SolarCity Solving Two Major Pain Points for Business by Introducing Energy Storage

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SolarCity unveils a smart energy storage system to address two major pain points for businesses: rising utility demand charges and increasing grid outages. The system, SolarCity DemandLogic, allows companies to reduce energy costs by using stored electricity during “peak” periods, thereby reducing exposure to the high demand charges. The system can also provide backup power during grid outages. Developed with battery technology from Tesla, the system includes learning software that automates the discharge of stored energy to optimize utility charge savings for customers.

The utility grid is aging and outages are increasing. The United States experienced 679 major weather-related power outages between 2003 and 2012, including seven of the ten costliest storms in American history. At the same time, while overall electricity usage in the U.S. has increased only modestly since 2001 (approximately 10% according to the U.S. Energy Information Administration), utility revenues have increased more than 50% in the same time period.

Utilities have achieved this increase in part by creating “demand charges” for businesses that have increased their share of the utilities’ cost burden. Some utilities are basing rates less on the overall amount of electricity consumed and more on “peak demand” — the maximum amount of electricity used at a specific point in time. 

Solar power can significantly offset the overall amount of electricity used by businesses. However, if a company’s “peak” electricity demand is still high during the day — in the late afternoon, for example — the business can be hit with high demand charges. 

SolarCity (Nasdaq: SCTY) has unveiled a smart energy storage system to address these two major pain points for business: rising utility demand charges and increasing grid outages. The system, SolarCity DemandLogic, allows businesses to reduce energy costs by using stored electricity during “peak” periods, thereby reducing exposure to the high demand charges. The system can also provide backup power during grid outages. Developed with battery technology from Tesla, the system includes learning software that automates the discharge of stored energy to optimize utility charge savings for customers. 

Much like SolarCity’s solar installations, the storage systems are available with no upfront cost, and come with a 10-year service agreement including monthly payments. According to SolarCity, the company will customize the system size to make it possible for businesses to save money immediately by saving more on energy costs than they spend for the storage service. SolarCity will analyze each organization’s energy usage to design a storage system that can offset peak load and support high priority backup functions. Unlike load-shifting approaches to demand management, this product requires no change in operations for the business and is fully automated, the company said. 

“Utilities have altered their rate structures such that demand charges are rising faster than overall energy rates, and businesses are bearing the bulk of those increases,” said Peter Rive, SolarCity’s CTO and COO. “Time is money, but so are control and predictability. Our storage systems can give businesses the tools to address all three — delivering immediate savings, protection against escalating demand charges, and optional, grid-independent backup power in case of outages.”

“The economics and scale that Tesla has achieved in the automotive market now make stationary energy storage more cost effective and reliable than it has ever been in the past. We expect this market to grow very rapidly now that we have crossed this economic threshold,” Tesla CTO and co-founder JB Straubel added.

SolarCity storage systems will initially be available in areas of California serviced by PG&E and SCE, areas of Massachusetts serviced by NSTAR, and areas of Connecticut served by Connecticut Light & Power.

With this latest move, SolarCity is again at the forefront of solar development. The company has been in the news a lot lately. They completed the industry’s first securitization of distributed solar energy, a move that is expected to result in billions of dollars of new potential financing for the solar industry. Recently the company announced partnerships with car manufacturer BMW and two Texas homebuilders, and last week, the solar installer announced the opening of ten new operations centers in California, nearly doubling the company’s locations in the state.