Under net billing, a rooftop solar owner is compensated for electricity sent to the grid at an “export rate” below the retail price of electricity, “often tied to the utility’s avoided costs,” says a Berkeley Lab study. Net billing is replacing net metering in many states, the study says, with some version of net billing having been adopted in ten US states as of last year, and proposed in five others.
The net billing structure provides an incentive for customers with rooftop solar to add storage, so they can use more of their solar generation after the sun goes down, rather than sell it to the utility at a lower value.
At current costs of battery storage, installing storage solely for solar self-consumption is “not an economical customer investment,” the researchers found, with annual customer bill savings ranging from $19-33/kWh of storage capacity for a small storage system, and declining steadily with increasing system size. Rather, residential storage adoption has been driven by a multitude of value streams, the study says.
Meanwhile, net billing barely reduces grid costs, primarily because residential batteries are “largely sitting idle on peak days,” the study said.
If residential batteries were instead operated with market-based dispatch, to maximize their value to the grid, their value at a standard system size, across five of the six utilities studied, would equal a combined annual energy value of $16 to $23 per kWh of storage capacity, plus an annual capacity value of $6 to $13 per kWh of storage. (For the sixth utility the energy value would be much lower, because the utility does not participate in a wholesale market with volatile wholesale prices.)
For four of the utilities, the combined energy and capacity value under market-based dispatch would be greater than the upper bound of customer bill savings from solar self-consumption under net billing, said study co-author Galen Barbose in an email. For the remaining two utilities, the grid value under market-based dispatch and the bill savings under solar self-consumption would be very close, and for all utilities the self-consumption values were influenced by an “aggressive assumption” for the price differential between consumption and export prices, yielding high estimated bill savings from self-consumption, Barbose said.
The authors say that replacing “inefficient” net billing structures with market-based dispatch for storage could yield a significant “Pareto improvement”—a solution in which at least one participant gains and no one loses. Utility customers would gain because system costs would be reduced through savings in energy and capacity costs. Owners of residential storage would not lose so long as they were compensated at least at the level of their current annual bill savings under net billing.
Market-based dispatch is possible for storage batteries with smart inverters because smart inverters can receive communications regarding price signals.
The study defined energy value as the reduction in grid operating costs, measured by wholesale energy prices. It defined capacity value (termed “peak value” in the study) based on a $50/kW-year marginal capacity cost, allocated across the top 40 load hours for the bulk-power system. It defined market-based dispatch based on hourly varying prices for both exports and consumption, with batteries allowed to charge from the grid or discharge to the grid at any time.
A sensitivity analysis projected that the relative advantages of market-based storage dispatch would increase through 2050, because its combined energy and capacity value would rise faster than the value of storage operated for solar self-consumption under net billing.
Unconstrained grid discharging of storage batteries could add stress on the distribution grid, the study said, but by limiting grid discharging, 50–70% of the grid value of market-based dispatch could still be achieved.
The researchers conducted their study using metered electricity load data from about 1,800 residential customers across six utilities. The open access article, published in the journal iScience, is titled “Private vs. public value of US residential battery storage operated for solar self-consumption.”
The authors will host a webinar to discuss their study results on August 4 at 1:00 p.m. Eastern time.
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Utility-scale batteries are largely sitting idle as well. Usage factors through May are sitting just under 5%.
https://www.eia.gov/electricity/monthly/current_month/july2022.pdf
People seem to think there are lots of opportunities to buy low and sell high. The low usage factors indicate this isn’t the case. To a large degree, the growth of the utility-scale market is being driven by policy mandates and fancy accounting practices. Moving forward price arbitrage is probably going to become much harder. Here are some quotes that sum up the problem.
“Current industry philosophy regarding the use of batteries posits that short-term price arbitrage could be used to maximize profits and result in greater overall reliability of the power grid. FGRS finds that this assumption is not supported by the current modeling approach, and that operation of storage in this manner may not necessarily support system reliability goals.”
“The FGRS found that the supply-and-demand mix envisioned in many of the more aggressive Scenarios did not leave enough time for storage to recharge in the 2019 weather year, even though it was not a particularly severe winter. Price arbitrage (whereby storage charges during low-cost periods and discharges during high-cost periods) is widely seen as a way for large BESS penetration to be both reliable and profitable. However, the FGRS found that although this methodology is realistic for the current grid resource mix, it does not meet the needs of the future grid envisioned in this study. For example, in today’s grid, sustained low demand occurs overnight. In a future grid where heating and transportation demands have been electrified and large quantities of wind are installed, the wind lulls can extend for days and even weeks. In these situations, charging opportunities shrink or disappear. Integrated regional energy storage using Hydro Québec’s reservoirs is a possible solution, but this study finds that the opportunities to store energy via this method are narrow. ”
“Most of the software tools assumed the use of storage for price arbitrage, but price arbitrage becomes complicated during sustained periods of low or negative locational marginal prices (LMPs). The FGRS analysis found that modeling storage with the objective of price arbitrage did not fully address the needs of the overall future power grid.”
https://www.iso-ne.com/static-assets/documents/2022/07/2021_economic_study_future_grid_reliability_study_phase_1_report.pdf
In other words, storage is barely being used now and it will be used less and less as we move to ever higher levels of RE. In high coverage modeling scenarios, the diurnal balancing opportunities go from the current level of 200ish days a year down to under 50 days. The main reason for this is that RE will be generating over 100% of our power for large stretches of time. Secondary reasons for this include competition from controllable loads like A/C, heaters, pool pumps and electric vehicles.
When the report mentions reliability goals they’re talking about supply security – they’re saying batteries don’t provide supply security. We’ll need to keep around some gas plants and use them during those wind lulls that last days or weeks.
https://www.utilitydive.com/news/utility-scale-battery-storage-growth-price-arbitrage-maximize-income/628744/
1) The pareto (onesided) advantage in deployed utility systems favors utility benefits with zero net benefit to consumers over the life of the user installed battery.
2) >75% of consumer battery instalations are motivated by poor utility scale outages/reliability.
3) In california with >$0.30/kwh prices over 300kwhr/mo (>90% of consumer battery installs) see substantial savings. Even more so with the growing trend for DIY installs.
4) Small 2kwhr (modular expandable) peak tou shaver battery systems have $0.50-0.68/kwhr With incentives.
Your generalizations just don’t pencil out using California’s very high power costs for non subsidized users > 500kwh/mo. Not even close for those using >700kwh/mo who represent the bulk of ca battery installs.
Climate change makes the future cost of running your ac from 3pm to 9pm (hottest hrs of day with largest % of ac use) an inevitable no Brainerd for both large and small battery systems at $0.22/kwhr.
Today… Net Metering … “gouges” Solar Producers for the “privelege” of Storing and using Night Time Energy from the Grid.
In fact.. today.. Utilities regularly provide LOW TARIFFS for Night Time use and High Tariffs for Day time (Peak) Use… aka TOD Metering..
Solar Energy generates and HELPS the Grid by providing decentralized Electricity.. and thereby reducing losses (higher margins).. as they feed their “neighbor(s)”.. but get NO CREDIT FOR THIS…
At Night, once again, as Industries etc.. get Lower “Non-Peak” Tariffs… the Solar Energy Consumers now.. get NO CREDIT… again..!!!
Yes.. a DOUBLE WHAMMY… for Solar Generators using PV Panels.
Then there is the Societal Cost of $0.31/KWhr, caused by Pollution, which is NEVER SEEN by or CREDITED To Solar Energy Providers as THE POLLUTERS GET AWAY… SCOTT FREE.. ONCE AGAIN… !!!!
IMPLEMENT THE ABOVE PMP …. POLLUTERS MUST PAY .. LEVY.. and watch Solar Energy coupled with UHES.. provide POLLUTION FREE ENERGY 24hrs/Day … AND USHER IN A ZERO POLLUTION FREE EARTH NEEDING $400 TRILLION…WITHIN A DOZEN YEARS FROM THE $36.5Trillion/yr on the 120,000RWhrs/yr of Energy Used .. TODAY….!!!!
Are the PUC & FERC Officials Listening …???
First, utilities mocked solar, then they refused it, then they capped it, then they monetized it by buying low and selling high, then they added surcharges to offset it to help “support their infrastructure” even though they were reaping profits from lower generation costs. Now they want to not only use your PV system with no compensation for *your* infrastructure, but they want to put wear and tear on your batteries again with no compensation for early replacement just because A: they are there. B: It makes them more profitable.
Your property is not required to increase profitability for the utility, so don’t let them convince you that your battery system or your electric car is needed for the sustainability of the service *they provide you*. If they need battery storage, they are fully capable of building it out on their own. Don’t let them lease yours for free!
I am sure, these studies were performed with lithium battery systems like The Tesla Power Wall. A single power wall, installed with permits is $10,500.00 and has a storage capacity of 14 kilo watt hours if it was not limited to 80% that gives only 11.2 kilo watt hours of total usable storage with the life expectancy of 12 years. Other lithium systems are about the same cost. Now using a Deep cycle Marine/RV lead Acid battery system, rack mount with Grid Tied inverters of the same size costs $2,400.00 installed with a life expectancy of 6 years so a set of replacement batteries costing $1,500.00 after 6 months is swapped out for a total of $3,900.00 for a 12-year run rather than the $10.500.00 for the lithium, changes the whole dynamics of costs and value. Using the lead acid system to power a home through the most expensive electrical rate of “Peak-Time” that can be up to 50 cents per kilo watt hour can earn a customer up to $2.50 per day in savings or more depending on the homes usage at those times. My own savings is based on a system equivalent to 4 power walls or 80 – 100-amp hour deep cycle marine/RV lead acid 12-volt batteries is about $100.00 per month with summer months being $300.00 and winter month being only $45.00. The annual savings of $1,200.00 times 12 years, the life of my system $14,000.00 and the cost of my batteries, which is 160 batteries over 12 years at $84.00. per battery is $13,440.00 which is a break-even point. So why get batteries at all? Because they will power you when the grid is down, free you from grip price fluctuations, make monthly bills more predictable and save the planet when used with rooftop solar.
Thank you for the great write-up. It’s very hard to find folks who have ACTUALLY done this and able to provide usable numbers when comparing PowerWalls and Lead-Acid systems. WN
Grid kWh are not equivalent to PV kWh due to grid losses. The important metric is the reduction of CO2 emissions from fuel powered power plants.
Daytime self consumed PV kWh and grid exported PV kWh have much lower grid losses as consumed by close neighbors.
Nighttime self consumed battery kWh and exported battery kWh have additional losses but less than grid losses.
Netmetering based on the entering and exiting kWhs measured at the meter should be replaced with rational payment system based on the CO2 emissions produced vs saved by the consumer.
The drastic price difference between peak and off-peak (30c/kwh) motivated me to buy and install a 30kwh storage system to complement my PV. I’ll be pushing +20kwh per day to the grid during peak and pocketing the $6/day arbitrage difference.
The $2k/yr savings will have my system paid off in about 7 years which leaves me around 10 additional years of profit (plus peace of mind knowing outages won’t affect my family).
Love the concept and the ideas ….but I am pessimistic if the US Congress (both sides or even current or future Presidents) will ever allow such a situation to pass. All solar programs are out to screw the home owners of their Solar investment. Look at CA (PGE/CPUC forex) or even the State govt at Sacramento – can you you even imagine that they will implement such a buyback?
Meh. We’ve been 100% grid-free for over a year now, with no compromises. It’s just not worth hooking up to the grid, with all the ugly wires, hassles, restrictions and BS rules that come with it. More effort should be put into getting everyone that can be, *off* the grid.
Is “Duh” an inappropriate or aggressive response?
It sure is when preaching to the choir. We are all on this site because we want to change the world and get off out fossil fuel addiction. With prices for fossil fuels going up and wind and solar going down, it will just be a matter of time and money and we will have saved our plant. But it had to start with us, taking the first steps, so others would follow.
It seems everyone fails to mention the damage caused by mining metals for batteries, and disposal of byproducts during manufacture and recycle. If off grid, batteries make sense. If power can be used nearby as it is produced, don’t use batteries. Cost to environment is greater than the few dollars you’ll put in your pockets. Not sure why we don’t force utilities to buy it at cost.
Really tho, can everyone just use less power maybe?
The ideal in my mind is a car-to-home system such as Nissan’s Leaf-to-home system which is in use in Europe & Japan. You’re buying that battery anyway as part of your car, and 40 or 60kw for the Leaf and much bigger for Teslas, Ford Lightnings, etc., you can have battery backup to power your home without buying a wall-mount battery.
Either that, or let’s figure out how to refurbish and wall-mount the batteries from cars that are no longer in use.
Anyone calculate how much environmental and mining damage is done from raw materials for bodies and conventional cars? Picking on just batteries may be a bit unfair.
1) The pareto (onesided) advantage in deployed utility systems favors utility benefits with zero net benefit to consumers over the life of the user installed battery.
2) >75% of consumer battery instalations are motivated by poor utility scale outages/reliability.
3) In california with >$0.30/kwh prices over 300kwhr/mo (>90% of consumer battery installs) see substantial savings. Even more so with the growing trend for DIY installs.
4) Small 2kwhr (modular expandable) peak tou shaver battery systems have $0.50-0.68/kwhr With incentives.
Your generalizations just don’t pencil out using California’s very high power costs for non subsidized users > 500kwh/mo. Not even close for those using >700kwh/mo who represent the bulk of ca battery installs.
Climate change makes the future cost of running your ac from 3pm to 9pm (hottest hrs of day with largest % of ac use) an inevitable no Brainerd for both large and small battery systems at $0.22/kwhr.
I have to admit that I am woefully ignorant as to grid tie systems and tariffs. What is to stop somebody from simply charging batteries at the off peak price and then utilizing the batteries during the peak price? (and not bothering with a solar array at all)
It has equalized the power companies load over the day and saved the consumer from paying the peak KWh price .
This is what Uninterruptable Power Supplies (UPS) do every day. Those little units, you buy to back up your Wi-Fi or computer, that keep them powered through short term blackouts or power surges, by switching from the wall socket AC to an internal 7-amp hour battery, come in larger sizes as well up to 2,800 watts. If you open the back of the unit, you will see the battery and there is nothing that says you cannot install an external battery, to the unit, that is 5, 20 or even 100 times larger. They come with a built-in battery charger sized for the 7-amp hour battery to be charge in 8 hours. If you install a time clock, on the wall socket and plug the UPS into the time clock and set the time clock to turn off the wall socket power during peak power hours, anything plugged into them will run off the batteries and no draw power from the grid until the time clock turns back on and powers the device and re-charges the battery. There is a 15% charging and discharging loss that needs to be considered so if the difference is less than 20% from low to peak times, it would not be worth it. But if the difference is a 40% to 70% difference, like in California where the price jumps up to 50 Cents per kilo watt hour from 28 cents per kilo watt hour, then it could save you some money and give you a “black out” backup system as well.
Using UPS units, I shave off 2.7 kilo watt hours off the higher priced electricity during those 5 hours, from 4:00 PM to 9:00 PM every day with 9 of the 350-watt UPS units running about 50 watts to 80 watts of lighting or computers. My recharge takes about 3 kilo watt hours of the lower priced electricity when the UPS units transfer back to utility at 9:15PM each evening. I pay 84 cents for the recharge but save $1.35 off the peak priced power. That is a net savings of 51 cents per day times 365 equals $186.00 per year.
My UPS units have been running for 15 years and no burn outs and the replacement batteries run about $50.00 per 35-amp hour, glass-mat, lead acid, non-spillable batteries (like used in motorized wheelchairs) every 4 to 5 years of usage. Cost of batteries every 4 years is $450.00 and the 4-year savings from peak time is $744.00 with a net gain of $294.00 over 4 years and I have a system that will give at least 5 hours of backup power during a power failure as well. The nice thing about UPS units, they have 4 outlets that run off of both the AC house power and the battery power and 4 outlets that turn off when the AC power goes down and come back on when the AC power is back. Those that turn of and then back on are the outlets you plug a 6-amp battery charger into to get the 35-amp hour battery to charge up over the next 19 hours before the next 5-hour cycle.
No solar is required to run this system yet it gives you both back up power and pay back from the high peak times your utility is charging you.
Why should the lack of grid support from residential batteries be a surprise? The residential batteries are doing what they are supposed to be doing.
Grid-focussed consumers may have hoped that capital investment at big scale might save them but that’s unrealistic. The optimal role for residential and all distributed users and generators is to be electron hoarders. There may be a way for small towns to inventivize them to share with close neighbors but that can’t be as good a win as neighbors doing what they need to do to provide for themselves. In fact I estimate small towns need to inventivize a lot to dissuade from hoarding. That’s as it should be and is simply a matter of economic efficiency.
This is not energy socialism after all.
Only by offering real value for the excess electricity can you persuade homeowners from just hording all the power for themselves. PG&E in California only offers 3 cents per kilo watt hour to homeowners for the extra electricity they put back on the grid at “True-up” for energy they don’t just keep and use. I had to install water features, landscape lighting and light up my front, back and side yards plus light up my neighbors back yards and install Electric heaters thought my home and turn of the pilot light to my furnace because the 3-cent value they give my electricity is cheaper than natural gas for my furnace. East Bay Community Energy was offering 10 cents per kilo watt hour and that was a fair price but decided to follow the 3-cent value of PG&E and dropped the True-up buy back to just over 3 cents. I saved $500.00 in natural Gas I no longer had to buy from the same people who sell me my electricity. After all of that using of excess power, I still had a Mega Watt Hour left on my NEM credit and they gave me $30.00 bucks for it but will not give it to me until I build up a $100.00 credit which means I won’t ever get it back unless I give them 3 additional megawatts at $30.00 per megawatt hour. Total utility scam.
Okay but why should anyone be surprised about utility scams? That’s all the more reason to be self-centered.
Now that NEM 3.0 will become law in April 2023, the rush will be on to finish op grandfathered in NEM 2.0 systems. But what will happen after April 2023? If the utility, no longer lets the summertime Net generation build up to 3,000 kilo watt hours but only give 750 hours credit, will the solar installations just go “off grid” and charge their own batteries an resign themselves to buying wintertime utility purchases of power as a cost of owning solar in California? Adding the allowed NEM 3.0 150% of previous years usage in solar panels will not get one through winter on credits but could add additional wintertime electricity to batteries for those long winter nights. My wintertime solar is on movable panels that can face up to 45 degrees south in the winter but rooftop solar is fixed and will not be able to charge up a battery system well no matter how many panels one can fit on a rooftop.