What to Consider and Understand When Considering Battery Storage for Solar

A recent report in Bloomberg News states that Natural gas is getting edged out of power markets across the U.S. by two energy sources that, together, are proving to be an unbeatable mix: solar and batteries.

In just the latest example, First Solar Inc. won a power contract to supply Arizona’s biggest utility when electricity demand on its system typically peaks, between 3 p.m. and 8 p.m. The panel maker beat out bids from even power plants burning cheap gas by proposing to build a 65-megawatt solar farm that will, in turn, feed a 50-megawatt battery system.

Arizona Public Service Co. spokeswoman Annie DeGraw said the bid the utility received from First Solar was “very competitive, and it had the added benefit of being clean.”

It’s a powerful combination for meeting peak demand because of when the sun shines. Here’s how it’ll work: The panels will generate solar power when the sun’s out to charge the batteries. The utility will draw on those batteries as the sun starts to set and demand starts to rise.

Just last week, NextEra Energy Inc.’s Florida utility similarly installed a battery system that’ll back up a solar farm and boost generation. In California, regulators have called on PG&E Corp. to use batteries or other non-fossil fuel resources instead of supplies from gas-fired plants to meet peak demand.

California Battery Push

The state is adding energy storage to backstop wind and solar power

Specifically for Californian’s, the SGIP, California’s latest incentive program

Californian’s understand that solar provides a strong ROI and typically increases their home value by more than 17% and there is tremendous interest taking advantage of battery storage when it matures. At the current rate of incentive for small scale residential project, the grant would total $4,000 for a battery storage solution that would store 10kwh of power. This is a typical battery size needed for a residential customer that has a 6kw system and wants to be able to use their battery to meet as much as possible of his or her electricity demand during the peak pricing period for electricity each day.

In addition, PGE in Northern California requires customers to select a TOU rate

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Whether or not you’ll save more money by installing a solar-plus-storage system depends on how your electric utility charges its customers. In states with net metering, you will typically receive a credit on your utility bill for every kilowatt-hour (kWh) of solar energy that you send back to the grid. You can use those credits later on when you need more electricity than your solar panels are generating. For homeowners in this situation, installing a solar battery won’t increase their savings: the electric grid is providing the same financial benefit as a solar battery.

However, some electric utilities are changing their rates in ways that make solar batteries a smart investment for homeowners. If your utility’s rate policy includes any of the following, energy storage can help you save more with your solar panels.

How time-of-use (TOU) electricity rates affect solar battery economics

If your utility has TOU rates, the per-kWh rate that you pay for electricity will change depending on the time of day. Electricity will cost more during “peak hours” when demand for electricity is high, typically in the late afternoon and evening. Electricity rates are lower during the daytime when home electricity use is lower and solar panels are at their most productive.  If your utility uses TOU rates, you can benefit from home energy storage by using electricity from your solar batteries during peak hours when utility electricity rates are at their highest.

TOU rates are becoming more common in the U.S., with California leading the way. Under a new solar policy, any homeowner who installs solar panels in the Golden State will automatically be required to pay TOU rates instead of a single per-kWh rate.

Backup power is important for consumers

Reliability is more essential than ever before since almost everything is electric. The vast majority of power outages are caused by a failure of the local grid, largely due to extreme weather and equipment failures. Both commercial and residential customers are placing a higher value on backup power capabilities. Battery storage systems that do not have backup capabilities will be at a substantial disadvantage in the marketplace.

As you consider your solar-plus-storage options, you’ll come across a lot of complicated product specifications. The most important ones to use during your evaluation are the battery’s capacity & power ratings, depth of discharge (DoD), round-trip efficiency, warranty, and manufacturer.

Capacity & power

Capacity is the total amount of electricity that a solar battery can store, measured in kilowatt-hours (kWh). Most home solar batteries are designed to be “stackable,” which means that you can include multiple batteries with your solar-plus-storage system to get extra capacity.

While capacity tells you how big your battery is, it doesn’t tell you how much electricity a battery can provide at a given moment. To get the full picture, you also need to consider the battery’s power rating. In the context of solar batteries, a power rating is the amount of electricity that a battery can deliver at one time. It is measured in kilowatts (kW).

A battery with a high capacity and a low power rating would deliver a low amount of electricity (enough to run a few crucial appliances) for a long time. A battery with low capacity and a high power-rating could run your entire home, but only for a few hours.

Depth of discharge (DoD)

Most solar batteries need to retain some charge at all times due to their chemical composition. If you use 100 percent of a battery’s charge, its useful life will be significantly shortened.

The depth of discharge (DoD) of a battery refers to the amount of a battery’s capacity that has been used. Most manufacturers will specify a maximum DoD for optimal performance. For example, if a 10 kWh battery has a DoD of 90 percent, you shouldn’t use more than 9 kWh of the battery before recharging it. Generally speaking, a higher DoD means you will be able to utilize more of your battery’s capacity.

Round-trip efficiency

A battery’s round-trip efficiency represents the amount of energy that can be used as a percentage of the amount of energy that it took to store it. For example, if you feed five kWh of electricity into your battery and can only get four kWh of useful electricity back, the battery has 80 percent round-trip efficiency (4 kWh / 5 kWh = 80%). Generally speaking, a higher round-trip efficiency means you will get more economic value out of your battery.

 

Battery life & warranty

For the most uses of home energy storage, your battery will “cycle” (charge and drain) daily. The battery’s ability to hold a charge will gradually decrease the more you use it. In this way, solar batteries are like the battery in your cell phone – you charge your phone each night to use it during the day, and as your phone gets older you’ll start to notice that the battery isn’t holding as much of a charge as it did when it was new.

Your solar battery will have a warranty that guarantees a certain number of cycles and/or years of useful life. Because battery performance naturally degrades over time, most manufacturers will also guarantee that the battery keeps a certain amount of its capacity over the course of the warranty. Therefore, the simple answer to the question “how long will my solar battery last?” is that it depends on the brand of battery you buy and how much capacity it will lose over time.

For example, a battery might be warrantied for 5,000 cycles or 10 years at 70 percent of its original capacity. This means that at the end of the warranty, the battery will have lost no more than 30 percent of its original ability to store energy.

Manufacturer

Many different types of organizations are developing and manufacturing solar battery products, from automotive companies to tech startups. While a major automotive company entering the energy storage market likely has a longer history of product manufacturing, they may not offer the most revolutionary technology. By contrast, a tech startup might have a brand-new high-performing technology, but less of a track record to prove the battery’s long-term functionality.

Whether you choose a battery manufactured by a cutting-edge startup or a manufacturer with a long history depends on your priorities. Evaluating the warranties associated with each product can give you additional guidance as you make your decision.

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