The largest foray into residential battery storage in the U.S. to date will happen in Orange County.
The pending effort is driven by two longtime friends and attorneys who work in the field of renewable energy and began talking two years ago about a possible energy storage venture.
Andrew Meyer and Matt Rising co-founded Swell Energy, a Los Angeles-based operator of an online platform that matches homeowners with battery storage devices from several companies, arranges to have the batteries installed, and works out financing packages.
“It’s the final mile for energy storage, connecting the homeowner with the battery technology,” Meyer said.
The partners have arranged for the installation of about 20 batteries, but that could be small fry in the not-too-distant future. Swell has been selected by Southern California Edison to lead a pilot project to place batteries into an estimated 3,000 homes in South Orange County by June 2019. It’s the largest single project anywhere in the country aimed at getting batteries into homes—10 times the size of a similar program launched this summer in the New York area.
The project is part of Edison’s effort to reduce the draw on the grid by homes in the area affected most by the closure of the San Onofre nuclear plant four years ago. The virtual mini-power plant Swell proposes could supplement Edison’s typical supply with 5 megawatts—a small portion of the 2,200 megawatts San Onofre produced before it went offline in 2012, but an addition that could be crucial on the margins in periods of peak demand.
A strong performance of the pilot program could propel Swell into the front ranks of the fledgling home energy storage market.
The evolving nature of battery technology renders aspects of the effort a moving target.
Meyer believes the company is up to the challenge in any case. He said Swell is using some of the $1 million in seed money it raised from angel investors over the past year to reach out to homeowners in South OC, explaining the benefits of battery storage. The company already has received a few reservations.
“We are on track to exceed the 3,000-home mark in the project area, given our partners in the area and the current trajectory,” he said.
High School Pals
Meyer and Rising met in high school in Los Angeles. They kept in touch as they went to law firms on separate coasts: Meyer was an attorney at Latham & Watkins in Los Angeles specializing in renewable energy projects, and Rising was at a New York law firm also practicing in the renewable energy arena.
They both see benefits of home batteries, especially for homes outfitted with solar panels. The energy generated by the panels when the sun shines can be stored for use in the evening, sharply reducing reliance on the grid. Homes without solar panels, meanwhile, can use batteries to store energy purchased for low prices during off-peak hours and then turned on during peak hours—a practice called time-of-use shifting.
Current lithium-ion batteries that can fit into a console smaller than a refrigerator cost as little as $10,000, and the cost of batteries and installation can run less than $15,000. Larger batteries can cost upwards of $20,000.
Swell offers battery systems by such players as Sonnen, LG, Panasonic and, just recently, Tesla Motors.
Swell’s revenue stream is from monthly service subscriptions to the online matching platform.
Finance Plan
The company is working on an in-house system to finance the purchase and installation of battery systems, then it can start receiving payments made by customers resulting from those financing packages. The packages would allow customers to apply savings from their utility bills toward paying off the systems over time. The systems could be completely paid off in about 10 years, and the homeowner then would be free to reap the power bill savings.
Another risk can be found in the pioneering nature of the sector.
“Right now, this home battery market is strictly for the early adopters,” said Brett Simon, an energy storage analyst with Green Tech Media in Boston. “The batteries are just becoming affordable for homeowners, but right now, only at the high end. It’s still not affordable for the typical homeowner.”
Edison will provide subsidies to the pilot program if California’s Public Utilities Commission approves the plan. The commission likely won’t decide the issue until 2018, according to Caroline McAndrews, director of the preferred resources pilot program for Edison.
Only customers who install a battery system through the pilot program would be eligible for Edison subsidies.
Edison will make monthly payments to Swell, which will use the money to cover the cost of installing and operating systems.
Permit Hurdles
Getting the batteries into 3,000 Orange County homes won’t be easy. The biggest hurdle is likely to be obtaining permits from the various cities covered by the project, including Irvine, Lake Forest and Mission Viejo. The technology is still so new that most cities don’t have the specific permit procedures set up yet.
Swell’s Meyer said about 300 homeowners have signed up with the company for home battery installation over the past nine months, but only 20 systems have actually been installed.
Competitors
Swell also could run up against stiff competition. Over the past year or two, SunPower Corp., Sunrun and SolarCity Corp. all have launched battery programs aimed at the residential market, Simon said.
Meyer said he’s confident that Swell’s technology platform and focus on lining up customers with the right battery will allow the company to go head-to-head with the solar giants.
“We’re trying to simplify it, make it super affordable and provide as much immediate benefit to homeowners and utility companies as possible,” he said.
Fine is a staff writer for the Los Angeles Business Journal, a sister publication of the Orange County Business Journal
