A study by academics at Finland's Lappeenranta-Lahti University of Technology (LUT) has concluded the expense of residential battery systems means they are less profitable than exporting unused electricity generated by household solar panels to the grid.
Researchers, in a paper published in Applied Energy, concluded the most valuable use of household solar electricity was for self consumption, as it avoids the taxes and grid charges associated with each kilowatt-hour of network electricity, as well as the wholesale cost of the energy.
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While residential batteries increase the amount of self consumption in solar households, the paper stated, their costs outweigh the benefits they bring, meaning the simple export of excess energy to the grid, at the wholesale price, offers the best returns at current battery price levels.
“We could roughly say that battery prices would need to drop to a third of their current level for them to be a viable investment for residential power systems,” said LUT researcher and lead author of the paper, Pietari Puranen, in a press release issued by LUT on Monday.
The academics also attempted to weigh the financial returns available to solar households who sign up to be part of ‘virtual batteries‘ set up by electric companies who aggregate groups of solar ‘prosumers' – households which both consume and export solar power.
However, the researchers were unable to come to a conclusion on the merits of such systems, with LUT associate professor Antti Kosonen frustrated in his attempt to calculate the economics. “In my opinion, virtual battery storage is not particularly transparent,” he said. “At least, regular prosumers may have trouble finding out about its advantages compared to selling excess electricity to the grid.”
The findings of the Techno-economic viability of energy storage concepts combined with a residential solar photovoltaic system: A case study from Finland paper, also published on the ScienceDirect website, were based on the electricity import and export data from two detached houses in Finland over a three-year period, and the corresponding electricity market prices.
The academics found the costliness of residential batteries rises with their storage capacity at a faster rate than the economic benefits they offer by increasing household consumption levels.
“Many still think batteries are the best, or even a necessary solution for deriving a profit from self-produced electricity,” said Jero Ahola, LUT professor of energy efficiency in electricity-driven systems. “However, current battery prices rarely make the investment profitable.”
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The study is already obsolete. Volkswagen and Hyundai have promised V2G for their BEV models n 2033, and Ford are offering V2H as an option on its electric F150 pickup. Tesla and other carmakers will have to join in. For the owner of a typical >2022 BEV, the added cost of V2H is just the wallbox inverter., say $1000.
“the added cost of V2H is just the wallbox inverter., say $1000.”
You can say $1000, but by the time everything is properly connected, you might pay closer to $4,000 for the Wallbox and $6,000 for the electrical panel, switching hardware, and for installation.
For the carmaker, all that’s needed may be the software and hardware to close the contactor to connect the charging port to the traction battery with near perfect safety and reliability, and a cable plug standard like CHAdeMO. And a warranty agreement that covers V2x.
It should be easy for the carmaker to 0romise, likely expensive and difficult for the homeowner.
The in home charge car plug is ac, no extra inverter needed, it’s built into the car. No need to spend that much.
These researchers totally miss the point of batteries with solar. In residential, it’s not about profit. It’s about reliability. With solar batteries, home owners are no longer sitting in the dark when the weather brings the power provider down. In many places throughout the world, that’s worth a lot more than these so-called experts know.
Have you read the study ? Not just what the article makes of it but the actual study and its conclusions. Part of the conclusion is as follows : “A comparison of the two monetary energy storage methods and the physical battery energy storage indicated that neither physical batteries nor virtual batteries are economically viable for the houses under study. A physical battery storage, although capable of inducing a significant increase in self-consumption, would require battery prices half the current ones or the electricity purchasing margins two- to fivefold greater than the current ones to be feasible.”
Two important things to note here : first, “for the houses under study”, which means that considering the parameters of the study, even if they are supposed to be representative, physical battery storage is not suited for them. This does not mean that it is true for every house with PV Panels. Secondly, the authors point out directly that physical batteries increase signficantly self-consumption, meaning that more energy is captured and used at the right times, even under the weather.
The article conclusion “The academics found the costliness of residential batteries rises with their storage capacity at a faster rate than the economic benefits they offer by increasing household consumption levels.” is also misleading to drive a point by omitting to mention that in this case the PV capacity is fixed and only the storage capacity increases as high as 5 to 12 times the PV capacity. Of course there is a sweetpoint of battery storage capacity relative to installed pv capacity, and if you oversize your batteries compared to the installed pv capacity you’d get a degraded cost/value…
This is an interesting study nonetheless which shows that the whole package of houses, electricity, pv capacity and battery capacity, etc. is much more difficult to evaluate than at first glance.
Clearly a flaw in their analysis to not consider added value of backup power. To be fair, they’d need to at least compare with cost of a standby generator solution in place of battery storage. From an economical standpoint, that comparison would be rather straightforward.
Let us be real here and admit for the money a portable generator is not going to be beat by home battery storage. The real success is going to be in functional electric cars. Tesla will be made to let users use their vehicles as battery storage in the future. It is supply and demand. Ford f-150 lightning will be able to use it’s massive battery as a generator in the event of a power outage. Then you can charge it up during the day with your solar and now you have a winner. A battery that is useful.
Exactly for the few days power might be out and you have no heat or cooling, standby power is well worth it.
I am very suspicious of the research model used and wonder if there is reliable data from sample sets globally. I have done several cost analyses of residential off-grid systems and found them to be very cost effective especially when rolled into the financed portion of the property.
Bottom line: Centrally distributed power is very unsecure and vulnerable to attack and sabotage. I will be going off grid permanently in due course.
It would have been very informative to include the detail of the case studies used in the paper. Our house in Queensland Australia is. 5 bedroomed two storey home which is 100% electric ( car, cooking, heating, cooling and all home tools). We have 18.3kW of panels facing different directions to maximise self production. If we were to buy electricity from the grid this would cost us 23 cents/kWh before charges and taxes and we export to the grid at 17c/kWh. We have 2 × Tesla Powerwall 2.
Using the grid as our battery, the round trip efficiency would be less than 73% with charges factored. Our powerwalls are siting at 89%. With this set up we enjoy the following:
1. Peace of mind that we are not going to worry about any shock bill increases at all. We have prepaid our electricity. In a way this is actually an insurance policy. It is also income protection insurance. If I lose my job, I will still enjoy this for a number of years.
3. I can choose any power provider without much figure crunching since we are 100% self powered most of the year
4. Our figures actually show that batteries are a must in our case. We pay demand charges for peak times without batteries. We still export lots to the grid and we use our batteries as a better storage system than the grid whose feed in tariff and electricity prices change for the worse every year.
Agreed with you completely. I’m in a similar situation with my solar setup in Cape Town, South Africa consisting of 10.34kw of solar panels and 14kwh of lithium batteries.
The cost of solar + storage in my location is well below the cost to buy it from the national grid with our currently electricity tariffs set to increase by over 13% per year for the next 3 years.
I also look at our ad prepaying my electricity over the next 10 years. Eleven months in and I’ve already generated over 12MWh
In Latvia we have ~13¢ per kWh electricity price. ~5¢ is the actual power. ~5¢ is for the grid and the rest is taxes.
Net metering tariff cuts part of tax ment to reduce pollution. But it still costs to put electricity back into the grid just like it would to store it in battery. After all wires and poles degrade over time just like batteries.
Solar installers here tend to design systems for 30% of demand at sites to avoid backfeeding the grid since is not economically viable in “dumb” system if current rates does not change.
Iverters connected to a virtual power plant would be a different story. Just like flexible demand would be. Backfeeding the grid makes economical sense at peak demand, sometimes even some much that it makes sense to cycle the batteries. Devices that can act on electricity price and adjust power consumption while providing no less of value for user would stabilize the grid just as well. Take MyEnergy Zappi charger for instance which can be set to use only locally generated power. Although an e-bike charger with same functionality would achieve at much lower energy demand. Dutch knows how to make transaction work :). More on that topic is available at “Not Just Bikes” Youtube chanel.
Another solution to reduce energy demand is a Mixergy heatpump water heater. Heats only as much as necessary. In hot climate it could doble as an AC moving heat from house to water. Could also recover heat from shower drain by using a fansy copper tube.
I was always aware that my battery would be a net cost, even if I switched to time of use billing. I have it because it offers a degree of resilience, and compared the cost to the cost (and hassle) of installing and maintaining backup generation. I need power to run my well pump and for the heat to work. Depending on the time of year, that battery may save me a burst pipe. Beyond that, it’s just the satisfaction of weathering short power outages without going dark.
My utility will not even let me give them electricity, let alone buy it from me. Batteries are the only way to time shift what the panels produce is via batteries.
When EV’s are widespread & include V2G capability with autonomous regulation, they will provide much desired advantages of reliability & arbitrage without many additional batteries or generators coupled to typical residential solar systems. This is the distributed power/ micro-grid scenario that’s probably going to develop within 10 years in California. Many grid connected Big Batteries on wheels are the solution here.
Cost effective Net Metering here in the US is a dying breed, the utilities rarely pay the exact wholesale price you pay from them back….here in Texas I pay 13 cents per kwh consumed and they buy back my excess solar at 1.5 cents per kwh…. with my batteries I can limit sell back or not sell back at all, charge my batteries during daytime and used my own power at night and not consumed from the utility, other benefit of battery is backup when the grid goes down….
Cool. Now do a cost analysis for those new concrete flywheels.
We live in an area where our electric is from a members-owned co op. The board of directors has spent hundreds of millions to build a residential storage substation for the country club elite, plus the inverters which, daily, send excess energy to the grid. The rest of our community is stuck with the debt incurred! A small co-op with barely 19,000 members has more than 350 million in debt!
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