I’ve been searching for the app for home “behind-the-meter” batteries that will make them as ubiquitous as refrigerators. I’m an industry analyst, and I know from my research that people love the idea of having batteries in their homes. Before they run out and buy those batteries, though, there has to be something the batteries do that customers really want. Think of how the Super Mario game made the Nintendo console into a computer gaming star. In my search for a killer app for home batteries, I keep running into a wall. My two main criteria are that the batteries—perhaps used in conjunction with solar panels—enable homeowners to get good value for their investments and also show benefits for electric utilities. The latter is important, so that the utilities will be motivated to pay incentives to offset the high cost of the batteries and to make it easy for customers to hook their batteries up to the electrical grid. The problem I keep running into is that I’ve yet to find an app that meets both of those criteria.

I know what people want from batteries. E Source surveyed a representative sample of 1,029 residential utility customers in the US and Canada in July 2016 to get their opinions on home battery systems. We found that of those respondents who were familiar with home battery systems, nearly two-thirds either owned these systems or were planning to buy them. The three most popular reasons they gave us for wanting home battery systems were to save money on their utility bills (48%), to have backup power during outages (29%), and to reduce their impact on the environment (25%) (Figure 1).

Figure 1: Why customers like batteries

When we asked our respondents why they planned to purchase a home battery system, three answers stood out: They wanted to save money on their energy bill, they wanted backup power for their homes during an outage, and they wanted to reduce their impact on the environment.
Bar chart with two bars for Plan to purchase (n = 163) and Purchased (n = 87). Bars are for 12 responses plus Other. The top three responses are Savings on my energy bill (48% plan to purchase; 31% purchased), Help with powering my house during a blackout or other electricity outage (29% plan to purchase and 20% purchased), and Reduced impact on the environment (25% plan to purchase and 24% purchased)

I also know from my conversations with utility executives what their organizations want from batteries. They want to be able to discharge batteries during peak power times to minimize their purchases of expensive peak power. They also like that batteries can slow the rush of solar power onto the grid when it threatens to overwhelm the grid’s capacity.

The problem I see is that either batteries don’t deliver most of the benefits residential customers want or that the benefits they can access are in conflict with the functionality utilities are seeking. Take utility bill savings for example. In theory, batteries can be charged with cheap off-peak power and discharged during peak periods when power is expensive, and customers can pocket the difference. In practice, where time-of-use pricing is available, the spread between off-peak and on-peak power is often less than 10 cents per kilowatt-hour. Even where utilities offer extravagant spreads, they’re available for too few days per year. As a result, the amount of utility bill savings homeowners can achieve using this technique are so skimpy that few battery vendors offer this application and few customers use it.

Batteries should deliver benefits that both residential customers and utilities want.Tweet this!

Residential batteries also usually don’t produce any environmental benefits. Batteries are not friction-free devices. Whenever energy is stored in a battery and discharged later, a bit of it is lost. Because most rooftop solar panels are hooked up to the grid, any battery loss results in less solar power being conducted to the grid, where less fossil-fuel power is offset and fewer emissions are avoided. When researchers at the University of Texas analyzed electricity consumption data from nearly 100 homes that were part of a solar and smart technology test bed, they found that the homes that added batteries to their solar electric systems experienced 8 to 14% more energy consumption than homes that hooked their panels up directly to the grid. They concluded that additional energy consumption resulted in increased emissions of carbon dioxide, sulfur dioxide, and nitrogen dioxide.

Batteries are not friction-free devices. Whenever energy is stored in a battery and discharged later, a bit of it is lost.

Customers who desire batteries for their ability to provide backup power are on firmer ground. Batteries are capable of providing this benefit with just a few caveats. One is that batteries, per kilowatt, cost about four times as much as the small natural gas generators that are often used for home backup. However, I expect that some people would gladly pay a premium for a backup power system that’s quieter, cleaner, easier to maintain, and faster to respond than a generator. Another caveat is that batteries can provide backup power for only a limited time. Once they’re discharged, they’re out of business until the sun comes up or the power comes back on. A generator will provide backup power as long as it has a natural gas supply and is in good working order.

Notwithstanding those caveats, the reason backup power isn’t a killer app is that backup batteries can’t be used for any other purpose without diminishing their ability to provide backup. As a result, utilities can’t make use of them without exposing their customers to additional risk that their backup systems won’t fully work. Suppose a utility discharges a home battery onto the grid to boost the grid during a peak demand event, then a few minutes later a car crashes into a distribution pole, knocking out power to the home. Those drained batteries won’t be able to serve up much backup power. If a load is critical enough to be backed up by batteries, it’s critical enough that those batteries be devoted completely to that mission.

Backup batteries can’t be used for any other purpose without diminishing their ability to provide backup.

So that’s my dilemma. I haven’t found that sweet spot yet where both residential customers and utilities can benefit from batteries. In all the applications I’ve looked at so far, either customers don’t get good value for their investments in batteries or they would sacrifice too much functionality turning over control of their batteries to utilities. That said, there’s a lot of pent-up demand for a residential battery product, and I’m going to keep searching for that killer app.

Is your organization a member of the E Source Technology Assessment Service? If so, you can learn more about residential batteries by reading our recent report titled Customers Like Batteries, but They Don’t Understand Them.

Contributing Authors

Board Member, Senior Fellow

Jay Stein is focused on expertise development, research skills development, quality control, new product development, and technology assessment....