In a cheap retail market, the battery pitch is all about resilience.
Houston-based residential solar company Sunnova had been supplying batteries in markets like Puerto Rico and Hawaii, but not in its own backyard.
This week, though, the company introduced its SunSafe solar and battery product in the Lone Star State. That’s a surprising move, as Texas has seen exceedingly little home storage action to date; even large-scale storage has had trouble breaking into the highly competitive ERCOT market.
Whereas the early home storage markets of Hawaii and California feature some of the highest retail electricity rates in the country, creating opportunities for bill savings, Texas is known for freewheeling competition among retailers, which keeps prices much lower.
But the state has also suffered from hurricanes, flooding and even ice storms in recent memory.
“The value proposition for consumers in Texas is going to be more around the reliability and security that Sunnova SunSafe offers to customers,” said Chief Marketing Officer Michael Grasso. “If we continue to see the weather events and energy outages we’ve seen over the last year, there will be a strong market for energy storage in Texas.”
Sunnova hopes to capture a first-mover advantage. Sunrun hasn’t launched its solar-plus-storage product in Texas; Tesla is busy building cars; Vivint is in the early stages of commercializing storage after its initial supplier quit the market.
But the company can also leverage its on-the-ground presence in the state. It employs roughly 300 people in the Houston area, Grasso noted, and they’ve been hearing requests from friends and neighbors.
“Consumers are asking us in our hometown of Houston for this solution,” he said.
The average price for residential electricity in Texas was 11.44 cents per kilowatt-hour in August, according to the Energy Information Administration. That’s roughly half of what Californians paid, and a third of what Hawaiians paid.
Standalone solar needs to offer clear bill savings to make financial sense. It’s doing well in Texas, which ranked fifth in the nation for home solar installations in the first half of 2018, according to Wood Mackenzie Power & Renewables data.
But adding a battery increases the price. The customer has to decide whether the value-add sufficiently compensates for the higher expenditure. Texan homeowners don’t have to contend with time-of-use rates or demand charges, which takes away the battery’s ability to earn its keep by shifting electricity consumption throughout the day.
Given the nature of averages, some customers pay a lot more, Grasso noted. They might stand to save money with solar-plus-storage, even if a typical household might not.
But if people only bought storage for the economic rationale, the home battery industry wouldn’t exist. The real calculus will be how much value the customer places on energy independence and the security of power in the face of extreme weather.
“It makes sense for them to launch solar-pus-storage there, since Texas is a big market where consumers are looking to add storage for resilience from outages,” said Allison Mond, a senior analyst covering residential solar at Wood Mackenzie Power & Renewables.
“It’s also an area where there’s the desire to become independent from the utility, and even though solar-plus-storage doesn’t fully offer that, there’s an idea that it does,” she added.
It’s too early to know how the market will respond, or what value Texans will place on buying from a hometown company instead of a Silicon Valley startup.
Since Sunnova already has the footprint in the region, launching the product should be low-cost compared to entering a brand-new geography. And if the Texas storage market takes off, the company will have a healthy head start.