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Does Storage Improve Residential PV?

Feb. 11, 2021
Is securing a backup power source a sound argument for installing solar or solar plus storage?

Hurricanes, derechos, tornados, nor’easters and now, planned preventive power shutoffs, are among the electric service threats that come to mind for homeowners and small businesses considering the addition of a backup power source.  For decades, the only viable choice for protection during a grid outage was a backup generation source such as an emergency diesel or gas fired generator. Today, solar advocates argue that solar plus storage for homes and businesses may be a more cost-effective solution than fossil fuel backup generators. Is securing a backup power source a sound argument for installing solar or solar plus storage?

Unfortunately, there is no easy answer to this question. However, working through several related issues may help homeowners and small business owners arrive at a sound economic decision. First, does solar make economic sense for one’s basic electric supply? Second, a compound question: Is backup service critical and how frequently and for what duration may it be required?

A recent article from T&D World provides a simple methodology for comparing utility supplied electricity pricing to that from a small scale, on-site, grid connected solar system (see: “Residential Solar: Is it Time?” March 2020). Following is a quick review: NREL’s PVWatts calculator is used to estimate the local solar resource and obtain an annual solar production figure. An escalation rate for long term utility supplied electric service is then determined to provide an apples-to-apples comparison to a long-term investment in a solar system. Finally, another NREL program is used to calculate the levelized cost of energy (LCOE) from the utility and from the prospective grid connected solar project.   

Obviously, one’s location is critical to both the solar production potential and numerous other relevant state and local renewables incentives and taxes that affect solar economics. The author previously determined solar for basic supply was not cost-effective at his home in Pennsylvania. The situation may be different elsewhere around the country. Newly updated PV cost estimates indicate residential solar costs have remained relatively stable this year with pricing ranging from the national average of $2.84/Watt DC, cited by the Solar Energy Industry Association in 2020 to about $3.70/Watt (About the Solar Market Insight Report | SEIA) depending on supply and demand, labor costs and other factors.  

Where solar is economic the logic of adding a battery backup system may seem straight forward. The backup supply analysis can for the most part be separated from the basic supply decision. The only caveat is the value placed on service interruptions, which is touched upon in the National Renewable Energy Laboratory (NREL) study referenced below. The author obtained quotes for battery backup to a proposed solar supply system. The pricing ranged from $865 to $1,587 per kWh for usable capacity of 10 to 13 kWh and continuous usage between 4 and 5 kW. This capability translates to partial service for several hours during a grid outage, with a cost adder equal to one third or more of the total PV system.    

A portable generator capable of continuous delivery of 4 to 5 kW equivalent to the above quoted battery backup system would cost approximately $112 per kWh, requiring approximately six gallons of fuel to operate the 6-hour maximum discharge duration quoted for a battery of similar capacity.  The cost of a permanently installed system with fuel storage and automatic activation in the event of an outage is estimated at $300 per kWh.  The obvious question is why would someone choose solar plus storage as opposed to an emergency generator? 

NREL suggests that the availability of fuel and poor emergency generator availability have influenced the back-up supply decision in places like remote islands. However, for residents and businesses in suburbia, more critical factors may be the frequency and duration of outages, limitations related to installing a fossil-fueled generator,  and the ability of a solar plus storage system to island and provide electricity and recharging during a grid outage. To limit unintended system back feed, basic grid tied solar systems seen in homes and small businesses are not designed to operate during grid outages. NREL estimates the cost to build an islanding system may increase the basic PV system cost from 10 to 50% and, obviously, this additional cost should be justified by the added resiliency this enhancement provides. 

The author found that the breakeven point for a solar plus storage system in South-Central PA would likely occur beyond 20 years. The resources cited here will help homeowners and small businesses determine the payback in their situation. NREL’s resiliency whitepaper (Valuing the Resilience Provided by Solar and Battery Energy Storage Systems: nrel.gov) will assist readers in valuing increased availability.

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