar developers and their customers.
Solar providers that do not install storage technology as part of their projects leave meaningful value on the table and miss out on a competitive edge. By offering a more robust solar + storage solution, developers can differentiate their business offering and establish market leadership with innovative technology that addresses customers’ resilience needs and furthers sustainability goals.
Solar + storage investments are particularly attractive now because of two federal tax incentives: An investment tax credit (ITC) and Modified Accelerated Cost Recovery System (MACRS) depreciation deduction.
Battery systems charged by renewable energy 75% of the time annually qualify for the five-year MACRS schedule, which is equal to more than 20% reduction in capital costs. And, they are eligible for the ITC, which is currently 26% for systems charged by solar, but that declines to 10% by 2022 and stays at 10% from then on.
While these guidelines apply to storage systems installed concurrently with solar, the National Renewables Energy Laboratory (NREL) believes storage added to an existing renewable energy system would also be eligible, provided that the solar and energy storage are in close proximity and under common ownership.
The combination of all of these factors delivers real results. Based on real-world deployments by our partners, we find that developers can increase their revenue by 50% and improve gross profit by up to 2x with the addition of storage.
Energy storage customers can see sizable returns from solar + storage, too. But the opportunity can pass them by if their solar development partners struggle to articulate these benefits or help them optimize their entire solar + storage investment.
Let’s consider this from an enterprise customer’s perspective. Most companies today are watching every penny, particularly as we face a significant economic downturn from the coronavirus crisis. As the economy recovers, they may find themselves stuck with high fixed costs, such as rent (or mortgage) and labor. And even though energy is typically one of the three biggest operational expenses, most people do not realize it does not have to be a fixed cost. Energy is the one lever you can move, using a strategy that relies on both renewables and storage.
The energy savings solar generates are just the tip of the iceberg. Companies using Stem for storage have seen up to 20% savings by addressing peak demand charges and shifting loads. Plus, they have achieved savings of another 10% or more by contributing power to the grid through utility demand response, wholesale markets and other programs.
Despite these benefits, storage is not yet a natural part of every solar installation. The hesitancy may result from developers’ limited familiarity with how to sell and integrate battery technology into their solar projects. Sizing and modeling a storage system are much more complicated than a solar project, as the set up varies depending on each customer’s business goals. Consequently, integrated storage may become less of a priority when selling to commercial and industrial customers.
Solar developers need to jump in and get their feet wet by adding storage to solar installations. But where to start?
With Stem. We are freely sharing with the solar market the storage expertise and experience we have gained over the last decade . Through our recently announced Stem University, we are offering a best-in-class program for our partners to educate themselves on storage. Expanding over time, our curriculum currently addresses three key building blocks:
- Sales – This introduction to storage and the current state of the market also focuses on how Stem’s intelligent storage works, who are the best fits for the technology, and best practices for sales.
- Sales analytics – In this course, Stem provides an overview of sales analytics, including how to format interval and solar data, available energy storage incentives, and how to estimate savings for behind-the-meter solar + storage projects.
- Deployment – Get insights into engineering, procurement and construction aspects and the project lifecycle of the Stem solution. Stem provides EPCs with detailed documentation and resources about system and metering components, AC electrical design, permitting and interconnection, installation, commissioning and ongoing operations and maintenance.
When our partners complete these courses, and as they update their certifications annually, they will have confidence in their understanding of storage and how to deploy it. And they’ll be equipped with the resources needed to educate their customers about the value of solar + storage.
If you’re a developer interested in learning how you can incorporate Stem intelligent energy storage into your projects, visit our website for details about our Partner Program and how to sign up for Stem University courses.