Is It Worth Investing in Solar PV with Batteries at Home?

Benefits of Using Battery Storage
The study shows that without a battery, homeowners only use 30-40% of the electricity from their solar PV panels, while the rest of the electricity is exported to the grid with very little to no benefit for the owner. With a home battery, the self-consumption of solar PV in the building almost doubles, allowing the residents to reduce electricity imports from the grid by up to 84%, which can in turn help the owner to become less dependent on the grid and electricity prices. In addition, the researchers found that while PV-batteries are presently not really profitable for residential consumers, they can become so with the implementation of slightly different policies and regulations, even in high-latitude countries where solar irradiation is relatively low.

Energy Policies for a Decentralized Energy System
The authors propose some novel energy storage polices that offer a positive return on investment between 40% and 70% for residential PV-battery storage, depending on the policy. These include, among others that national renewable energy policies adopt more innovative incentives to enhance the economic profitability of decentralized green energy solutions based on the contribution of these systems to the grid. The results indicate that this can be easily achieved by, for example, rewarding consumers for using their solar PV generation onsite, instead of encouraging them to export the excess solar energy they produce to the grid.

The researchers further posit that the way utility companies and electricity distribution firms generate income today may itself be a hindrance to promoting the self-consumption of renewable energy in buildings, as these companies generally charge consumers for each unit of electricity imported from the grid. If consumers therefore become independent from the grid, grid operators and utility companies would lose a significant part of their income. Such a scenario calls for new business models and operating modes to guarantee that central utilities do not see decentralized solutions as a threat to their revenues.

In today’s renewable electricity generation environment, capital subsidies are one option to partly pay for investment in batteries. The study points out that these policies are costly for the system, and may not automatically result in system-level benefits as they do not reward the optimal use of batteries. In this regard, Zakeri and his colleagues propose a “storage policy” that rewards residential battery owners to store and discharge electricity whenever the system needs it. The profitability of PV-battery systems of course also depends on the type of retail pricing mechanism in the system. The findings indicate that dynamic electricity pricing at the consumer side, such as hourly electricity prices with an enhanced gap between off-peak and peak prices, will encourage consumers to use home batteries to benefit from charging at low price hours and discharging the battery when the electricity price is high. This way of operating a home battery could help reduce the pressure on the electricity grid at peak times, which has significant benefits for the system.

“Traditional, central energy structures are transitioning to new systems based on decentralized, renewable energy solutions. This requires more flexible, modern, and effective policies that can guarantee the social and economic benefits of the energy transition. We hope our analysis contributes to a better understanding of the role of some energy policies that can promote decentralized energy solutions,” Zakeri concludes.