Were increasingly seeing solar developers including energy storage as a standard offer in their customer proposals, rather than talking about energy storage as a future option, as we saw for the past two years.
Solar + Storage Solutions
Alan Russo | Stem, Inc.
Please tell us a bit about Stem and your role in the alternative energy industry?
Renewable energy on the grid is increasing, coupled with increasing customer demand to control their decisions on energy sources and costs. Both are necessitating new tools for utilities and grid operators to manage variable generation and distribution grid congestion. Stem’s mission is to build and operate the smartest and largest digitally-connected energy storage network for our customers. Stem’s Athena AI manages our aggregated energy storage network to deliver fast-acting dispatchable capacity to help balance the grid at the system and local level when and where it’s needed most. By forming these “virtual power plants,” the Stem network offers localized, on-demand, modular capacity and services to provide flexibility and reliability.
What’s the news here on solar + storage?
Well, foremost, the energy markets are changing, electric rates and solar remuneration rules are changing, and supply chains are changing. That means solar projects are getting skinnier and riskier, and site qualification is getting harder for the developer. We’re increasingly seeing solar developers including energy storage as a standard offer in their customer proposals, rather than talking about energy storage as a future option, as we saw for the past two years. But battery hardware alone does little to unlock the value of energy storage. The fundamental key is the intelligence of the software – this is what will differentiate solar going forward. So at Stem, we are expanding in the solar + storage markets with an enhanced offering that makes our Athena artificial intelligence and energy storage deployment experience available to top-tier solar developers that join the Stem Partner Network.
What are the biggest hurdles that storage helps solve for the customer?
Intelligent energy storage gives customers the flexibility to deal with all the changes I raised, especially the five to six rate design changes that are likely to occur over the life of a solar system—we’re talking about managing cash flows for 20-30 years. Intelligent energy storage helps customers ‘future-proof’ their solar investment and maximize the solar generation system’s value and returns, by giving them greater control and flexibility on their energy decisions through automated, real-time, energy optimization.
Many providers are now offering storage software solutions for solar + storage; what should a developer look for regarding software?
In order to size the system correctly and maximize the returns from a solar + storage project, artificial intelligence, or AI, is needed to perform predictive analytics, machine learning from big data, and grid-edge computing. For example, Stem’s AI captures data on a one-second basis on load behavior, solar generation, weather, nearby grid congestion, electricity rate options, and more factors, and stores terabytes of this data to our cloud to feed our machine-learning algorithms. In turn, the AI enables the energy storage to deliver a range of new value streams for solar projects, from reducing demand charges, to future proofing against changing rates, to capturing more value from the Investment Tax Credit. The resulting AI-connected network also creates new opportunities for customers to earn revenue from demand response, wholesale markets, and other utility programs. This is a major shift from the way that solar developers and EPCs are used to thinking about a solar project, as hardware assets.
Are your solutions suitable for residential systems and utilities or strictly commercial?
Stem leads in the field serving commercial, industrial, and public customers, and we support a range of partners adding storage to standalone, community, or commercial behind-the-meter solar projects. Our networks then serve additional grid-and utility-facing contracts with local capacity, aggregated demand reduction, and other grid services.
How much does your storage solution add to a typical solar project?
A wide range of factors influence the cost of a solar system or solar + storage system—such as customer goals, customer type, load shape, insolation, market rules, and so on. These make it hard to present a range of costs and returns, and in fact is why the artificial intelligence is so important to the deal. But very roughly, a 10-20 percent increase in system cost by adding storage is more than offset by what we calculate is up to 30 percent in additional customer savings from demand charge, load shift, and grid services value—and that’s not even counting the additional future value of decreased risk from rate changes. Moreover, we calculate roughly 40 to 50 percent additional margin for the developer from an intelligent solar + storage project.
Is a solar + storage offering new for Stem?
The new Stem Partner Network represents an extension of a business segment we’ve been actively developing for years. I really view this as part of the broader platform of Stem’s Athena AI solution and partnered solutions for customers. We’ve been deploying standalone storage projects since 2012 and solar + storage projects since 2014. In fact, Stem’s systems are already co-located with onsite generation at over 100 sites across multiple states. We started in Hawaii where some of our customers had solar—and we’ve heard many stories where our AI-driven storage services helped them manage demand peaks resulting from a drop in solar production, and even catch solar hardware malfunctions early before customers learned about it on their bills. We’ve had a lot of interest in California from K-12 and higher education for solar with storage, such as our services at Fresno USD and Colton USD, and that’s now extending to a wide range of commercial, industrial, and public sites. We’re also gearing up to assist solar partners in the Massachusetts SMART program and the NY Sun program when they open later this year.
What are the main things developers should consider when they’re looking at solar + storage projects?
As new state and federal incentive programs and value streams emerge, it becomes increasingly complex to maximize returns while ensuring program compliance. By improving project economics, adding storage increases the solar developer’s addressable market, so they can grow their business and win deals that otherwise wouldn’t have penciled. A top solar developer will be looking for the tools that can differentiate them in a competitive marketplace, add sales and enhance margins, and increase their customers’ project returns over the life of a solar system, but the software is the primary driver of that value and of the network’s value. Over nine years, Stem has invested in our proprietary artificial intelligence, project development, and operations capabilities that allow us to efficiently scale our 900+ energy storage systems across six U.S. states, Japan, and Canada. So we bring to the partnership long experience integrating the hardware and the software, financing the projects, and managing the complexities of tariff rates, program rules and compliance, savings reports, and asset maintenance.
Are these solar + storage systems going to be integrated into Stem’s networks and value-stack contracted grid-facing services?
First and foremost, AI can be used to dramatically expand the value of the solar generation system. But AI also enables the customer to join a vast storage network that performs grid-or utility-facing services when the storage system is not needed on site, which can offer additional contracted revenue for the customer. For example: if a certain area of the grid is experiencing high demand and strain, AI-enabled software can mobilize the network of available energy to meet that demand. As these new grid services and market opportunities emerge, we continuously add new revenue streams to the menu from which Athena will optimize and maximize value created for customers and the grid. From now on, it’s the AI acumen that will differentiate “intelligent” solar in the markets.
About Alan Russo
Alan Russo serves as Senior Vice President of Global Sales and Marketing at Stem, leading the expansion of Stem’s markets in the U.S., Canada, Europe and Asia. Before joining Stem in 2018, he led sales and marketing for REC Solar, a wholly owned subsidiary of Duke Energy. Previously, Alan was Vice President of Strategic Accounts for Bloom Energy. During his 10-year tenure, he led the development and deployment of hundreds of fuel cell systems at critical facilities around the U.S. Earlier in his career, Alan also led Asia commercial operations for American Power Conversion, a Schneider Electric company, managing over 350 employees. Alan earned his B.S. in aerospace engineering from Boston University.
The content & opinions in this article are the author’s and do not necessarily represent the views of AltEnergyMag
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