Are Battery-Backup Systems Cost-Effective Yet?
The effectiveness of battery storage is measured in two categories: 1) the desire for back up power, and 2) the opportunity for peak shaving. Both of which are more limited than customers might realize.
The majority of battery systems installed on homes today have less than 15 kW of storage capacity. So when customers discover that they cannot back up their entire house without investing $30,000 or more for multiple battery systems, they typically realize that a home generator is still a more cost-effective approach for the desire for backup power.
Peak shaving can be a saving grace if the savings between time-of -use (TOU) rates for the customer are enough to be significant. However, this has been a topic of controversy between companies. It is the stance of Solar Negotiators that the math just doesn’t work out quite yet. We want to make sure recommendations we give our clients benefit them to the fullest, and investing in batteries just isn’t quite cost-effective in today’s market.
Here is how it is understood:
The key to this is time of use (TOU) utility rates. People are making the assumption that you can store solar power at peak production times, and then utilize it later in the day. This would save people money in their minds because they are using their stored power instead of pulling from the grid during a more expensive peak rate.
Here are the facts:
Unless the difference between the peak and off-peak rates is at least $.20 per kwh, then it will never pencil out as a savings opportunity. PG&E’s ETOUA time-of-use rates are changing.
Peak hours will be from 4pm-9pm Monday through Friday, June through September. The cost difference is roughly $.08 cents per kilowatt between the off-peak and peak rates.
A 10.0 kw battery system can only cycle once per day. Most power you could shift from peak to off-peak using your battery would be 10 kW. The savings differential is only eight cents. 10kwh x $.08= $ .80 per day savings. That’s not a whole lot of money to be saving, even accrued on a monthly or annual basis. You also need to consider that weekends are excluded so you have 22 days per summer month Mon-Friday.
Fact #1: 22 days X $.80 = $17.60 per month of savings but for only 4 months per year
Fact #2: $70.4 per year of savings by utilizing a battery for this purpose. This is not a high enough number to justify the investment for just the purpose of saving money.
Fact #3: Average battery installation costs roughly $12,000 or more before subsidies.
There are other factors that can increase the savings number but only in very minor ways. Some utility rate schedules have a bigger difference between the peak at off-peak hours but typically not enough to justify such a large investment. Batteries are still in their infancy and will see significant improvements in efficiency and cost over time. Although solar pays for itself very quickly, most people are waiting before installing batteries for the reasons listed above.
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Original Article: Power Solutions for Blackouts