German energy storage company Sonnen wants to ensure that one thing the future residents of an apartment complex in Herriman, Utah, never experience is a blackout.
That’s not a given in Utah where 1.8 million people were affected by 346 power outages between 2010 and 2017, according to the Blackout Tracker 2018 from Eaton, a power management company. It’s part of what makes the Herriman complex, called Soleil Lofts, so attractive to Sonnen.
In Herriman, Sonnen sees an opportunity to prove that a virtual power plant (VPP) could solve major energy problems in the US. A VPP is made up of connected solar roofs and batteries so that renewable energy can power the entire complex if the grid loses power.
The first residents of the Soleil Lofts will move in this September, and the Wasatch Group, which is the company building the lofts, says the last building will be completed in 2020. Units in each of the 600 new rental apartments will be outfitted with Sonnen products to power the VPP.
When complete, the community will be the largest operating VPP formed by residential batteries in the US, according to Rocky Mountain Power, the regional utilities, the Wasatch Group, and Sonnen. The completed project will have a planned 12.6MWh of solar energy storage.
Sonnen, which was founded almost 10 years ago in rural Germany, is one of the world’s largest manufacturers of residential energy storage systems. Sonnen says it has installed over 40,000 batteries worldwide, mostly in Europe. The company, which was acquired by oil and gas giant Shell in March, pioneered VPPs in Germany and the UK. Now, Sonnen wants to conquer the US. It even has a production site in Atlanta to help with that task.
The US is “a relatively young market for our products, still in its infancy,” Sonnen CEO Christoph Ostermann tells The Verge. “But it’s also a very large market.” In any case, it is a market with energy problems.
It’s not just Utah where millions of people have experienced blackouts recently. In most other states, the situation is no better — or even worse. The energy infrastructure is aging all over the country. In California, energy company PG&E has been responsible for more than 1,500 fires since 2014, so it has announced and implemented rolling blackouts to avoid sparking more fires.
The National Infrastructure Advisory Council (NIAC) warns of unprecedented mega blackouts, triggered by severe earthquakes as well as physical or cyberattacks on the energy grid, that could cut off entire regions from electricity for months. On top of this, power generation is responsible for a third of all US carbon dioxide emissions.
Sonnen wants to help solve these problems, but its success depends on utilities, regulators, and consumers playing their part, experts say. This isn’t a given in the US, where President Donald Trump is withdrawing from the Paris climate accords, an international agreement that’s attempting to combat climate change.
“As one of the world’s largest producers of carbon dioxide, the US need solutions to promote renewable energies,” Ostermann says. “Politically, this may be controversial, but there are more and more consumers who recognize this.” Ostermann is convinced that his company’s technology can help relieve the strain on the outdated power grid in many states while protecting consumers from power outages at the same time.
It’s not that difficult to explain why solar systems with batteries might benefit the consumers who can afford them. “The hurricane or the cyberattack comes, the grid is gone, but you can continue to light and operate your house because you have a storage system and a solar system,” says Ostermann.
But the advantage for the entire grid isn’t as obvious. When utilities have planned how efficient the power plants and lines they build must be, they planned around the system’s peak, says Ryan Hledik, a principal at research consultancy Brattle Group who focuses on distributed energy technologies. The US power grid is built around the hours in the year when people use the most electricity. In most places, those are hot summer afternoons when everyone turns on the air conditioning. But that infrastructure is aging, and energy consumption is reaching record highs.
Perhaps surprisingly, renewable energy can add more stress to the already creaky grid. Without a battery to store the energy, solar energy goes directly to the grid whether it’s needed or not. The sun also shines, of course, when the grid doesn’t need much energy. That means that some solar farms are told to shut down to prevent clean electricity from clogging the grid. This, too, can lead to power outages.
This is why batteries and VPPs are part of Sonnen’s plan. Tesla also has a VPP program with Green Mountain Power in Vermont. (Tesla’s solar energy projects stem from the acquisition of SolarCity in 2016.) Solar battery installation is also on the rise in California where almost 10,000 home battery systems were in place last year, which is 25 times more than in 2016, according to BloombergNEF. BloombergNEF has predicted that battery installations will rise “exponentially” worldwide.
A VPP is easier for a utility to deal with than individual solar panels because a VPP operates as one asset rather than several individual homes. If too much energy is produced from the solar panels, it can simply be stored in residents’ batteries. And because the energy from the solar panels is stored locally, the utilities can draw from batteries during peak hours, Ostermann explains.
The software associated with the batteries can also alleviate strain on the grid. For instance, the batteries can be set so that devices such as electric vehicles or air conditioners do not necessarily draw power at peak times, but before or after them. “We shave off peak consumption and supply, if you will,” Ostermann says. Ultimately, that may mean saving utility companies money: they won’t have to build new power lines because the peaks of usage are less drastic.
This sounds like a convincing plan to Gerbrand Ceder, a professor of materials science and engineering at the University of California, Berkeley. “Personally, I thought this was always the model that Tesla with SolarCity was going at,” he tells The Verge. “But they just haven’t been particularly good in executing it.”
There are some hurdles to Sonnen’s plan, though. Specifically, it might not make money. Whether you can make money with a VPP has to do with regulations, Ceder says. Every state — even every utility — can draw up its own regulations, and a provider like Sonnen can’t avoid them if it wants to set up a VPP. “If the utility says, ‘No, the network belongs to us, and we are not up for your idea,’ then it won’t work,” says Ostermann.
There’s an even bigger economic hurdle: solar incentives. In many parts of the US, customers who add solar to the grid through solar panels can then consume just as much from the grid without paying a cent, says Hledik. Consumers, therefore, have no financial incentive to actually use the electricity they generate. They can feed superfluous clean power into the grid during the day and draw the same amount of conventional power out of it at night.
“The customer is basically using the grid as a virtual battery, and probably saving more money from the production of their solar facility than it’s really worth,” Hledik says. “That policy has prevented solar plus storage from becoming very common for residential customers in the US. They don’t need to consume the energy from the solar panel on site in order to avoid the full retail rate.”
Ostermann points out that regulators in some states are already moving away from the net metering policy. Hledik agrees this is a trend, so the economic incentives against having a battery may not continue.
In the meantime, Sonnen is pursuing a strategy that worked for its project in Utah: finding utilities, housing companies, and consumers that want to give the technology a try. The best candidates for Sonnen projects are ones who are interested in both the financial benefits and protecting the climate. Ceder believes that strategy may be successful for Sonnen, in part, because batteries are far less expensive than most customers think.
But it’s also true that the US has lots of regional and local grid operators — it is, after all, a very large market. “Sonnen could probably for the next ten years just pick off the environments in which it is easiest to operate,” Ceder says. That means the Soleil Lofts in Utah might be just the beginning.