The rapid development of rooftop solar and battery storage technology could be as transformative to the economy and modern life as the U.S. oil and gas boom, Energy Secretary Ernest Moniz said.
“It’s pretty dramatic,” Moniz said yesterday in an interview with Bloomberg News at the IHS CERAWeek conference in Houston. “They are growing very, very fast.”
Batteries allow customers with solar panels to store energy during the day and then tap the excess overnight when the sun goes down. The widespread use of electric vehicles could reshape the development of cities, and applying the same battery storage technology to transform the U.S. energy system has “huge potential,” Moniz said.
Battery storage advances could threaten the 100-year-old monopoly utility business model that books about $360 billion in annual power sales. An increasing number of customers are reducing their dependence on the grid, turning to solar panels and battery storage as a way to reduce their bills.
“Storage is a huge deal,” Moniz said.
New techniques including directional drilling and hydraulic fracturing in shale formations helped U.S. oil production grow by a record of more than 1 million barrels a day last year, when the U.S. is estimated to have surpassed Russia and Saudi Arabia as the world’s largest producer of oil and natural gas.
The advances have upended world markets as a country that was once far more dependent on imports is now weighing exports. The U.S. met 86 percent of its energy needs in the first 11 months of 2013, the highest since 1986, according to the U.S. Energy Information Administration.
Exxon Mobil Corp. researchers involved in studies of the impact of new technology in 2008 identified batteries that could store energy such as those used in electric vehicles as the most disruptive potential energy breakthrough, according to “Private Empire,” a 2012 book by journalist Steve Coll.
“If there was one emerging energy technology that seemed to have the practical potential to disrupt the oil industry’s assumptions about the transportation economy, this was it,” Coll wrote.
Exxon ultimately concluded battery use in electric vehicles hadn’t advanced to the point of being transformative, he wrote.
Homeowners might use battery storage, combined with solar power, to further reduce their dependence on utilities and sell electricity back to the grid, a new business model known as distributed generation.
Solar companies from SolarCity Corp. to SunPower Corp. are expanding into backup energy storage. Battery costs are expected to decline as manufacturers, including electric car maker Tesla Motors Inc., ramp up production. In May 2013, Tesla paid the Energy Department $451.8 million remaining on the Advanced Technology Vehicles Manufacturing loan it was awarded in 2009.
Last week, Tesla Chief Executive Officer Elon Musk said he plans to build a “gigafactory” for lithium-ion batteries, which could further disrupt the electric utility business as the expense for energy storage is driven down, according to Morgan Stanley.
Electric vehicle costs have declined by a factor of two in the past five years, and they will need to come down by “another factor of two or three” to be affordable for an average consumer, Moniz said.
Tesla, based in Palo Alto, California, is seeking to cut the cost of lithium-ion batteries by at least 30 percent, it said last week.