Why design flexibility matters for residential storage

by Michael Mahon, SMA America Solar Academy Trainer

Residential energy storage is poised to be the next “big thing” in solar, showing 70% growth quarter over quarter since the beginning of this year, according to GTM Research. The promise of solar-plus-storage is the flexibility it offers, allowing system owners to dispatch the energy their systems produce at whatever time is most economically opportune.

Utility-scale systems can provide grid support functions such as frequency response, or perhaps deferral of transmission and distribution system upgrades. Commercial storage is often used to offset peak demand charges. Residential storage does not usually make economic sense where utilities provide full retail net metering. However, residential storage is experiencing a groundswell of interest and media coverage as more utilities adjust net metering policies or introduce additional restrictions on PV systems installed in their service territories.

Still, the economic use cases for residential solar-plus-storage are less clearly defined than for utility or commercial systems. They depend not only on the system owner’s usage profile, but current and future rate structures, and any possible grid services market the system owner might participate in. To maximize the economic benefits of residential storage, a system needs to be designed with great flexibility.

Grid-tied storage design is certainly different than off-grid design. Off-grid solar-plus-storage systems are generally designed to cover a system owner’s energy needs for several days. That design aspect covers the energy capacity. The power capacity is determined by the peak load demand. If the system is DC coupled, where the solar and storage are DC inputs to the same inverter, then the inverter capacity must be able to accommodate peak load demand as well as peak solar production. AC coupling, where the solar production is delivered as AC power from the PV inverter to the loads panel powered by the battery inverter, allows the PV inverter and battery inverter sizing to be de-coupled. The PV inverter is sized to the peak solar production, and the battery inverter is sized to the peak net load demand.

Though AC coupling provides flexibility for off-grid systems, the design is always based on the system owner’s usage. The flexibility of the AC coupled solution really shines for system owners looking to incorporate storage into their grid-tied systems, because it allows them to achieve reasonable payback periods. The potential value for grid-tied storage will vary greatly for each system owner based on their daily energy usage and their utility rate structure. Customers looking to achieve zero-export may only need to size the storage to the difference between PV system production on a good day and their daytime loads, while those aiming to avoid time-of-use charges will size their storage to cover a few hours of daily usage.

DC coupled systems for grid-tied storage do offer some design advantages. When installing solar and storage at the same time, a DC coupled, or what might be termed “Fixed Hybrid Storage system,” utilizes one inverter. This requires less installation space and may allow lower installation cost. The tradeoff is that the inverter size is linked to the solar and the storage components based on the specifications of the inverter chosen. Most of the time, storage cannot be retrofitted as part of a DC coupled system while utilizing the existing inverter.  There are some inverters that could accommodate such a retrofit without much modification, but they are the exception, not the rule.

AC coupled systems, or what might be termed “Flexible Storage Solutions,” allow for the PV system size and storage system size to be fairly independent.  An AC coupled grid-tied storage system could be installed without PV, or retrofitted into a wide range of PV systems. The economic drivers for grid-tied storage will be best addressed by different ratios of PV power to storage power, as well as differing amounts of energy storage depending on customer location, usage and utility – so having more flexibility allows for optimal design.

For example, consider a design to achieve zero export. For a utility customer with a high price per kilowatt-hour (kWh), the optimal design might be a PV system large enough to offset all their usage.  This scenario would require energy capacity to cover the nighttime usage, storing all surplus energy during the day and then delivering it at night. If the customer’s load profile matched the PV production profile and nighttime usage was moderate, the storage system power capacity might be significantly lower than their PV system power capacity, with the energy capacity sized to meet nighttime needs.

Conversely, if the customer load profile is fairly consistent at all hours, then the PV and storage power capacities might be similar, and the energy capacity would need to be increased as more of the PV production would need to be stored and used to offset nighttime demands. This same zero export goal with a lower utility price per kWh might lead the customer to vastly different designs.  With a load profile similar to the PV system production, a much smaller storage system (both power and energy capacity), designed only to assure no excess PV power is back-fed rather than try to cover nighttime energy needs, might have the best return on investment. The consistent load profile scenario might have a storage power capacity closer to the PV power capacity, but a lower energy capacity, as it is no longer economically favorable to offset all nighttime usage.

Similarly, time-of-use drivers for grid-tied storage would benefit from the Flexible Storage Solution. In this scenario, a utility customer faces significantly higher utility price per kWh for a few hours each (or most) day. This is the “peak” rate. The economic driver for storage is the delta between the “peak” and “off-peak” rate. If the delta is high, but the “off-peak” rate is not high, then a storage system, even without PV, could make economic sense. If the delta is fairly high and the “off-peak” rate is also high, then using PV to provide the energy that offsets “peak” usage might make sense. Here, the de-coupled nature of the PV and storage systems in the Flexible Storage Solution is advantageous. If the PV system produces close to the “peak” time, then the storage system capacity can be small. If the PV system produces primarily in “off-peak” hours, then the storage system can be sized larger, storing most of the PV production and offsetting “peak” usage.

The vast number of utilities’ rate structures and changing requirements means that customers looking to maximize their return-on-investment when considering solar-plus-storage systems will be best served with the greatest flexibility in their system design to match their utility scenario and their own unique load profile. The AC coupled, Flexible Storage Solution approach allows for the greatest range of options for optimal design and performance.