Published on October 25th, 2016 | by Carolyn Fortuna
A Solar-Plus-Storage Startup Focuses on Optimizing the Battery
Swell Energy has announced it will be offering an innovative home energy solar-and-storage solution for residential homeowners. Instead of manufacturing the entire package, as might be expected, Swell packages batteries made by its partners— LG Chem, Sonnen, and Tesla. The result is an all-in-one residential energy system that is fully integrated and affordable. Since it has a battery-centric product, Swell is a bit different than other companies.
With its focus on optimizing the battery, Swell Energy’s EnergyShield combines rooftop solar and lithium-ion batteries into an energy management system. Usually, most home energy products are purchased a la carte: homeowners buy the rooftop solar system, but only a fraction of solar customers buy storage as well. “Right now, storage is being sold electively,” said Suleman Khan, a managing partner at Swell Energy. Homeowners often have considered energy storage as an accessory, an add-on, instead of being an integrated component of a whole system. With Swell’s innovations, the isolation perspective in home energy systems could be changing.
Swell markets its systems as being able to keep a home and family safe from grid volatility for as little as $1 a day, adding that, with “self-reliant power from solar panels and smart home batteries, we can all be part of the solution” to create a sustainable world. Swell claims that just a monthly fee allows its customer base to have full-service electrical independence.
How a Home Battery Works
A home battery plugs right into an existing electrical system to optimize daily energy use. It takes in power from the grid or from solar panels and then strategically deploys it to a residence. It can also provide backup power during a grid failure.
Until just recently, home batteries have been bulky, costly, inconvenient, and functionally limited. Swell Energy specializes in the new generation of smart, lithium-ion home batteries that power electric cars like the Tesla. Working alongside its partners, Swell provides compact, automated, and cloud-connected home battery systems. They require no maintenance and are predicted to last over 10 years.
Swell Energy is a Winner of SCE’s Preferred Resources Pilot
As a residential energy storage developer and aggregator, Swell has received an endorsement from California’s second-largest utility, Southern California Edison (SCE) to distribute 20 megawatt-hours of storage across 3,000 homes for grid services. Swell was a winner of SCE’s second Preferred Resources Pilot (PRP), a multi-year study designed to determine whether clean energy resources – including solar, wind, energy storage, energy efficiency, and energy conservation – can be acquired and deployed to offset the increasing customer demand for electricity in central Orange County (OC).
The PRP is an attempt to see whether non-traditional energy resources can supply electricity to meet the growing demand in a densely-populated area with the same reliability as a traditional power plant.
The call for projects came as a result of the growing demand for electricity in conjunction with concerns over grid reliability. The closure of the San Onofre Nuclear Generating Station and the impending retirement of nearby ocean-cooled power plants were primary factors in the search for energy alternatives. According to SCE’s Caroline McAndrews, the PRP’s director, “The need for electricity in this area is increasing, and we want to meet those new needs with clean energy resources.” SCE looked to the market for innovative solutions, including behind-the-meter energy storage, energy efficiency, demand response, and solar photovoltaics.
Based on the initial pilot’s results, the need for new gas-powered power plants in the OC region may be deferred or even eliminated. In the second year of the pilot, SCE picked six companies to build 125 megawatts of distributed energy storage and demand response. The PRP’s learning curve continues to examine how distributed energy and the grid can work together. As part of the process, residential battery startup Swell was awarded a contract, positioning it well within the burgeoning decentralized alternative energy sector.
The Details behind Swell’s Plans to Outfit 3000 Homes
Under the SCE contract, Swell will install the assigned 20 megawatt-hours of backup energy across 3,000 OC homes. The systems must be ready with 15 minutes’ warning to dispatch up to 5 megawatts for a continuous 4-hour period. Swell handles the cloud-based software to aggregate energy from the fleet of batteries and push it onto the grid. The contract calls for everything to be operational by mid-2019. Swell will start its installs in Q1 2017 and plans to finish by Q2 2018. Per SCE contract, each clean energy resource which received the SCE second year pilot nod is expected to come online at least between 2019 and 2020.
Swell picked three sizes for the EnergyShield that increase the capacity a residence can generate. The basic setup starts with 2.1 kilowatts of solar paired with a 6-kilowatt-hour battery, enough to power a kitchen and internet in a blackout, the company says. Overall, EnergyShield weights the balance more heavily toward storage than typical household installations. The preset, standardized format functions as a key element of the product strategy, because it reduces customer purchase costs. “We believe the EnergyShield could get on a majority of rooftops without much customization,” Khan explained. “You don’t need hours or days of planning to get it on your roof.”
The Yet Unrealized Potential behind Swell’s All-in-One System
Swell’s arrangement with SCE positions it well in order to pitch investors. It’s appealing to be able to offer a guaranteed payback from a major corporate entity, compounded with the anticipated payments from individual customers. That lowers the risk for the financing. The company is in the midst of raising a $40 million fund to finance the rollout of the systems. “We are convinced that the cost of capital for EnergyShield will be lower than the cost of capital for typical residential PV systems,” Khan, the Swell managing partner, said. Swell plans to leverage contracted revenue streams for grid services provided by the network of installed EnergyShields.
If Swell Energy is all it portends, its all-in-one home energy product will make residential storage more marketable and profitable. The Venice Beach-based Swell promises its customers to “get you the best product, fastest, and the best financial reimbursement available.” The product, however, is still in the planning stages. Even with the SCE acknowledgment, Swell’s new residential all-in-one model is yet unproven.
In the meantime, a few other companies are piloting this type of residential storage, like Tesla’s 500-system program with Green Mountain Power and Enphase and SolarCity’s 50-home pilot with PG&E. Moreover, Sunverge has shipped thousands of systems, raised more than $50 million, and contracted pilot programs for aggregating systems with Con Edison and the Australian utility AGL.
Photo Credit: Swell Energy