Behind-the-meter storage is forecast to become a larger segment than grid-scale storage by 2021, and could pose a potential threat to utilities, according to Bloomberg Energy Finance (BNEF) senior analyst Logan Goldie-Scot.
Despite large grid-scale deployment making up 84% of installed capacity, growth of behind-the-meter storage will likely dominate in the years to come. “If you are an energy retailer and a large number of your customers not only have PV but also have residential storage attached, then they are procuring less electricity from you. There's a threat to their future revenue streams, based on increasing levels of self-generation from their customers,” explained Goldie-Scot.
But the threat does not stop with residential. “If you are a utility looking at your very valuable commercial and industrial (C&I) users, if they have greater behind-the-meter energy storage and on-site generation, once again, they are not only purchasing less electricity from you, but they are probably managing their electricity bill or their electricity demand in a smarter way to reduce thing like demand charges,” adds Goldie-Scot.
This can be seen practically in the storage-friendly state of California, where hundreds of millions of dollars have already been made available in project finance to companies such as Stem Inc. and Green Charge Networks to put energy storage in C&I buildings and reduce demand charges. On the flip side from being a threat to utilities or network operators, there is an opportunity for more innovative retailers to use the behind-the-meter boom to build service relationships with customers instead of building large centralised assets.
Goldie-Scot made reference to a few pilot projects to this effect, such as AGL’s virtual power plant in Australia, where there are designs to install around one thousand residential systems, but then using those to offset other costs and ultimately make a more efficient network. “You have two angles; one is that utilities are potentially threatened by this sort of increase in deployment, but it is also a great opportunity for some utilities to go ahead of this and start deploying energy storage themselves and gain a valuable foothold into their customers’ homes,” said Goldie-Scot.