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Are Solar Batteries Cost Effective in California?

When you install a solar battery as part of your home solar energy system, you can actually store the extra energy your solar panels produce at home instead of feeding it back into the electric grid. You can maximize your ability to manage and use the electricity generated by your solar panels on a day-to-day basis. During the times when you need more electricity than your solar panels are producing (later in the day or at night time), you can use the solar energy you have stored during midday peak production.

The monetary value of installing a solar-plus-storage system depends how your electric utility charges its customers. Some states still have net metering. Homeowners will typically receive a credit on your utility bill for every kilowatt-hour (kWh) of solar energy sent back to the grid. You can use those credits against when you need more electricity than your solar panels are generating no matter when generated or consumed. Every kWh produced has the same value no matter when it is produced or used. For homeowners still on net metering, installing a solar battery won’t increase their savings. This was the situation for all electric utilities until the advent of Smart Meters.

How Time-of-Use rates affect solar battery economics

California and a large number of other states now have adopted Smart Meters, allowing them to abandon net metering and to transition to “Time of Use”(“TOU”) pricing. Essentially this allows the utilities to charge more when they have to pay more from their power wholesaler providers.

Under TOU pricing the effect for the consumer is the per-kWh rate that you pay for electricity changes depending on the time of the day used. Wholesale electricity rates are lower during midday and at night when home electricity use is lower, or solar panels are at their most productive. Under TOU pricing this is passed on to homeowners. Electricity costs the most during “peak hours” when demand for electricity is high. This typically in the late afternoon and evening ( 1:00 to 7:00 p.m. or 4:00 to 9:00 depending on which PG&E TOU plan you are enrolled in). Homeowners with solar generating systems can benefit from energy storage by using electricity stored in solar batteries during the midday but used during costly peak rate hours.

Demand Charges Also Affect Battery Economics

Each particular time of use period has a “baseline” amount of kWh’s. kWh usage that exceeds that amount is charged at a higher rate to encourage conservation. Use over your baseline allowance, you pay more per kWh over. You also benefit from solar batteries because you may be able to stay out of those higher over baseline rates by relying on your energy storage system to flatten you usage to avoid these more expensive levels of usage.

📷In California should you overproduce during off peak you will receive a credit for the wholesale or “avoided cost” rate, which is usually equal to the rate your utility would have paid to buy the electricity somewhere else. As a result, the monetary value of one kWh of solar power that you use in your own home is higher than a kWh sent back to the grid. As an example, if you use grid power costing $0.25 per kWh for electricity, but PG&E only offers about a $0.04 credit for electricity sent back to the grid, your solar electricity will be worth $0.18 less if you don’t use it in your own home. Solar batteries makes economic sense because they provide the ability to shift less valuable electricity produced by your system to be used when it is more valuable.

Backup power: another benefit of solar batteries

kWh’s from solar batteries will typically cost more than a standard diesel generator, but they do provide backup power without producing greenhouse gas emissions. If you have a standard solar panel system, you lose all power during a grid power outage because of how your panels are connected to the electric grid. However, when you add a battery to your system, a portion of your home can run off of the solar energy you have stored.

In February of 2019 PG&E announced that any of their more than 5 million electric customers could have their power shut off due to a growing threat of extreme weather and wildfires. Another benefit of backup power would be the ability to run a home office, medical equipment, or a refrigerator during these periods.

What (most) Storage Can’t Do: “Go Off Grid”

As energy storage technologies come onto the market, more homeowners are thinking about going "off the grid" – completely severing their connection to their electric utility – with the use of solar batteries. While there are certain situations where going off the grid is possible (or even necessary), most solar batteries aren’t designed to serve as your only source of power. They provide more value for the average homeowner when they are connected to the electric grid, and should be thought of as a solar grid storage product.

📷Your solar panels will produce more electricity during the long days of summer than they will in the winter months. To go completely off the grid, you will need a battery system big enough can store significant amounts of extra energy during the low production winter months. A typical home solar battery like the “Tesla Powerwall” isn’t nearly large enough to do that.

Most home solar batteries on the market today have enough capacity for only limited hours of power; a single battery can’t run a standard American home for multiple days. However, they can provide you with temporary backup power. They can also be set up so that they power essentials in the event of a blackout. If you truly want to go completely off grid, you should be prepared to spend tens of thousands of dollars and set aside a section of your home or garage for a large multi-battery energy storage system.

A Final Word.

📷When one installs a solar generating system, they become a small electric utility company. The owner typically wants to maximize the value of the product produced. The electricity market within which one’s little utility operates is complex and evolving, but almost no market observer disputes that batteries are going to be continually coming down in price and become a very significant factor in coming years, perhaps as significant as solar panels themselves. One should consider starting with one small battery just to put one’s toe in the pool. Then as prices drop they can add more batteries and be comfortable they are knowledge able about how to best take advantage of this new technology.

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