The profitability of batteries and solar cells in the future

Ensuring a balance between energy production and consumption has become a significant challenge in today’s society. One possible solution is the use of batteries as energy storage. With the growing demand for residential batteries, it is of interest to investigate their profitability, both presently and in the future. The objective of this thesis is therefore to assess the profitability of residential battery storage for various investment years and to compare the economic viability of using batteries alone, solar cells alone, or a combination of both. To achieve this goal it is essential to develop a battery model that accurately simulates battery cell degradation. In this thesis, a fully implemented battery simulation model from Oxford is used. Additionally, two optimization models are constructed: one that optimizes the utilization of a standalone battery, and another that optimizes the usage of a battery in combination with solar cells. The third model, regarding only solar cells, is not an optimization model. It is a profitability model that calculates the expected profit based on the forecasted electricity prices and expected generated power from the solar cells. The final profitability of the three alternatives for each investment year is determined by calculating the Net Present Value (NPV) using the NPV formula. Further, it is crucial to consider uncertain factors such as differences in investment costs or discount rates, as they might have an impact on the results. To address this uncertainty, a sensitivity analysis is conducted to explore a wider range of possible outcomes. The results indicate that using batteries alone does not yield profitable outcomes whereas owning only solar cells generates significantly higher profits, with a maximum repayment period of seven years. Combining them both is currently not profitable but it could become profitable in a couple of years. The results from the sensitivity analysis indicate that both the investment costs as well as the discount rate highly effect the results. One assumption regarding the future is that the use of solar cells will continue to grow, given their demonstrated high profitability. Whether residential batteries will experience a breakthrough will likely depend of a range of factors, including both economical and non- economical considerations. Economical factors will influence the growth of residential batte- ries based on batteries advancements, cost reductions, and the overall economic climate. On the other hand, non-economic factors will also impact the growth of residential batteries. Examples of these factors are the energy crisis, the urge for independence and the development of optimization services that aim to optimize the residents’ profitability.