Sonnen launched a discussion last year about using energy storage devices in new homes as virtual power plants, but the real break through is likely to come later this year when the German energy storage company announces a similar deal but one that includes a utility contract.
Sonnen is still working out the details, but expects to make an announcement by year end, Blake Richetta, U.S. senior vice president at Sonnen, told Utility Dive.
Last year, Sonnen teamed up with Mandalay Homes to build 2,900 homes in Prescott Valley, Ariz., and equip each with a Sonnen battery that can be used to provide power during evening peak demand periods.
Storage city: One year out
In the original announcement of its partnership with Mandalay Homes, Sonnen anticipated starting construction and moving in the first residents within the second and third quarter of 2018. However, it could take a while for Jasper to reach critical mass. The project calls for 200 to 300 houses to be built per year and Sonnen estimates it will deploy the homes over the next 15 years.
When the Jasper project is completed, it will have 11.6 MW and nearly 23 MWh of energy storage. Each home will be equipped with 3.9 kW of solar panels and an 8 kWh Sonnen battery with the ability to upgrade to an 8 kW / 16 kWh system.
Sonnen deployed approximately 12 systems already and homeowners are moving into these homes now, Sonnen said. 20 more homes are scheduled for deployment by the end of the year.
The homes will also be able to communicate with each other to form a "hive" that Sonnen calls a sonnenCommunity. The hive can act as an intelligent network of clean energy storage systems forming a virtual power plant that can interact with the electric grid to flatten the load curve of the community and minimize stress on the grid as well as the community's carbon footprint.
"If our value for energy storage is ever going to be realized, it is going to come on the utility side."
U.S. senior vice president, Blake Richetta
The storage layer-cake
There are four layers of residential energy storage, Richetta says: backup power, daily cycling to shift solar power into the evening, dynamic dispatch that can use storage as a demand response resource, and "clustering" the hive so that aggregated storage devices can provide power and act as a peaking plant.
In the United States, residential energy storage is still in its "very, very early stages," Richetta says. Most residential storage systems operate at the first or second level. Even Mandalay is still in that second layer, he said.
In Arizona, Sonnen's batteries will be used to "solar shift," storing solar power during the middle of the day and discharging it during the evening. They will also relieve stress on the grid by soaking up energy in the middle of the night, from 2 a.m. to 5 a.m., and then again in mid-morning to early afternoon, 10 a.m. to 2 p.m.
"We're doing as much as we can at this point to help their project become a reality."
Spokesperson, Arizona Public Service
That load shifting function works because Arizona Public Service (APS) designed a specific rate plan to address its own version of the duck curve.
The "super soak" solar plan is designed to sop up excess solar power between 10 a.m. and 3 p.m., APS spokesperson Anne DeGraw, told Utility Dive. The per kW rates are very low during those hours "because we have so much solar power," she said. The rate program kicks in every winter between October and April when solar power floods Arizona's system. It's designed to "fill the belly of the duck with usage hours," DeGraw said, part of the solution "to a very large problem."
DeGraw also said APS has spoken at length with Mandalay. "We're doing as much as we can at this point to help their project become a reality," she said, but "we're not quite there yet" with the virtual power plant concept.
Model homes and business models
Sonnen hopes to get closer to making the Arizona virtual power plant a reality with its next slew of projects. Sonnen is not yet ready to make the details of those projects public, but Richetta said there are three in Florida, Utah and Chicago.
All the projects are driven by the homebuilder-developer. They are of significant size, but adding storage to upscale houses is still a small market, Richetta says. "Ultimately the utility is the ultimate influencer of the future of energy storage," he said.
To date, there has been a lot of talk and hype about the residential energy storage market, but mostly they are "science projects, not real projects," Richetta said. "If our value for energy storage is ever going to be realized, it is going to come on the utility side." Sonnen hopes to take a step toward incorporating that fourth layer with the project it will announce by the end of this year.
To address the patchwork U.S. regulatory landscape, Sonnen is using several different business models, Richetta said. The simplest model involves a rental property. The developer owns the property and reaps most of the benefits from aggregating energy storage. The renter gets clean energy backup and perhaps some benefit of lower rates.
If separate homes with multiple individual owners are involved, the business model becomes more complicated. In one model the homeowner owns the storage facility but leases it back to a virtual power plant entity that acts as a broker between the homeowner and the utility that has dispatch rights to the stored energy.
In a third business model, the utility owns the energy device on the home and has the rights to all the energy services. The homeowner would reap some benefits, such as lower rates, but most of the benefits would go to the utility.
There is also a fourth model in which an entity would have rights to the aggregated storage device and would be able to trade power in the wholesale market.
"We do it in Germany, but here it still has to be figured out," Richetta said.
"We would love to see more utilities come forward and do this as research and development," he said. "They would see you don't have to know everything up front." A five year pilot project and four houses does not yield a meaningful data set, but if a utility made an R&D investment in 100 homes, "they could really see the effect on the grid."