Full grid defection – combining solar with storage and a small electrical generator – will make economic sense in a matter of years, not decades, for some customers in high-cost markets.
That’s the prediction of respected business consultancy firm McKinsey & Company.
In a report calling battery storage ‘the next disruptive technology in the power sector’, California-based consultants David Frankel and Amy Wagner point out: “Storage prices are dropping much faster than anyone expected, due to the growing market for consumer electronics and demand for electric vehicles (EVs). Major players in Asia, Europe, and the United States are all scaling up lithium-ion manufacturing to serve EV and other power applications. No surprise, then, that battery-pack costs are down to less than $230 per kilowatt-hour in 2016, compared with almost $1,000 per kilowatt-hour in 2010.”
McKinsey’s research has found that storage is already economical for many commercial customers to reduce their peak consumption levels, saying: “At today’s lower prices, storage is starting to play a broader role in energy markets, moving from niche uses such as grid balancing to broader ones such as replacing conventional power generators for reliability, providing power-quality services, and supporting renewables integration.”
The report goes on to say that partial grid defection – customers combining solar with storage – is already “an attractive opportunity” and it can see this market continuing to expand, eventually making full grid defection viable.
This defection could hit utilities in solar-friendly states in the US sooner than expected. “Many utility executives and industry experts thought the risk of load loss was overblown in the context of solar; the combination of solar plus storage, however, makes it much more difficult to defend against,” says the report.
The consultancy, which was set up in 1926, also warns: “Battery storage is entering a dynamic and uncertain period. There will be big winners and losers.”
But it concludes by saying there is “no doubt that storage’s time is coming”.