US solar giant SolarCity today announced the launch of a microgrid product with built in energy storage capability. SolarCity is going after the commercial market, targeting municipalities, which is a segment the company views as underserved.

Extreme weather events have been increasingly disruptive for municipalities in recent years. See Hurricane Sandy as an example. SolarCity is offering a comprehensive solution – from design, installation, commissioning and service – along with maintenance, Daidipya Patwa, the company’s Sr. Product Manager for Grid Engineering Solutions told Breaking Energy.

SolarCity has traditionally installed microgirds on campuses like those containing medical facilities and military bases, but they see a gap at municipality level. “It’s interoperable with the grid but can also be islanded. Historically, these have been major complex projects that can be cost prohibitive for lots of organizations and communities. We have a pay-as-you-go model that can offer these services more affordably,” said Jonathan Bass, VP of Communications.

“Cost will vary depending on customer needs and the degree to which they want to use renewable energy,” explained Patwa. The microgrids will use new lithium-ion Tesla batteries and can be scalable by installing larger or smaller battery banks.

There is also a demand response component. The solution would provide resiliency for outages, but day- to-day it can help manage renewable energy loads by storing power off peak when electricity is cheaper and releasing it during more expensive peak load periods.

SolarCity has received interest from a few municipalities and Patwa specifically mentioned New York, where a new regulatory framework dubbed “Reforming Energy Vision” provides funding for microgrids at critical facilities.

With regard to the broader US solar market, Bass said the commercial sector is “lumpy,” but he expects there will be more commercial solar development in 2015 than there was last year. The investment tax credit for solar is also due to wind down in the coming years, which injects a fair amount of uncertainty into solar businesses. The ITC is only authorized at 30 percent through 2016 and is scheduled to fall to 10 percent thereafter for non-residential systems.

“We certainly think potential ITC expiration is going to drive demand. An extension would make sense, but it’s hard to say what will happen if it expires. We are maniacally focused on cost reduction and seek to reduce costs such that we can offer solar at discounts to utility rates,” Bass said.