Residential solar systems typically send power to the grid, not directly to the house, and don’t run the home during a blackout. For batteries to save consumers money, stored energy must be drained daily, said Jamie Evans, who runs the U.S. Eco Solutions unit for Panasonic Corp., which supplies lithium-ion cells for Tesla Motors Inc.

“Solar will need storage for grid stability,” Evans said yesterday in an interview at the Solar Power International convention in Las Vegas. “Battery costs need to come down and regulatory structures have to change to really scale up.”

As residential solar becomes more common from California to New York, utility grids will increasingly become stressed without storage to ease supply and demand imbalances, he said.

For now, that means battery storage only makes economic sense for large businesses that get hit with extra fees when their power usage exceeds utility expectations.

These so-called demand charges can add up to half of a company’s utility bill, said John Carrington, chief executive officer of Stem Inc., a storage supplier backed by General Electric Co. that offers three-year leases on battery systems for customers including hotel chain Extended Stay America Inc.

“Residential solar plus storage isn’t ready yet,” Carrington said in an interview. “Lithium batteries cost too much to be used for just back-up power in an emergency.”

That’s why rooftop solar developers and battery companies are working with regulators in California and New York to change utility rate structures so that batteries in a home can get paid to supply power to the grid when needed, said SolarCity Corp. CEO Lyndon Rive.

“Storage will have to provide additional services besides backup power, like voltage and demand management,” Rive said. “When you start to see gigawatts of solar deployed the grid will need this.”

Copyright 2014 Bloomberg

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