Incentives, reliability concerns spur adoption of home solar+storage, but not economics
Energize Weekly, August 4, 2021
The twinning of residential solar arrays and batteries, which rose from near zero in 2016 to about 550 megawatts (MW) of combined storage by 2020, is being driven by government and utility incentives and concerns about reliability – but not by economics, according to a new analysis.
“A lot of the co-adoption is non-economical,” Galen Barbose, one of the Lawrence Berkeley National Laboratory researchers who did the analysis, said in a webinar presentation. “The economics are simply marginal.”
The Berkeley Laboratory study looked at 50,000 paired residential systems, which accounted for about 90 percent of all the twinned systems in the U.S. About 6 percent of residential solar systems nationwide are “attached” to batteries.
The 550 MW of so-called behind-the-meter storage accounts for 17 percent of all U.S. battery capacity installed through 2020.
The Berkeley Lab analysis calculated the premium for adding storage for a residential photovoltaic (PV) system at $1.20 a watt, the equivalent of about 33 percent of the median price for a standalone solar unit and is equal to a storage cost of about $700 a kilowatt-hour (kWh).
The present-value of these financial benefits for a residential system across utilities, depending on system size, ranges from roughly $500 a kWh to $1000 a kWh.
“The net customer economics in these markets would appear fairly borderline,” the Berkeley report said. “This suggests that residential co-adoption in these markets is likely being driven either by customers with unique conditions that allow for more-favorable economics or by nonfinancial considerations, such as the resilience value associated with backup power applications.”
Some of the hottest markets for combined solar and storage reflect that broader range of concerns.
Hawaii has the highest storage attachment rates of any state – about 80 percent of all residential systems – spurred by net metering reforms that incentivize self-consumption.
Adoption of rooftop solar was so widespread in Hawaii that it threatened the stability of the gird with excess electricity placed on the system. Net metering paid residential customers for electricity their arrays placed on the grid. The net metering rate is being reduced with a time-of-use rate being adopted that encourages home use of electricity during peak periods.
California is a distant second with about 8 percent of its residential solar arrays attached to batteries and the forces driving the market are state incentives, affluent early adopters and concerns about reliability as a large portion of the state has faced wildfires and blackouts.
California’s Self-Generation Incentive Program, which runs through 2025, offers incentives as high as $200 a kWh, enough to cover the cost of a battery installation. A quarter of paired systems in California are retrofits to existing solar arrays.
Affluence also plays a role creating a class of early adopters, Barbose said. Nine of the top-10 zip codes, for penetration of combined systems are wealthy communities, such as Malibu, Marin County, Tiburon and other coastal towns.
Paired PV plus storage adopters had median incomes 66 percent higher than the median income for their area, while standalone PV adopter incomes were 41 percent higher.
This led to solar-plus-storage attachment rates ranging from zero to 70 percent across zip codes, with high rates also found in Northern California where communities have been threatened by wildfire and blackouts.
“Wildfires and public safety power shut-offs,” Barbose said “…have spurred new found concerns about reliability.”
In Arizona, the portion of solar arrays with storage ranged by zip code from 0 to 45 percent, with some of the biggest concentrations in areas serviced by the Salt River Project, which has a combination of incentives ($3,600 for battery) and rate changes encouraging storage and home use.
The two highest zip code rates are Arizona Public Service’s territory, where most of the systems were installed through a partnership between Sonnen, a home energy system manufacturer, and a large housing developer who placed them in all its homes for sale.
The market is dominated by two storage products: Tesla’s Powerwall, 5 kW with 2.7-hour duration, and LG Chem RESU, 5 kW with a 1.9-hour duration.
Most residential systems have the ability to store 30 to 80 percent of average daily PV generation, depending on the relative size of the PV and storage components, the study found.
About 60 percent of all U.S. residential solar+storage installations have been by just 10 companies, with Tesla and SunRun each having a 20 percent share of the market. Most of the other top installers are in Hawaii or California.