Over the past couple of quarters, commercial sector deployments have decreased, dropping 11% year on year. There's no reason to think that these past two quarters will not show the same downward trend, but we'll have to wait for the data.
But most market watchers in the US believe that a star is about to rise for both commercial deployments and energy storage. The commercial solar energy market is forecast to rise to 2.3GW by 2017, an increase from 3.2MW in 2012, according to IHS. America is also expected to lead the world in commercial PV storage, accounting for more than 40% of global installations in 2017.
Commercial solar deployment has dropped off this year, but that hasn't stopped players in solar and energy storage - both large and small - eyeing an opportunity in the segment.
That's quite an ambitious target given the lukewarm start so far. But in fact, solar companies and large corporations are staking money on it and putting their brand on the line.
Jim Doyle, president of Panasonic Eco Solutions, is leading the Japanese mega-company's drive to target the underserved commercial, industrial, municipal and small utility (CIMSU) and energy storage markets.
"We have positioned ourselves in the US commercial industrial and small utility markets – we are not in the residential sector; wide deployment is not our speciality," Doyle recently told PV Tech in exclusive comments. "We've installed 30MW so far – two years ago we weren't even playing.
"We're not in the huge utility-scale cover-the-desert-with-solar part of the market, but we're in between. But we want to play in there as we think there is inefficiency in the market. With tax equity requirements, the transaction costs, for example, of doing a 2MW commercial deal may not pencil out today because of the legal fees and the tax equity structure. By the time you get done paying the lawyers you're under water."
Last month, Panasonic Eco Solutions announced its financing platform would include US$50 million in sponsorship equity from Ullico, an insurance company. The first project to be completed under the expanded platform is a 16.2MW portfolio of CREST (California Renewable Energy Small Tariff) projects it acquired with finance partner Coronal Management from Macquarie Capital. That portfolio consists of nine projects located in Tulare and Kings Counties in Central California and will be completed by the middle of 2014 with interconnection to Southern California Edison.
"Now that we have a multi-million capital stack to deploy, we're just putting the flag up now that says ‘hundreds of millions of dollars to deploy – bring us your projects’," he said.
Total assets jointly developed by the Coronal-Panasonic relationship are now over 30MW. But Doyle said that customers are brought even more comfort by the Panasonic brand and a 20-year production guarantee that few but the largest companies can offer.
"We're the tip of the spear," he said. "It's so complex, you need such a big balance sheet, such a brand that people can trust. The fact that it's difficult is great because if I'm successful I don't have to worry about tomorrow another small company all of a sudden nipping at my heels. In fact, I'm not even trying to push the little guys out. I'm bringing the little guys into my ecosystem, I'm saying to small EPCs in Cupertino or Denver, bring the deal to me, I'll form the master EPC, finance and wrap it, and you can build it.
"Our customers know that I'm going to do a 20-year production guarantee by an US$85 billion company not by Joe's Electric – in year 18 are they going to be here? We've been around since 1918. I think we're going to be around a while longer."
At Solar Power International last month, Panasonic had one of the largest stands in the exhibition hall; partly a statement of ambitious intent in the US and also to show off its new HIT double bifacial solar panel, a descendant of course from the Sanyo product after Panasonic acquired the panel maker in 2010. Panasonic claims the new panel potentially enables up to 30% higher power generation (kWh).
But Panasonic has an additional asset in its technology portfolio as it is also a leading battery supplier and makes lithium ion batteries for Toyota's Prius and Tesla's Model S, for example. Energy storage for solar systems, particularly in the commercial sector is a perfect synergy.
"We're already doing pilots now," said Doyle. "We're already doing it at the residential level in Japan but we're looking at all the tiers of storage. You don't see us out there now because we're a conservative company and we're not going to be the first one in the market but we're going to be the second or third. We're not ready to be a flash in the pan – launch something, try it and have some issues that damage our reputation."
In the past couple of months, the California Public Utilities Commission has mandated the state's investor-owned utilities to procure 1.325GW of energy storage.
"That's a great signal to the market," said Doyle. "It's getting that technology to the level of reliability that we're comfortable with because we're sometimes our own worst enemy, we're an engineering company at heart so things don't get released until everything is done. But when we get ready that goal seeds the market."
REC Solar, meanwhile, is another company preparing to play in this sweet spot on the Venn diagram between commercial solar and energy.
Ben Peters, director of solar finance and policy at REC Solar, told PV Tech that the CPUC's 1.35GW mandate "certainly helps our larger partners recognise the business need for this".
But he also recognises the challenges of moving from demonstration to deployment stages and how a solar company integrates a new technology with a limited track record and different financing model.
"In this race there are the big gorillas," he said. "And while there's no question about the warranties to back them up, can they move quickly enough and get the internal resources deployed quickly enough or is that down to the small nimble guys? The CPUC decision gives those bigger players and partners confidence that yes, this is market we need to invest in and move forward on which is a great signal.
"The programme is saying the time to wait is over, you want to bid into these rounds. Our company is putting our solar brand on the line."
REC Solar decided to target the commercial solar segment with the additional option of energy storage about a year ago after "six months of spreadsheets", said Peters. The company now has five to 10 customers in three states – the closest it has come to deployment is in Southern California Edison's territory.
California's Independent System Operator and the PJM Interconnection are the two markets where revenues can be generated by selling into the wholesale market, according to REC Solar's Ben Peters.
"Our residential business is doing fantastic, it's doing great. We don't necessarily need to have that storage conversation yet,” Peters said.
Some energy storage companies are trying to sell their system – or at least the IT "brain" that controls the system with solar – with the promise that commercial customers will save money from demand charges.
"A church for example, might have a spike in load one Sunday a month when it turns on all the lights," said Peters. "Their entire demand is based on that spike because it's based on the 15-minute interval. Without a battery, that church has the same demand charge payment as a manufacturing company who has that demand for the entire month. Utilities always like to talk about fairness. Is that a fair billing structure?
"We're saying we're going to reduce those spikes and get those load curves much more flat. We see utilities as partners in that they need to help us interconnect and do these things. We're not going to net meter and push kilowatt hours back onto the grid; we're going to keep the customer from spiking the grid."
Peters also believes that solar systems with storage will make PV easier to finance for commercial projects now that ironically, panel cost reductions have dampened the attractiveness for financers.
"What used to be 300kW of solar at $3/watt is now 300kW at $2/W. There is no small market solar financing that's available. You generally need a million dollars just to start the conversation about finance.
"The deployment for the commercial and industrial sector in energy storage is quite modest to say the least. But over the next couple of years co-located solar plus storage projects behind the meter is going to be one of the largest growth sectors. That's not going to happen any time within the next six months, but that will be where the fastest growth is. That's not necessarily to say that it's where the highest volumes are but it's certainly where the most innovation is going to take place."
Enjoy 12 months of exclusive analysis
- Regular insight and analysis of the industry’s biggest developments
- In-depth interviews with the industry’s leading figures
- Annual digital subscription to the PV Tech Power journal
- Discounts on Solar Media’s portfolio of events, in-person and virtual