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The Tesla killer? Sonnen’s CEO on its US energy storage market strategy

The German storage company’s CEO talks U.S. markets, partnerships with utilities and the competition with Tesla

’s a common trope in the U.S. power sector to talk about the day that energy storage “went mainstream,” and was introduced to a broader audience beyond energy and technology circles.

Though batteries have been around for decades, that day was about a year ago — April 30, 2015, to be exact. That was the day Tesla Motors introduced its first two energy storage products, the residential Powerwall and the grid-scale Powerpack.

Coming from a household name like Tesla, whose fashionable electric cars are seen as pacesetters in the automotive industry, the batteries sparked new consumer interest in energy storage, and pre-orders for the product soared.

But Tesla is far from the first or only player in the residential storage market. While the sector is still in its nascent stage in the U.S., market conditions elsewhere have allowed other storage companies to develop working business models for residential consumers. Now, some are seeking opportunities on American shores.

One such company is Germany’s Sonnen. Since its founding in 2008, the Bavarian energy storage company has built eight generations of its all-in-one residential storage product, shipping its 10,000th system earlier this year. In December, it began offering its sonnenBatterie system — ranging from 4 kWh to 16 kWh — to customers in the U.S., with an aim to sell 3,500 of them in the country by the end of the year.

The first of those battery systems was shipped to Hawaii, a state whose high electricity prices and recent net metering reforms make it an appealing market for residential storage companies. That’s where Utility Dive found Boris von Bormann, Sonnen’s CEO, featured on a panel at the Maui Energy Conference last month. After his talk, he spoke to Utility Dive in an interview about Sonnen’s market strategy, its effect on utilities and competition with Tesla.

Sonnen eyes key markets: Hawaii, California and the Northeast

After Hawaii utility regulators decided to abandon retail rate net metering for rooftop solar systems last year, many installers reacted with alarm, saying it would slow adoption of rooftop solar systems.

But for residential storage, the story is much the opposite, von Bormann told Utility Dive. When the regulators ditched net metering, they replaced it with two options — a grid-supply option for customers who want to export generated electricity back to the grid and a self-supply option for those who want to generate energy for personal use only.

That second option — the self-supply tariff — provides an excellent opportunity for Sonnen’s storage product, von Bormann said. Under that option, Sonnen’s 4 kWh battery system paired with a rooftop solar system should provide a return on investment in about 6.5 years.

Hawaii is an obvious market for Sonnen’s product, which combines a lithium ion battery with an integrated inverter, switch and disconnect for an integrated solution that von Bormann claims can be installed right out of the box. The state has long been plagued by the nation’s highest electricity prices due to its isolation and reliance on fuel oil for generation, while nearly 30% of the island’s single family homes have rooftop solar.

Those factors open a huge opportunity for residential storage in the state, but the Sonnen CEO says his company is also looking to grow nationwide.

In the Northeast, people may find Sonnen’s battery appealing for backup power during weather-related outages so “you’re not standing at the gas station for two days to get your diesel for the diesel generator that you need to power the home,” he said. Such issues remain fresh in the minds of New England residents, many of whom lost power for extended periods during the Polar Vortex of early 2014.

California is another promising market for Sonnen, von Bormann said. While the Self Generation Incentive Program (SGIP) offers some money for certain home storage facilities, the Sonnen CEO was more excited about the transition to time-of-use (TOU) rates in the state. When California regulators preserved retail rate net metering until 2019 in a decision made earlier this year, they stipulated that all new net metering customers must be on a TOU rate, and the state’s utilities are preparing to transfer their entire customer pool to TOU rates by 2018.

Read full article at Utility Dive