Residential energy storage—what has been learned, where is it going?
Written By: Stratton Report
December 14, 2016
An interview with Neil Maguire of Adara Power
Residential energy storage is an emerging technology in today’s power industry, and when Stratton Report was at the CalCharge 2016 Bay Area Battery Summit, we were delighted to have met with one of the leaders in that space , Neil Maguire, CEO of Adara Power (formerly JuiceBox Energy). Adara Power is a three-year-old Silicon Valley based company offering a portfolio of products and services, including the firm’s iC3 platform, its site controller, a commercial energy storage system, and a residential energy storage system 2.0. Its systems have been installed in eight U.S. states, including California, Nevada, New York, Maine, Hawaii, Utah, Indiana and North Carolina, and last spring achieved a milestone of 5 MWh peak-shifted by its network of distributed residential energy storage systems. Mr. Maguire was kind enough to fill us in on his view of the residential energy storage space.
Stratton Report: Can you tell us the history of Adara Power and about the residential energy storage products you offer?
Neil Maguire: Adara Power was formerly known as JuiceBox Energy. We started the company in 2013. At the time, I was involved with semiconductors for battery management systems. I saw the large amount of electric vehicle capacity being built around the world, and I knew battery prices would be coming down. I saw that the price of the electronics to safely manage the batteries would be coming down as well. At the same time, I noticed that acceptance of lithium-ion batteries was going up. Adding all that up, we felt that energy storage was going to be a big market and we decided to start the company. Our first product is a residential energy storage system, an intelligent and connected battery system. It comes with 8 to 16 kilowatt-hours of energy capacity, and 5 to 7 kilowatts of power. It’s packaged in an outdoor-rated aluminum enclosure and is designed to be put in a garage or on the side of a house. The battery is coupled to a Schneider XW+ inverter. It’s easy to install because it’s a modular type design. And there’s no maintenance to these batteries after you put them in.
SR: How does the capacity of the battery compare to the load of a standard house?
NM: A standard, 2400 square foot house will usually consume about 30 kilowatt-hours of energy a day. If you put in one of our systems at eight kilowatt-hours, or a dual one at sixteen kilowatt-hours, you obviously can’t supply the load for the whole home for the whole day. Our system is really designed to be put in with solar. With 5 kilowatts of solar on the roof, a typical house might get five full time equivalent hours of sunlight, so that’s 25 kilowatt-hours of sunlight. So, the house with its solar is producing about as much energy as the inhabitants will consume throughout the day, but it is producing too much of that energy at the wrong time of day. However, we can make everything work out nicely if half of the energy produced is stored in the battery and used in the evening and throughout the night.
SR: What are the critical elements of the design of a residential energy storage product?
NM: The number one item is safety. Back when I was working with electric vehicles, I looked a lot at the different faults and hazards that could occur in energy storage systems, and I saw how many layers of redundancy need to be designed into one. Ideally, you want to prevent safety problems from happening at all, but if one does occur, you need to know how to handle that fault and make sure that there’s no possible way that the battery can get overcharged, which is the main concern. So, we built in four layers of over-voltage protection in our system. In addition to safety, we feel there are a number of significant aspects that are necessary in a successful product. In the automotive industry, we used to call them the “-ilities”: reliability, upgradeability, serviceability and installability. We designed our product so it can be easily installed, easily serviced, and upgraded in the future.
SR: How did you manage that?
NM: To give you one example, we custom-designed our battery modules and we designed the wire harnesses to plug them in. There are four battery modules in the standard product. If any one of them goes bad, you can pull that out and still run the system on the other three. And the act of taking it out and putting another system in takes about fifteen minutes: you take off four screws, unplug the wire harness, put a replacement in and plug it back in, and then you press a button to reconfigure the system. So, our system is designed to make it easy to service.
SR: How about the ability to easily install and upgrade the system?
NM: Our control software is designed to make our products easy to install and upgrade. In fact, the majority of our development work has been in the software and the controls for our energy storage systems. A big problem in installing an energy storage system is that programming a battery-based inverter is very complicated. In our case, there are over a hundred and forty different parameters that are used to set different system thresholds and operating modes. Now there are specialists that understand all the hundred and forty parameters and how to program them. But our product is targeted at the mass solar market, the two guys in a van that, you know, may have been roofers three months ago and now are solar installers. And, they don’t know what all these system parameters are. We’ve programmed our system so that when installers are finished with the physical assembly, they just really need to press a button and that starts the system, which starts the computer up, which programs the inverter the way it should be set. In terms of making our systems easy to upgrade, each of our units has a cell modem and it’s constantly pushing data back up into a cloud repository and getting instructions back down. Via the modem, we can make updates to our systems and tune them, without a solar installer being involved at all.
SR: Can you walk us through the various benefits of residential energy storage? Which benefits have been most important to your customers?
NM: One benefit from a financial standpoint would be peak shifting; that’s where a customer is taking excess solar power generated in the middle of the day, storing it, and then using it in the evening. In the past, solar has mostly been deployed on a net energy metering rate basis, where a homeowner simply fed excess power into the grid during the day, earned the full retail rate, and then drew from grid power at that same rate in the evening, paying for it with the credit they had earned during the day. But now, some utilities are getting away from net energy metering and moving to time of use rates. For example, in Las Vegas, customers will only get some five cents per kilowatt-hour for the energy they put back out into the grid during the day, but they will get charged thirty-six cents in the evening for energy they pull off the grid. So, that’s a thirty-one cent differential for every kilowatt-hour a customer can store during the day and use at night. From a financial return standpoint, for people under time-of-use rates, using energy storage for peak shifting is a powerful benefit. A second case is that in some localities, for example in Hawaii, the local utilities have so much excess solar coming onto their grid that their system can’t handle it, so they don’t allow people installing new solar to export any power to the grid. If people live in those areas, and they have excess power during the day, they must store it in a battery for later use. So, people can’t even put in solar now without batteries in some places. But I would say that for our customers, the strongest benefit has been that batteries give homeowners backup power when the grid goes down—there are quite a few people who are willing to pay for the resiliency that a battery system adds to their homes. For people without energy storage, if they suffer a power outage, even their solar system goes down. It might be a sunny day, but the homeowner can’t use any of that energy. And so our customers are often creating the ability to “island” their own energy load with the battery system, choosing which energy loads at their home to continue to power from their battery if the grid goes down. Those customers like being the one person in the neighborhood that can maintain their lifestyle. Sometimes grid outages are brief, but on occasion they can be quite serious—for example, if a big earthquake hits California, or with Hurricane Sandy in New Jersey and New York, people like to know that they can continue to function.
SR: Do any of your customers finance purchases of storage products, and if so, what options are available?
NM: Some of our customers are financing the cost of energy storage systems through standard solar financing packages. Others are using PACE financing, because energy storage is considered an energy efficiency upgrade for the home. We don’t support power purchase agreements for solar systems that involve energy storage, because we feel that those are bad deals for customers at the end of the day. But we’re fine with incorporating batteries in a standard financing for solar–in a lease type financing, in a purchase financing or in a PACE financing.
SR: Can you share your observations on how the residential energy storage industry has developed so far?
NM: It was always possible in theory to combine batteries with residential solar. But the few people who did that had to use big and rather nasty lead acid batteries that require a lot of maintenance. And so the solar industry largely took off without batteries. However, battery technology has advanced with lithium-ion technology, and the cost of batteries has dropped as large amounts of battery manufacturing capacity has been built to service the EV markets. I’d say there are probably ten giga-factories around the world currently making these batteries. And that created the opportunity for homeowners to start using batteries with solar. I give Elon Musk and Tesla credit for bringing the mass consumer into the loop in a much more substantial way with the announcements of Tesla’s Powerwall. It’s really opened the door for the likes of Adara and Sonnen who had their technology ready for market, more so than Tesla, and who have now been delivering products for the last couple of years.
SR: Are there regions that are more promising markets for residential energy storage?
NM: Right now Hawaii is a very interesting market. They have a solar plus storage program there that they call customer self-supply. Under that program the storage provider has to be on a pre-approved list, and Adara is one of the companies on that list. Hawaii is a good market for us. We also like the California market because it has fifty percent of the country’s installed solar, and is less budget sensitive. Compared with the total cost of owning a home in California, the price of a battery system is pretty manageable. And I think there’s a willingness to look at a residential energy storage system as a premium appliance in California, giving homeowners the luxury of having backup power.
SR: Are International markets growing?
NM: One of our guys is in the Philippines right now. Island nations are a very good market for energy storage. They don’t have local gas and oil supplies so the electricity that they generate is very expensive. And in many of them their power quality is flaky, the grid goes down quite often. So that is really an ideal market, because customers have a very strong business case and will get an excellent return on their investment with an energy storage system, particularly one paired with solar power.
We had a webinar just a few weeks ago and people from thirteen different countries signed up for the webinar. While we were originally focused on making sure our products were functional here in our backyard, now we’re at the point where we put a system together, we ship it across the country or, or to the Caribbean, and no engineer needs to follow it, because it’s easy for people on the spot to install and configure it. We’re right at the stage now to start enabling mass adoption.
SR: I’ve read about residential energy storage systems selling like hotcakes in Australia. Are you interested in that market, or in the German market?
NM: Germany was of course very early to the solar game. Because they had a generous feed-in tariff that paid a fixed rate for solar power in any quantity. At one point, homeowners could put in a solar system five times larger than what their house required, and they’d get paid for the power like they were a generating plant selling into the wholesale market. The same thing occurred in Australia. Both countries got a lot of solar installed. But now as the German and Australian utilities are pushing back, their solar model has shifted more to self-consumption. In Australia, the feed-in tariff is ending right at the New Year, just a few weeks away. Everybody with solar systems that used to sell power to the grid and then take it off the grid at night is looking to install batteries to store that excess solar energy during the day and use it throughout the evening. So those markets are a very good for us. We’re bidding on some large developments in Australia right now as opposed to individual homes. We’re looking at putting in some neighborhood-sized systems in. We like the Australian market, although as with any international market there’s a cost of setting up in business there and so we have to be confident that it represents a real opportunity for us.
SR: How do you see residential energy storage interacting with the trend toward smart homes? And how does it work with homebuilders who are trying to differentiate their new developments by emphasizing environmental friendliness and lower utility costs?
NM: Most people who buy a smart home or install a smart home network, are making investments to connect devices in the house and to optimize their overall lifestyle, being able to program devices or turn them on and off remotely. Which fits our energy storage systems to a “T,” given the control system and the cell modem that come with our units. We have set up application programming interfaces that we’ve written which enables customers at the cloud level to talk to and control their storage system, and put it into a charge or discharge mode. We’ve worked with a third party to test a handheld smart home application, and it works great. We look on our energy storage units as one of the nodes in the smart home. In fact, because of the amount of power and energy that our system has versus, say, a compressor or a washing machine, we’re really the biggest and baddest node in the smart home. And you can’t overlook the fact that once the power goes down, a smart home becomes a dumb home very quickly without a battery system in it. So, we look at these new “green” residential real estate developments, and we see a great opportunity there. If a homebuilder is putting in a one hundred home development, and they’re getting the houses ready for solar on the roof, they can install energy storage very efficiently. We like that type of customer, because it’s the same crew that’s really doing a cookie cutter type installation process. Additionally, when there’s a fleet of our products in a real estate development, the developer can use our fleet management software tool to see all of the homes in the neighborhood, and then we can send commands to those homes in the neighborhood to put them into a charge or discharge. And in the future, as virtual power plants and aggregation business models become financially viable, we are in a great position to support those as well.
SR: What is the general consciousness developing among customers, providers, utilities?
NM: The areas that are currently hot beds of solar activity in the United States will probably also lead in residential solar plus storage market penetration as well. I believe that we’ll see an exception to that trend chiefly in areas that repeatedly lose power for sustained periods of time. In those places, there’s much greater appreciation for battery systems that can supply resiliency. Looking at solar providers and solar installers, I’d say that three years ago, energy storage was viewed as a novelty product; two years ago, at some of the big solar conferences we saw people taking first steps. Today, I’d say that everyone in the residential solar industry has come to the conclusion that they need to have an energy storage solution. All of these small and large regional installers around the country compete against SolarCity which is now part of Tesla. The Powerwall is really only going to be available through SolarCity. And so, all of the other installers are going to need to find a solution. And, you know, it’s our job to help them, get educated on energy storage, to help them build out web and social media content on energy storage and to help make their first experience a success. Finally, you do see some utilities that are looking at residential behind-the-meter storage. Some because they’re public utility commission has mandated it and some are just more progressive, seeing it as a tool that they can use to help balance the grid.