Berkeley Lab Study Looks At Battery Storage And Net Billing

August 4, 2022

by Peter Maloney
August 4, 2022

Using battery storage to manage solar self consumption is not efficient from the perspective of an individual consumer or the wholesale power grid, according to a new study from Lawrence Berkeley National Laboratory 

The Berkeley Lab study, Private vs. public value of U.S. residential battery storage operated for solar self-consumption, set out to quantify the value of using residential battery storage to maximize solar self-consumption from the individual solar customer and the larger power system standpoint.

The impetus of the study is the growing popularity of net billing schemes that are being put in place to replace net metering schemes that are being phased out in many states.

Net energy metering (NEM), in which residential solar exports to the grid are credited against consumption at full retail electricity price, has been the dominant compensation structure, but it has raised several concerns, including the potential for cost-shifting from solar to non-solar customers.

As the use of net metering dwindles, net billing has become the de-facto NEM successor in many states, the study said. Net billing allows customers to offset consumption with contemporaneous solar generation, but any surplus generation exported to the grid is credited at a grid export rate below the full retail electricity price, often tied to a utility’s avoided costs.

Currently, some variation of net billing has been adopted in 10 states and has been proposed in at least five others.

Using metered data from 1,800 residential customers across six utilities, the study found that batteries operated solely for self-consumption provided “customer bill savings up to $20–30 per kWh of storage capacity annually, but virtually no grid value.”

Even though net billing may save customers money on their electricity bills, it is still inefficient overall for individual customers, the Berkeley researchers found.

Nonetheless, they said, private bill savings may be enough to drive adoption when combined with the resilience value from backup power or other revenue streams.

Compared with market-based dispatch, self-consumption dispatch will likely become more severe over time, insofar as increased renewable energy penetration leads to more volatile wholesale prices, the study found.

“Storage used for solar self-consumption yields virtually no value to the bulk power system in terms of reduced wholesale energy costs,” primarily because of a misalignment between the temporal profiles of storage dispatch and wholesale energy prices, the researchers aid.

Even in “a future with high solar penetration, where wholesale prices resemble the proverbial “duck curve”, the energy value of storage dispatched for solar self-consumption remains highly suboptimal,” they added.

Storage used for solar self-consumption also yields virtually no value in terms of reduced peak-related costs, such as those related to generation, transmission, and distribution system capacity, the study found, because almost all solar generation on peak-load days is used to directly serve onsite customer load, resulting in little surplus solar energy available to fuel storage discharge during peak-load hours later in the day. As a result, battery storage largely sits idle on those days, barring some other incentive to operate for system-peak reduction purposes.

Alternatively, incentivizing storage customers to respond to market prices, particularly on peak days, would enhance both private and public value. “Compensating customers for operating storage in response to market prices can create a win-win, providing benefits to the power system while offering commensurate financial returns to PV+ storage adopters (or their aggregators) that exceed what they would receive from simply maximizing solar self-consumption,” the study’s authors wrote.

The authors noted, however, that outcome is conditional on customers being allowed to discharge storage to the grid. Unrestricted market response would significantly increase exports, which could impose stress on the local distribution network under certain conditions, but a significant portion of the potential market value could be achieved without significantly increasing exports, by relying on pricing or programmatic incentives that target storage discharge during narrow peak demand periods, the study concluded.