Tucson Electric Power customers may see new rate for energy-storage systems
When Duane Ediger and Carol Rose installed a Tesla Powerwall 2 battery on their Barrio Hollywood home last January, they knew it wouldn’t pencil out financially.
“Though there’s a slight financial benefit, it’s definitely not enough to pay for the battery,” he said. “We got the battery out of a commitment to kind of blazing the trail to where we’re headed.”
But rooftop-solar customers of Tucson Electric Power Co. may soon have a new incentive to install home battery systems that store excess energy generated by the panels for use when the sun isn’t shining, under a proposal being considered by state regulators.
As part of the companies’ solar rate case pending before the Arizona Corporation Commission, an administrative law judge has recommended that TEP and sister utility UNS Electric propose special rate plans for solar customers who install battery storage systems.
The Corporation Commission in late 2016 decided to end net metering as a matter of policy and shift to a system where rooftop-solar customers are paid a lower “solar export rate” set for each utility for their excess power.
Lower solar export rates will make energy-storage systems more attractive, but local experts say such systems likely still won’t pay for themselves quickly enough to lure most customers.
Though prices are falling, battery storage systems are expensive, costing about $10,000 to $15,000 installed for typical home systems like Tesla’s Powerwall and batteries from LG and Sonnen.
Originally proposed by solar-industry groups, the TEP/UNS program would be modeled after a pilot rate plan offered by Arizona Public Service Co., which includes batteries and other “behind the meter” technologies such as load controllers that can turn off large appliances during demand peaks, and electric cars.
The APS “R-tech” rate plan has three parts: a basic service charge, a charge for the amount of demand averaged in a one-hour period for the month and a charge for the total energy used for the month.
The idea is to give customers a way to shift their power demands.
TEP and UNS have not taken a position on the R-tech rate proposal but the companies have said customers with battery systems could take advantage of existing time-of-use rates, which charge lower rates during off-peak periods, or demand rates, which include time-of-use rates with a charge based on a customer’s peak usage.
TEP spokesman Joe Barrios said the companies generally support the idea of a storage rate but it’s too soon to discuss specifics. He noted that once the solar rate order is approved, the utilities will have four months to come up with the rate plan.
“Our goal would be to design rates and requirements that would make battery systems accessible and beneficial to customers,” Barrios said. “We’re certainly in support of new opportunities to work directly with customers, and battery systems have the potential to afford those opportunities.”
Barrios said most existing customers install batteries for backup emergency power, noting that those systems can only run some home systems for a few hours and lack the oomph to start up an air conditioner.
“We encourage customers to understand what they’re purchasing and what services the battery system provides,” he said. “In the future, customers might be able to help with reducing peak load by charging their systems during off-peak hours, then deploying during on-peak hours.”
Solar supporters say battery storage can help rooftop solar homeowners save money by allowing them to store and use their own energy rather than tapping the utility grid, and help reduce peak power demand.
There are some caveats, however.
Aside from the cost, adding batteries doesn’t make financial sense for existing solar customers, who already get a full billing offset for excess energy their panels produce under the current system of net metering in TEP and UNS territories.
“With where the cost of storage is right now, it’s hard to justify economically,” said Louis Woofenden, engineering director and co-owner of Tucson-based Net Zero Solar.
Net Zero has installed a handful of battery systems, including some in off-grid applications where customers have no local electric service, but Woofenden said he doesn’t expect the storage rate to be highly attractive, even if regulators approve a low solar export rate for TEP and UNS, noting that it takes some discipline and effort to avoid large peak demand charges.
“It will be an option, but I wouldn’t guess it will be attractive for most people on a strictly economic basis,” he said, adding that such rates are more beneficial to customers in places where usage-based rates are very high, like Hawaii and California.
Then there’s the relative complexity of the making the rates work.
“The challenge there is you’ve got to be 100 percent of the time avoiding the peak — a lot of homeowners don’t want to dig that deep,” Woofenden said.