Economic analysis for residential solar PV systems with battery storage in PG&E territory

Electricity storage can be used as a tool to help with a variety of issues related to electric grid management. Declining costs and state incentives could allow fast penetration of battery storage. Distributed PV systems are now widely used, and battery storage has potential to address issues related to generation intermittency. This thesis assesses the financial potential of PV systems with behind-the-meter battery storage in two communities in Pacific Gas and Electric (PG&E) territory. An analysis is performed to calculate annual savings for four cases. The batteries are used to avoid peak period charges under a time-of-use (TOU) rate plan. A benefit cost analysis is performed to determine the feasibility of the investment. Results show that most cases have positive net present value and payback periods less than 20 years when compared to households without PV or a battery. Systems in Fresno have better results than Arcata due to higher energy costs and a larger solar resource. Analysis also shows that the economics improve with the size of the system. It is also notable that the positive benefit-cost results reported above are due primarily to the addition of PV rather than the inclusion of a battery. Under PG&E’s current net energy metering (NEM) program, the marginal energy bill cost savings of adding a battery to a PV system are minimal. Meanwhile the costs of battery systems increase system costs by 33%-50%. This indicates that adding a battery to an existing PV system is not economically viable in most cases. A sensitivity analysis indicates that the financial performance of battery storage systems is more sensitive to TOU rates than to installed battery price. A higher price differential between peak and off-peak rates, a reduced NEM rate for exported energy, incentives and rebates could improve the economics of storage for residential use in the future