Yes, Solar Plus Storage is Cost Effective
As shown in a recent RMI report, battery energy storage costs are less than a fifth of what they were a decade ago. This is enabling batteries to become cost-effective in a growing list of locations and use cases, such as balancing the grid, reducing customer demand peaks, and providing backup power. In particular, behind-the-meter solar-plus-storage can often deliver bill savings for large commercial and industrial users that have high demand charges — typically greater than $10-15 per kilowatt (kW)–or have time-of-use (TOU) utility rates.
Our analysis shows that these investments have simple payback periods of less than eight years in places as diverse as Arizona, North Carolina, Ohio, and South Carolina — based just on reducing peak demand and shifting TOU. Behind-the-meter batteries can also deliver other services, but we did not model these values.
More Than Bill Savings
While solar-plus-storage is gaining market share in places with battery investment incentives, like California and New York, it is now also competitive in many less-obvious locations. To evaluate its cost-effectiveness, we modeled the optimal battery capacity to be paired with a 50-200 kW PV system for a typical commercial customer with peak monthly loads averaging around 300 kW and annual usage of 900 megawatt-hours — translating to around $150,000 per year.
We ran our model in four diverse locations — New Bern, NC; Piqua, OH; Bullhead City, AZ; and Charleston, SC – based on geographic diversity, neither obvious political support nor antipathy toward solar-plus-storage, and typically high demand charges. We used NREL’s REopt Lite online tool to quantify the customer cost savings from solar-plus-storage. We also examined, but did not quantify, other social values, such as resilience and GHG emissions reductions.
New Bern, NC (New Bern Municipal Utility)
North Carolina has the fourth-most installed solar per capita in the United States, despite having the fifth-cheapest commercial electricity rates, a moderate solar resource, and a fairly weak renewable portfolio standard (RPS), which mandates that utilities source 12.5% of their electricity from renewable sources by 2021.