Residential storage used smartly or connected in virtual power plants can unlock value in existing solar PV, says sonnen Australia managing director Nathan Dunn, but don’t expect any major price drops.

Many solar installers struggle to come up with much of a sales pitch for battery storage when they have enough on their plate getting PV arrays up and running for customers. But sonnen Australia managing director Nathan Dunn tells EcoGeneration it’s all about understanding the deeper value in the technology and the value of “intangible returns”.

Solar installers are so busy on rooftops they hardly have time to explain to customers the value in batteries. Besides, many installers consider them expensive. What do you have to say to them?

Firstly, what you have to consider is that solar retail companies have built their business models on selling and installing rooftop solar panels. Storage takes a completely different sales and communication method because the benefits can be slightly harder to explain. The payback period for storage is often misunderstood by solar installers when compared with PV panels, so the return on investment in storage is quite often poorly communicated and this has hindered sales of storage.

Many solar retailers sell PV and they will sell storage only if a customer asks for it. They tend not to typically go out selling storage unless they see this as an additional source of revenue or benefit. For example, they might be a virtual power plant operator or aggregator. You also have to consider the fact that there are around six times as many Clean Energy Council-accredited solar installers as there are CEC-endorsed grid-connect storage installers. This means every battery installer can install PV but not every PV installer can install batteries.

Nathan Dunn says EVs will complement residential storage, not act as a substitute for it.

Is there a perception about residential storage in the clean energy sector that you’d love to change?

There are a number that need to be changed. I’d like to start with the perception that the return on investment for storage isn’t there yet. This may be true for some storage products but systems with features such as a good backup and the ability to operate in a VPP can offer both financial returns and intangible returns. These intangible returns come from the peace of mind to a consumer knowing that if they are away and the grid goes down, they won’t come back to a defrosted freezer or they can still charge their phones if they are home. This sort of benefit cannot be priced as it is far more emotive.

Secondly, there is a perception that the price of storage is going to reduce dramatically. This is not entirely true. The assumption comes from the comparison with the PV panel industry and the difference is that price reduction would lead to cost reduction of storage due to volume of the power electronics. Given that most of the power electronics in storage systems are the same as what you would find in a PV inverter, the price will not decline as it is already benefiting from the previous decline. We can expect the price for storage to reduce moderately over the next few years but this will not be a sudden drop.

Batteries require a lot of components and there is still have a very high production cost when compared with PV panels and inverters. We will need an increase of the volume of production for storage by a significant magnitude when compared to PV panels for us to see similar cost reductions.

What’s the best application of battery storage you’ve seen in residential?

The intelligent clustering of multiple storage systems together across different households to create a community that can share clean energy and sell back to the grid as part of the VPP is how we can best apply battery storage in a residential setting. But for this to happen at scale we need manufacturers who are developing smart storage systems or who are investing in software to enable energy trading.

Right now, we have a market that is either focused on storage for self-consumption or enrolling a storage system to a VPP. Building on the concept of clustering systems, we can incentivise households for demand response programs and increase the adoption of batteries.

What’s your take on electric vehicles: threat or opportunity?

Some people assume EVs will reduce or remove the need for residential storage – but this isn’t true. Residential storage is critical to store excess PV generated during the day. If the home owner has taken the car to work, the generation goes back to the grid or gets curtailed. When an EV returns home to charge, its storage can help to reduce the high demand on the grid and act as a smoothing component that will support the overall system.

Vehicle-to-grid technologies may also become a reality which can contribute to VPPs and they can all work together if its design and regulation are harmonised. After all, which household would like to wake up to having an EV with a low charge in the morning as its battery has been discharged for their home usage at night?