A new report from the National Renewable Energy Laboratory aims to provide a missing metric for what could become one of the fastest growing segments in the storage market, the pairing of solar power and energy storage.
GTM Research estimates behind-the-meter storage applications will account for 50% of the U.S. storage market by 2021, as measured by megawatts installed, up from about 15% currently.
While not all of the BTM market will be solar+storage applications, some companies are making solar+storage a part of their business model. Tesla last fall said it would be offering its Powerwall battery with a new residential solar rooftop, and Sunrun in December rolled out its BrightBox solar+storage service to the California market.
One of the things missing in that market – and something that could help drive the combination of solar and storage – has been a ready means for customers to assess their investment, says Eric O'Shaughnessy, one of the authors of the report and a member of NREL’s markets and policy analysis group.
One of the key metrics consumers look for is the pay back period, an understanding of how long will it take to recoup their investment. Consumers looking at putting solar panels on a roof often use $/watt to evaluate that investment, but there is no similar metric for storage, said O'Shaughnessy.
“A battery is very versatile, but that can complicate valuation,” he said.
The NREL report, “Installed Cost Benchmarks and Deployment Barriers for Residential Solar Photovoltaics with Energy Storage: Q1 2016,” aims to fill a gap in the existing body of research by providing “detailed component- and system-level installed cost benchmarks for residential PV-plus-storage systems.”
O'Shaughnessy is quick to say that the report does not address the question of the economics of combining solar and storage. The current report only aims to provide a useful metric, a benchmark. In a couple of months, NREL is going to tackle the economic question of when it makes sense to pair the two technologies.
Underlying the complexity of the valuation is the fact that batteries can be paired with solar panels for different reasons. One frequent application is load shifting or self-supply, that is, storing unneeded solar power during the middle of the day for use later in the day when the cost of electricity is higher or the sun is no longer shining. Batteries can also be used for resiliency to provide power when a system goes down, whether it is a failure with the solar panels or a fault in the grid.
Those different uses lead customers, or potential customers, to use two different measures when evaluating their investment — kW for sizing a storage system and kWh for determining how long the batteries might be required to run.
Instead of using one or the other of those metrics, or somehow combining them, the NREL report took a different tack. Using NREL’s component- and system-level bottom-up cost-modeling approach for standalone PV, the authors use the total installed price of a standard solar+storage system as their primary metric.
They present their results as two use cases, one for a small battery case and the other for a large battery. The small-battery installation uses a 5.6-kW solar array and a 3-kW, 6-kWh lithium-ion battery system designed for load shifting and for a limited amount of back-up power.
The large battery installation uses a 5.6-kW solar array and a 5-kW, 20-kWh lithium-ion battery system. It is used for load shifting but also is designed to meet greater back-up power requirements.
The delineation of those two use cases is straightforward enough, but the NREL report adds two subcategories to each use case, direct current coupled and alternating current coupled.
“That is one of the big take-aways of the report,” said O'Shaughnessy. The fact that solar+storage can be configured as DC coupled or AC coupled is a good example of the complexity inherent in trying to come up with a single metric for the paired resources, he says.
A DC-coupled system uses a single inverter for the solar panels and the battery and is more efficient for cases when the solar power is going to be stored. In an AC-coupled system the solar panels have an inverter that send electric current to the house and to the battery and the battery has its own inverter. The AC system is more efficient if the solar power is used when it is generated.
For the small battery case, the report found that the benchmark price is about twice as high as the price of a stand-alone 5.6-kW solar system. But the price ($27,703) of the DC-coupled system is $1,865 lower than the price of the AC-coupled system ($29,568).
For a large battery installation, the NREL researchers found that the price of the DC-coupled system is $45,237 — which is $17,534, or 63%, higher than the small-battery system. With AC coupling, the price of the large-battery system is $47,171, which is $17,603 or 60% higher than the small-battery system.
In general terms, adding storage to a solar installation roughly doubles the cost. But those costs will come down over time, O'Shaughnessy says. And, as costs come down, the benchmark will come down, he says.
Hardware costs, or the cost of the battery itself, constitutes about half of the battery system costs, and battery prices are coming down, O'Shaughnessy added. But he also expects to see installation costs come down as installers become more efficient, and permitting costs come down, as well, as different jurisdictions become more comfortable with combining batteries with solar power.
O'Shaughnessy mentioned New York City as an example of a place where storage has met barriers, such as fire code standards, but where over time the issues involved in those barriers will addressed and resolved.