If you are already big, you have to think bigger. That’s the mantra SolarEdge is hoping will secure it supremacy as a smart-thinking provider of energy-and-storage solutions, co-founder Lior Handelsman tells Jeremy Chunn.
Lior Handelsman, SolarEdge co-founder and vice-president of marketing and product strategy, is languid and friendly – the type of guy who remembers you from a quick chat two or three years in the past. Or at least he’s polite enough to make out that he does.
But the world of renewables is moving faster than ever, and a lot’s changed only in the past 12 months for the Isreal-based, Nasdaq-listed inverter giant. In October 2018 it bought a majority stake in Korea-based lithium-ion battery-maker Kokam. Only 10 months later, SolarEdge co-founder, CEO and chairman Guy Sella became yet another mid-fifties victim of cancer.
For the SolarEdge family, it was a year that contained the full spectrum of emotions.
The show must go on, however, and Handelsman is in Melbourne for All-Energy 2019, to explain the company’s strategy and join a panel discussion on system design as clean energy takes over the grid.
The Kokam purchase was a logical step, Handelsman explains, because although SolarEdge’s product offering included the StorEdge battery line it knew the storage market is destined to become far larger. Kokam offered utility-scale storage, and at the time had 232MW of systems deployed, “but more than that they are a lithium-ion cell manufacturer,” says Handelsman. “We are now integrating that capability of providing cells and storage systems into our business.”
Manufacturing in Korea is being expanded to a 2GWh-capacity factory, he says, as the company anticipates an industry-wide shift in focus to utility-scale storage to manage the transition of energy systems around the world from very large, steady-as-she-goes fossil-fuelled generators to a much larger population of relatively smaller but much cleaner wind and solar assets.
“Solar has gotten to a point, which we all dreamt of about 10 years ago, where it is literally part of the grid – and not a minor part of the grid,” he says. “For solar to be [accepted as] part of the grid, it needs to be less intermittent and more predictable, and storage plays a big part in that. Other things also play a bit part in that: communication, control, interfacing, virtual power planting – but also storage.”
In the residential solar market, batteries are an inclusion in PV systems among those whose investment may have been guided more by a faith in renewables rather than rational calculus. As costs continue to fall, or perhaps as the religion of clean energy draws in a wider patronage, Handelsman says in some markets in Europe storage is being included in about half of all new systems, whereas it was once one-in-10. Even managers of bigger commercial endeavours are biting the bullet; in the US, Handelsman estimates between 15% and 20% of commercial rooftop systems are sold with storage. “It gives you that extra layer of flexibility; the ability to shave off peaks, the ability to avoid demand charges.”
A lift in demand is causing some shortages in “good” lithium-ion products, he says. “The solar energy industry is a small part in that; the bigger part of course is the EV [electric vehicle] industry, which is consuming more and more cells.” Manufacturers are on a serious pursuit of building capacity.
When residential customers sit down to ponder the cost of a home battery they are introduced to the concept of “payback”, where the expensive new gizmo – something they have managed to live without – is expected to justify its existence by having paid for itself in as little time as possible. This is all based on estimates, of course. The sales pitch can become quite academic and a lot of people, installers included, will zone out. Storage is not the easiest thing in the world to understand, although there are numerous examples of its patent good value.
Around the world, Handelsman is seeing two trends in storage. First, some countries become so saturated in PV that there start to be limitations on new PV, “which forces installers to get really good at selling storage, because you either sell storage or you don’t sell [anything],” says Handlesman. In markets where this is happening, the estimated payback period for storage might still look lengthy, but storage brings other advantages in the meantime.
A second interesting dynamic in the storage market has shown itself in parts of Europe, he says, where batteries are being bought in places where it doesn’t make immediate economic sense. “I was really curious to find out why,” says Handelsman, who recounts a visit to a German customer who explained his decision to buy a battery as an antidote to the status quo. “He said to me, ‘When I buy a heating system for my home, I don’t think about payback. I buy it because it’s cold in the winter.’” But heating is a necessity in Germany, Handelsman countered, and a battery is not. To which the customer said: ‘It’s painful for me to be dependent on the utility; it’s painful for me to consume fossil-fuel energy.’
“That trend is growing,” he says. “People say, I don’t want to be dependent on the grid.” It’s even happening in parts of the United States with net metering, where there is no financial advantage at all in owning a battery. Another blaze in California in October attributed to strain on the grid will only convert more energy-users to this way of thinking, he suspects, not to mention more frequent and more extreme weather events.
Who can trust the grid?
Trust in the grid is eroding, and some people buy storage because they want to be ready for the next blackout. “In the last hurricane on the east coast [of the US], 90% of homes [that had lost connection to the grid] were reconnected after three weeks, and 100% were reconnected after three months,” he says.
There are more ways than one to unlock financial value in storage, with much hope riding on the aggregation of assets into virtual power plants that can tap revenue by providing services to the grid, such as non-wires alternatives, frequency regulation and deferral of infrastructure.
In homes, SolarEdge’s focus is controlling high energy loads with its hot water heating controller, and its smart inverter’s mastery of household heat pumps, EV chargers, pool pump, etc. “We will try to make the most out of solar energy and stored energy before we drive grid power into your hot water heater,” he says. Likewise, the system will anticipate an owner’s driving habits and charge the EV accordingly, but do so at the lowest cost.
It all fits with a world where everything runs on electricity generated from renewables, particularly from up high. “Solar is going to be the energy source for mankind,” he says.
It would help if Australian standards were more aligned with European and American equivalents, instead of having evolved into the complex and overly-sophisticated measures that are in place. “I think it would help the industry to look a little bit across the ocean and harmonise with some of the things that are done in other places,” Handelsman says. “It would accelerate the adoption of products here.”