The growing interest in combining residential rooftop solar panels with battery-based storage often overlooks a critical piece of equipment: the inverters that are key to making such combinations work. Inverters today are the brains of these systems and could open new opportunities for future adoption as utilities are being pressed to support aging grids in a slow demand-growth environment. Residential ECs could be seeing more of these devices in their customers’ homes, as the market for solar-plus-storage is expected to grow exponentially over the next five years.
Inverters have been important to residential solar adoption since the solar market first began expanding a decade or more ago. In the early days, however, inverters primarily served to convert the DC power produced by solar panels into the AC used by utility distribution grids. They also provided a critical safety function: in the case of any grid irregularities, first-generation inverters shut down the connection to rooftop panels. This prevented power from being fed onto distribution lines and potentially electrocuting line workers who might be performing repairs.
This requirement was defined in the most important industry standard related to solar, storage and other distributed-energy resources. The Institute for Electrical and Electronics Engineers (IEEE) Standard 1547, “Standard for Interconnecting Distributed Resources with Electric Power Systems,” was finalized in June 2003. A related Underwriters Laboratory publication, Standard 1741, “Standard for Inverters, Converters and Controllers for Use in Independent Power Systems,” defined related testing requirements for inverters. And both were informed by a third highly influential standard, the California Public Utility Commission’s Rule 21. As with automobile emissions limits, California has an oversized presence in setting requirements for rooftop solar-power systems, thanks to its overwhelming lead in installations of this equipment.
Since then, IEEE 1547 was revised to allow for ride-through operations under some irregular grid conditions. Today’s smart inverters also feature the capability to island local operations (separating a home from the connected grid to support that home’s electrical load without back-feeding power onto a utility’s distribution grid). And, with a full 2018 update, the standard will actually require ride-through capabilities, along with the ability to dispatch local power to the grid to provide voltage and frequency support, based on a signal from the utility. Products compliant with IEEE 1547 in 2018 are expected to begin hitting the national market in 2022, though a related California Rule 21 update, along with a similar move in Massachusetts could bring products to those states sooner.
“The updates on rules and standards has really opened the door on new advances,” said Lindsay Cherry, a solar analyst with energy research and consulting firm Wood Mackenzie, Edinburgh, Scotland. “They’re helping grid integrators incorporate [a] more distributed generation.”
This move to smarter, more grid-involved inverter operations parallels a shift in how utilities and regulators are beginning to think about distributed residential and commercial solar and solar-plus-storage installations. A decade ago, many utilities saw rooftop solar as a system disruptor and competition. This was especially true in states where utilities are allowed to own their own generation equipment. Today, though, as falling panel prices are driving consumer adoption, and more states are implementing aggressive carbon-reduction goals, state regulators are pushing utilities to consider customer-sited solar—especially solar-plus-storage—just another resource in their capacity planning.
“These solar systems, with inverters as the brain, could actually be integrated into the grid,” said Raghu Belur, co-founder and chief products officer for Enphase, a Fremont, Calif.-based inverter and storage system manufacturer. He highlights functions such as voltage support and ride-through capabilities in this regard.
“All of these things can be dynamic; they can change over time,” he said. “That’s one of the big transitions we’re seeing the industry.”
Richard Baldinger, marketing chief for the German inverter maker Fronius, said smart inverter functionality can enable even further expansion of residential solar. The original approach, with inverters turning off at the slightest grid irregularity, limited the scale of rooftop deployment because large numbers of solar systems going offline at once could turn a minor problem into a major cascade.
“As you add more solar systems, and then suddenly all the inverters turn off, that causes problems. These new features and standards help give the utilities more certainty,” he said.
Baldinger uses experiences in Germany and Italy as examples, where former rules requiring systems to disconnect resulted in thousands of inverters going offline simultaneously. European nations have since updated their regulations, to good result.
A new category—“hybrid” inverters—is taking smart-inverter intelligence a step further and driving down the complexity of solar-plus-storage installations. Previously, these combined designs might have required two separate inverters for both solar and battery output. Hybrid devices combine these functions and often are installed within the battery housing. This makes connecting the system more of a plug-and-play operation for electrical contractors.
Belur sees adding storage and a smart hybrid inverter to home solar-power systems as a way for utilities to further recognize value from their customers’ grid-edge resources.
“It’s no longer about solar—it’s about energy,” he said.
Under the model Belur and many others see as the future, inverters become a utility’s portal into their customers’ various loads. At one point, smart thermostats were proposed to provide this service, but the inverter can make more sense in homes equipped with solar, storage and a smart inverter. The device is directly connected to the home’s panel and the systems that could potentially support the home’s load as well as the utility grid. In time-of-use or demand-response rate programs, utility signals to the inverter could shift all or part of a home’s load over to the battery without the need for any involvement from the homeowner.
“With storage, the amount of energy available at the end of the network is enormous; now I have an energy source that’s available at night,” Belur said, comparing storage to the backup generation utilities needed to keep running to allow for rapid integration during peak-demand periods. “It’s like a spinning reserve, except it’s super clean and available, and it’s local.”
And solar-plus-storage can offer great value for homeowners as well. A recent report by analysts from consulting firm McKinsey—“How Residential Storage Could Help Support the Power Grid”—notes that U.S. residential storage installations have increased 200% per year over the last four years. This equates to a leap from 2.25 megawatt-hours (MWh) installed in 2014, to 185 MWh in 2018. Installation rates jump with every major hurricane or other storm. Similarly, in California, where utilities now regularly shut down wide swaths of their systems when wildfire risks run high, homeowners are increasingly adding batteries to new or existing solar-power systems to maintain household operations.
“A home can become a microgrid, especially with some of the new technologies we’re developing,” Belur said, pointing to Enphase’s new Ensemble home energy management system as an example. “If you interconnect multiple homes, that’s a larger microgrid; it can scale up. You do that to provide a greater degree of efficiency and resiliency.”
Baldinger also sees growing enthusiasm in the residential market.
“The whole idea of self-supply and having a backup, this is something consumers are very interested in,” he said.
Another important mover for hybrid inverters is the fact that almost all home storage systems sold today are tied to on-site solar panels. Some commercial owners might see value in standalone batteries; peak-demand charges are much more expensive for commercial buildings, so the ability to shift some of that load onto a battery could make economic sense. But for most homeowners, prices remain too high for battery-only installations, especially since many are looking for new options to keep home systems running during a grid outage.
Looking forward, the market for hybrid inverters is certain to grow. While inverterspecific market estimates are a bit difficult to find, the numbers for both residential solar and storage growth are both very bullish, and inverters are integral to installing those systems. Beyond equipment sales, Wood Mackenzie’s Cherry also sees inverter manufacturers possibly becoming more involved in how consumers actually use their products.
“I think an interesting storyline is that the inverter industry is moving more toward providing energy services,” Cherry said.
This could include enabling homeowners to participate in incentive programs that aggregate the output of large numbers of batteries to help utilities meet peak demand needs. The solar and storage company Sunrun is doing just this in Massachusetts, with its Brightbox battery and inverter system. Customers don’t even have to buy the system—they can sign a power-purchase agreement offering guaranteed electricity pricing and use of the batteries for backup instead. The real money for Sunrun in the offering is its ability to sell the aggregated output of all its installed batteries to the New England power grid.
Similarly, Belur said Enphase’s Ensemble software has the ability to analyze utility price signals, along with various inputs from connected solar panels and batteries to determine a home’s most cost-effective electricity source at any given time.
“This is not pie-in-the-sky stuff—we have this now,” Belur said.
Belur added that we can anticipate more changes to come over the next decade. He predicts the changes enabled by increasingly intelligent inverters to create a rapid evolution in the places where we get our electricity and how we use it.
“I think you’ll see more change in the next 10 years than in the last 100 years. The industry, in general, is poised to make this transformation. I think many companies are going to try to solve this distributed-energy system. The opportunity is massive. You’ve got 70 million homes—just multiply that by that many dollars,” he said.