By Seth Mullendore, Project Manager, Clean Energy Group

A vast solar market sector remains almost entirely underserved—communities at risk during a power failure could benefit greatly from resilient power applications that use a combination of PV and battery storage (solar+storage). Companies like SolarCity and Tesla have begun targeting residential customers with promises of Powerwalls for solar-fueled backup power and Powerpacks for businesses to shave demand charges, but no major company has come forward to offer a solar and battery storage solution for the vulnerable communities truly in need of resilient power sources. These communities include affordable housing developments, assisted living centers and community facilities, including schools and recreation centers. The need for assured power is critical in an emergency so shelters, police and fire stations and communications hubs can continue to function during a grid failure.

These are not the types of facilities solar developers often think about for new project opportunities, but the market potential of resilient solar+storage should become increasingly clear. Unfortunately, there is not yet any clear market value for resilient power, but the social value is unmistakable. This is particularly true for those left stranded when disaster strikes, like the 80,000 public housing residents left without power in the wake of Superstorm Sandy in 2012, 85% of whom ended up sheltering in place due to poor health, lack of mobility, fear or simply having no other place to go.

Of course, the economics of these solar+storage projects also plays a part in their development. Despite the fact that municipal leaders and affordable housing developers recognize the need for resilient power, there is a limit to how much they are willing and able to pay for it. This is where the added value of battery storage comes into play.

Clean Energy Group examined the economics of resilient solar+storage in multifamily affordable housing in its recent report, Resilience for Free. The report models the financial case for resilient solar+storage in three markets (Chicago, Washington, D.C., and New York City), finding favorable economics in each case, with 20-year internal rate of returns (IRRs) of 10%, 21% and 4%, respectively.

The report tested potential outcomes without tax incentives. A 200-kW commercial solar project in Chicago had a 20-year IRR of less than 5%. However, with the addition of a 150-kWh battery, that shifted to a resilient 20-year IRR of around 6%. It’s clear that adding storage to solar projects can be quite beneficial. Now that the ITC has been extended, solar+storage makes even more economic sense.

The key to success in these cities lies in the availability of viable market opportunities. Chicago and Washington, D.C., both lie within the PJM Interconnection territory, which has a thriving market for energy storage due to the structure of its frequency regulation market. Such market opportunities are expected to become increasingly prevalent as utilities and grid operators become more familiar with energy storage and are able to use the benefits these technologies can provide. In fact, California, Texas and New York are all currently exploring ways to allow distributed energy resources, like solar and storage, to generate revenue through providing grid services. These efforts, along with utility campaigns to transition away from solar net metering and toward new revenue structures, such as time-of-use rates and increased demand charges, will only increase the value of adding battery storage to solar installations.

But why focus on vulnerable communities? Aside from the obvious public benefit, the answer is opportunity. More and more states are recognizing the need for power resiliency and the importance of bringing these clean, resilient technology solutions to our most vulnerable and disadvantaged communities. Massachusetts, New Jersey and Connecticut have all implemented incentive programs to support resiliency in their communities. More states and communities are sure to follow as the devastating impacts of severe weather continue to mount. Additionally, the White House is taking a leadership role in bringing more solar to low- and moderate-income communities, and states like California and New York are ramping up their efforts as well. As more initiatives are developed and deployed, the economic opportunity for deploying resilient solar+storage will continue to grow.

All of these factors are setting the stage for community resilient solar+storage to transition from a handful of one-off projects, to a standardized pipeline of affordable housing and municipal building portfolios. Solar developers would be wise to start taking a serious look at resilient solar+storage applications for communities now.

For more information about resilient power, visit www.resilient-power.org.