Residential Battery Storage… is this “Thee” Disruptive Technology?

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As governments around the globe continue to promote solar, the next market to show strong growth in coming years will be the storage market. We asked Terry Rendflesh for his views and to share his thoughts on “time shifting”; where storage can be charged during periods of high solar PV output and discharged later, often during peak demand periods. We hope you find this of interest and value.

Larry Peters, Director, NewGen Energy

Residential Battery Storage… is this “Thee” Disruptive Technology?

By: Terry Rendflesh, P.Eng.

A disruptive technology is one that displaces an established technology and ultimately shakes up the industry, or a ground-breaking product that creates a completely new industry.

Could residential battery storage be “thee” disruptive technology? It very well could be.

For years the province and much of the world have been looking for alternative sources of energy outside of traditional fossil fuels. As the cost of solar, wind and battery storage continue to decline and the installed base continues to grow, we are also beginning to see consumers utilizing electricity for more of their everyday needs, such as driving, heating, and cooling.

It is unlikely that fossil fuels will be completely eliminated from our lives anytime soon. We rely heavily on fuel to power our commercial and industrial growth and it provides the basis of our plastics and polymers that make up half of our consumer goods. Examples of such include automobiles, communication and entertainment goods, and even the structures supporting renewable technology, like battery cases.

A 2007 study by National Resources Canada suggests approximately 80% of the average home energy consumed is in the form of heating. Many small consumers depend on two forms of energy in their everyday lives. Electricity for lights and heating, as well as natural gas and fuel oil for heating. The later forms of hydrocarbon-based energy can all be replaced by electricity, but never the reverse.

Finding the Appropriate Energy Mix

As countries and communities around the world explore the deployment of renewables like solar and wind, the technical challenges continue to grow.

The problem is now finding the appropriate mix of renewables, energy storage, and on-demand generation to meet the consumption needs of consumers. In opposition is the pressure to reduce the use of non-renewable energy such as coal, fuel oil and natural gas.

Grid-tie solar provides a means for the individual investor to physically participate in green energy solutions. However, this technology is currently implemented in a way that displaces grid consumption during the daytime while requiring connection to the grid to provide peak power when the sun stops shining. While effective during the summer months and long daylight hours, it does not compliment the annual system profile as shown below.

Figure 1 Weekly Average Demand for January to December Source: Enertyr Solutions Inc.

Traditional generation fueled by coal and gas has the ability to respond to swings in consumption in near real time. Renewable generation such as solar, wind and to some extent hydro, produce power when the environment permits it; rarely can it be called upon when we need it. They require the usage by each consumer to respond immediately to when generation falls off (when the wind stops blowing or the sun stops shining).

If the consumer cannot respond, we look to the energy supplier to provide a reliable energy supply to ensure the “lights stay on”. To date this is achieve by providing “spinning reserve” to cover any gaps in supply. “Spinning reserve” can be defined as a source that is online to provide immediate response for additional generation in the event existing generation fails, which could lead to a grid collapse if not provided. This generation must be financially compensated for being there – just in case.

So, we need to establish both a balance of existing generation types as well as enable the development of new technology without over-investing in infrastructure that is at risk of being “disrupted”.

Increased Electrification Poses Challenges

Alberta has the second-best solar potential in Canada. When compared to other countries around the globe like Germany, which recently set a new record for Solar PV production (producing over three times Alberta’s peak load), Alberta is lacking in installed capacity.

2 Source: Enertyr Solutions Inc.

The figure below shows the Alberta average hourly provincial load for Monday to Sunday for January 2017. In Alberta much of the peak electricity we need on any given day is needed during the evening hours; much more so than compared to countries like Germany and areas of the USA. What makes up this demand? Predominantly heating and lighting.

If consumers begin to shift from gas to electrical heating, the demand for electricity would more than double and would add even more demand during the evening.

If this were to happen, our renewable resources themselves could not cover it. Could our distribution system handle this increase in demand? Unlikely, as the largest residential electrical load would be in communities with older homes where buildings are less efficient by construction.

Statistics Canada estimates that approximately 70% of the occupied private dwellings in Canada were constructed before the year 2000. Unfortunately, most of these homes are service constrained when it comes to using more electricity.

We all know that when a home is built, a breaker panel is installed. Building and electrical codes require that certain requirements are met for sizing these breaker panels. Homes that were built 50 years ago as an example, would have had a panel as small as 60 Amps. Anything built since then (the majority of homes on the market today) would have a panel rated at least 100 Amps.

The latest Canadian Electrical Code (as well as the National Electrical Code (NEC)) sets new requirements for sizing services when you have electric heating and electric vehicle charging, the two largest sectors of change residential consumers are facing. If consumers were to opt for an electric vehicle, or to switch to electric heating, they would ultimately double the size of service required to their home (an increase from 100A to 200A).

That makes our current utility and residential infrastructure undersized to provide a single energy service to each and every home.

The reality is that consumers cannot afford to run new power lines to each home, and the utility cannot justify increasing the capacity of each distribution transformer and service feeds alike in anticipation that consumers will switch energy sources. At the same time, your natural gas provider is not going to sit back and watch its residential business erode without a clear alternative.

Is Residential Battery Storage the Answer?

Alberta has had an abundance of generation built over the last few years. As we retire our coal fired plants and struggle to get the replacement generation in place promptly enough to handle demand, there may be pressure to implement Time of Use (TOU) tariffs as they have done in Ontario.

TOU tariffs are designed to incentivise consumers to shift their non-essential use of energy to off-peak times, in order to balance demand or simply shift the peaks to other hours of the day. These tariffs charge cheaper rates at certain times of night or day, when demand is at its lowest, and higher rates during the “energy rush hour”.

TOU tariffs are temporary measures. They are commonly applied year-round but there are times when it might be more favorable for generators to have consumers draw more energy to keep the generators properly loaded to achieve maximum efficiencies.

The introduction of storage to the market could supplement the evening electricity demand peaks and reduce the need for the introduction of TOU tariffs, providing we leverage Internet of Things (IoT) technology and smart energy control algorithms. The data provided by smart meters and the application of Artificial Intelligence (AI) will help “optimize” these algorithms.

Some key points:

1. If you think you can replace all of your “energy” needs with just electricity, the reality is we just aren’t there yet. For example: if you consume a peak of 16 GJ/month of natural gas in the winter, you would need over 4450 kWh of electric heat to replace it. Considering your typical electrical consumption is only 750 kWh/month, this would be nearly six times what you currently consume. A new winter daily average including heat would total about 120-160 kWh/day.

2. If your power panel is less than 125 Amps, it would be costly to upgrade your distribution system to your home. You would be required to upgrade both the power line to your home as well as the panel itself. The estimated cost of this upgrade would be in the range of $3,000 to $5,000; if not more. And that does not include the utility’s portion.
3. Consider your current bill where the variable portion of your bill consists of 6.8 cents energy plus an additional 3.025 cents/kWh for delivery[i]. Using a price of 10 cents/kWh energy including delivery, you would have a peak winter electricity bill exceeding $450/month, or over $500 by the time you include taxes and fixed costs.

4. Residential battery storage is currently around the 20-40 kWh capacity range, which falls short of the 120 kWh/day winter requirements needed for an electricity only solution.

5. There are no clear grid-tie tariffs allowing the connection of battery storage systems unless they are deemed “micro generation”. But storage is not the same as generation in the traditional sense – and should not be treated as such.

So it would appear we are captive to our two energy sources – for now.

Storage Capabilities Looking Up

Things are looking up. Tesla now has a 100-kWh battery bank for their cars. They produce a 13.5kWh Powerwall, expandable to 135kWh to augment their residential solar systems. Others like Eguana Technologies, a forward-thinking company located in Calgary, are offering commercial and residential energy storage systems in the 30+ kWh capacity rating. This technology is scalable to within reach of eliminating the need for both supplies to each resident.

Instead of competing with our current energy providers and utilities, I propose consumers utilize residential battery systems with the electrical grid in parallel, through a complimentary operation, creating a consistent and manageable flow of electricity without stressing the local utility or completely draining the battery. When demand goes down, supply is directed to the Battery Storage; when demand goes up, the incremental load is then drawn from the battery storage.

Batteries of this size could lead to the displacement of natural gas as the preferred heating source for homes.

The advantage of this approach is:

1. There is less risk to the utility and regulators to upgrade their system.

a. The energy delivered to the resident is more predictable so the threat of lost revenue to the utility is reduced if not eliminated. This should result in lower delivery charges and avoid the risk of stranded assets for the wire service provider.

b. The grid profile is flattened, reducing the demand for peaking generation, which leads to more secured revenue to generators driving lower energy costs.

2. The residential battery system can still complement a solar system, but the payback is potentially much better than for a solar system alone as it now helps support larger load system in the home.

3. The battery system offers a new energy component and services utilities can provide should natural gas be displaced.

4. As gas assets held by the utility as well as the consumer reach End of Life, an alternative system can be leveraged without the need to invest in technology that continues to be questioned as socially acceptable. Will you be able to replace your gas furnace with an electric furnace and heat pump augmented by a Battery storage system? Maybe …

Utilities are exploring battery storage solutions to dampen the volatility of solar and wind, but it does not address the physical limitation of getting energy to the residential consumer the last 100m.

As consumers change their usage patterns by adding electric heat (and cooling) as well as electric vehicle charging to their consumption profile, the night time peaks will get larger when solar is not available and wind remains unpredictable. Battery storage will help flatten the usage pattern, displacing some of the expensive spinning reserves to become more like base loaded generation, helping to keep electricity energy costs low.

With growing demand for air conditioning and EV charging, it is only a matter of time before residential battery storage becomes another essential appliance, like the furnace and hot water tank. Tesla and Eguana are banking on it. And so, the gap is closing faster than we realize.

As noted earlier, the energy needed for space heating will always be the highest for our geographical climate.

Is the threat of battery technology the catalyst for utilities to expand their services into something different? How will industry respond to this Disruptive Technology? Or does it position an opportunity for new businesses to service the changing consumer needs to supply that energy? Only time will tell, but it is prime for the picking.


This paper is the work and opinion of the author only and is not to be interpreted as a position of current or past employers or their affiliates. The author shall not be liable for any claims for loss, damages or costs, of any kind whatsoever, arising for the errors, inaccuracies or incompleteness of the information or references made in this paper or any loss, damage or costs that may arise from the use or interpretation of this paper.


About the Author:

Terry D. Rendflesh is a Professional Engineer registered in Alberta and Ontario, Canada. He holds a B.Sc. in Electrical Engineering from the University of Alberta and had held his Certified Energy Manager designation from the Association for Energy Engineers for over 10 years. He has over 30 years of Oil and Gas related experience in which he was involved in detailed design, construction and operations of gas and liquid pipeline facilities and commercial buildings. He held various roles in which he helped industry leverage the changes in a deregulated electricity market to optimize cost. He exploits the methodology of Value Management/Value Engineering to enhance industrial and commercial designs and rationalize the deployment of new technology.

His guiding principle is one that seeks balance between capitalistic opportunities and social responsibility to which everyone can benefit. He has a keen sense of identifying innovation that is unique and unconventional but often key to the evolution of new technology. He has personal experience in the design and deployment of Solar Thermal and SolarPV hybrid technologies. His interests include Energy Management and Renewable Energy Technology at the commercial & industrial level as well as for the retail consumer.

[i] Delivery charge based on EPCOR SAS-R Tariff, January 2018