Saturday, November 15, 2014

Inside the Enphase storage play - The coming "AC Battery" Storage System

So Enphase is moving into storage. Why storage and why now?

I think a big part of it is if you go back to our beginnings, we are not Enphase solar, we are not Enphase microinverter, we are Enphase energy. And so the overall vision was always to participate in a broader energy ecosystem. If you think about storage it's becoming more of an extension of what solar needs, it's not a "are we entering into storage?" it's more of a natural extension of where solar needs to go.
In Hawaii, parts of Europe, Queensland in Australia you are getting to the point where you need storage to be coupled with a solar solution, to actually start getting solar to the point of higher penetration.

So it was a natural extension. We thought it was the right time, where it is still early in the industry days, but when we think there are use cases in all the areas like I talked about. But I think this is now when storage is starting to get more-and-more traction with our solution, where you get price competitive, you get a more modular solution, where people can put a few [AC storage units together] and then expand out.

I think now it truly starts getting into the beginning of the market truly taking off. Why storage? It is a natural extension of what we were doing with energy management and I think it's the right time when the market, in a year or two really takes off.

What is the significance of having the Enphase 5th generation S-Series microinverter actually in the battery unit?

The way of thinking about this is if you see solutions out there on the market, there are big massive power conversion systems and you are trying to combine that with massive battery systems and our whole way of thinking was, how can we make this modular and simple, the way we did with solar? It sounds like a catch phrase, but it truly was, "can we do for storage what we did for solar?"

The true breakthrough was this bi-directional microinverter, that's what makes this possible. With that now you have the possibility of connecting that to a very modular, scalable small pack. It's about a 1 kWh to1.2 kWh solution. And you combine that and now you have a complete solution with which people can just plug and play.

You can now size for different needs. Let's say you buy an EV, and you want to charge it later on with cheap solar that you have stored during the day, it's not easy to expand a storage system today. That's where combining those two technologies and making a fully scalable modular box is the exciting part for me.

So modularity is key, but doesn't it add to the cost?

Storage is still new, there are early adopters who irrespective of the cost will put storage in because they think it is the right thing to do. But I think if storage is going to move into the mainstream it's important for people to get something that they can afford on an entry level and try it out.

Modularity is a big part of the value proposition and a big part of the thinking behind making this modular is that our existing installers can go and sell one or two of these, get the customer comfortable with it, demonstrate the benefit and then without any system changes go in and put four more. You just get four units, mount them, connect them in and then you now have six instead of two. And so I think that was giving the customer the flexibility that doesn't exist in the market today, I think that is a big part of the value proposition that we wanted to bring to the market.

The AC battery looks very much like a residential product, is this indicating that residential really is the sweet spot for Enphase?

I don't think so at all. It definitely is an area we know really well and we do really well in. But our new C250 Microinverter System, that pushes us further into the commercial side. Just the same way that we have shown microinverters are scalable with large commercial and we are even in conversations about doing utility scale, the same thinking applies to the AC battery solution.

We can rack them up in a big telecom rack and we are starting to speak with customers of commercial solutions that are 8kWh or 10kWh that you can mount on feeders and serve different parts of the commercial segment.

So yes, we are starting with residential, but given the interest that we have seen we expect commercial to follow very closely behind that.

There is a lot of hype here at SPI about storage technologies and the effect it will have on the PV industry. Do you honestly believe that it will have a major impact?

I think it will. I think there is a factor of timing, maybe that will be two years from now or four years from now, that is the crystal ball question everyone is asking. But I think it has to be. We've seen places like Hawaii, Queensland, Germany, where people simply connect solar to the grid and in a high penetration area it does create a lot of issues for grid stability.

As the industry matures and it continues to integrate with the solar industry, I think it just makes a lot of sense for managing intermittency, providing some peak shifting, I think in a lot of cases it will soon get to a point where to have a high penetration of solar, you are going to need to have some level of storage. It's not an if, it's more a question of when that that will become a reality.

What sort payback period are you talking about with the AC battery?

I think battery storage makes more sense in some areas than in others, that is the overall story with storage. We hope that making it an overall, modular product makes it easier from a price perspective and installation perspective.

The areas where the AC battery makes sense are the ones I keep repeating, Hawaii, Queensland, etc. But I think that as net metering keeps going away, where FITs keep going away, then it starts becoming a bigger financial case. The other part that is exciting is that we are talking to utilities about using our batteries not just for demand response but now the same new microinverter have on the rooftop, it actually provides reactive power. That becomes interesting because the utility can give the homeowner an incentive to provide them with grid stability, rather than paying big rate-based systems that they actually need to buy and put on the feeder.

Like peaking gas plants and the like?

Exactly. So I think that is where the financials will get to a breakthrough phase when the utilities begin to participate to the whole equation. It might be behind the meter, but the utilities can benefit from it and actually give some of the economics back to the homeowner. That's where storage really takes off.

How are you planning to roll out the AC battery?

We are beta testing it next year, in the U.S., Europe and Australia. Then the full launch will be in all of those places, one after the other. We are trying to go global on this really fast. That's because the use cases for the AC battery are not only in the U.S., it is in California, Hawaii, maybe the north east. So to capture the whole market you have to go to different places.

The beauty of that is that our microinverters are used everywhwere today, and so we understand those markets, the technical requirements etc. and so it's the exact same requirements that we are putting inside. Yes there are some regulatory differences with storage between markets, but they are not new markets for us, so we are prepared to enter all of those pretty quickly.

The AC battery has a storage capacity of 1.2 kWh with an estimated lifetime of 10 years. Enphase plans to begin rolling it out in the second half of 2015.

Source: PV Magazine , Text originally posted by Jonathan Gifford @jonogifford 

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