How to find the perfect solar + storage projects (start by looking at the rates)

solor+storageAt the heart of a solar + storage system is a battery, but that heart can’t beat without its brain — the software layer telling it how to operate. For your customers, regardless of battery manufacturer, the software brain is driven by three possible value streams.

  • Peak demand shaving. This is a commercial project value.
  • Time of use (TOU). Discharging on-peak and recharging off-peak.
  • Self-consumption. Pairing storage with solar and setting it to not export to the grid.

Deciding which value stream to choose might be easy, but determining just how much value is in that stream is complex. During a presentation led by Energy Toolbase, a software platform for modeling and analyzing the economics of solar and energy storage projects, Adam Gerza, Energy Toolbase COO, demonstrated how to pull accurate rate schedule data and load profiles of potential projects to accurately model system value. The new storage component in its software offers the same ability as its PV-only modeling and is built with an algorithm to solve for “perfect math,” based on all of the assumptions of a project — load profile, rate schedule, system characteristics and set points for the control strategy.

“It’s a math problem; there’s a best answer,” Gerza said. “So, how much is your storage project saving in dollar terms? We’re quantifying savings and trying to optimize them.”
Some examples of how crucial this value modeling is:

Hawaii solar-only

The net metering 2.0 tariffs in Hawaii are extreme but demonstrate where self-supply is a valuable option because if you export solar to the grid you get zero return for that production.

So, take two neighbors with identical load profiles (1,000 kWh a month; 12,000 kWh a year), with the only difference being time of use. A 6-kW DC rated PV system would produce a 79 percent offset for both homes. One home is peaking midday, between 10:30 a.m. and 2 p.m. The other home peaks in the evening. Overlaying time of use profiles reveals the midday home is only exporting about 29 percent of its energy to the grid, whereas the night owl is exporting 61 percent.

“What did that just do to the value of solar? During the day it is 19.5 cents; at night, the value collapses to 10 cents,” Gerza notes.

Hawaii PV + storage

Say you have a house (10 kW DC system, producing 15,000 kWh, 87 percent offset) exporting 50 percent of its PV production to the grid, where, again, you get nothing in return for it. After specifying a 14-kWh, 7-kW, two-hour battery, that export number goes down to 24 percent.

“There’s still a lot exporting from this,” Gerza says. “This is a function of running out of capacity. So, think about what’s happening. The system stored and prevented exports but then ran out of space. So, trial and error. If we want to get to 100 percent, we have to size up.”

Rate change scare

California has some great solar + storage project profiles right now, and the state seems to want to incentivize their deployment. The just-passed SB 700 would create a 10-year rebate program designed to grow the California local storage market and make storage more affordable for consumers. The rebates would step down as more storage systems are installed and economies of scale are achieved, thereby driving down the installed cost of the systems.

But as the earlier examples showed, rate structures are the true indicator of solar + storage value right now, and there are potential changes coming to rate structures in California that could really undercut that value.

Consider Pacific Gas & Electric (PG&E)’s A6 rate schedule. Right now, the summer time of use rate has a 37 cent differential between on and off peak, which makes a big case for solar + storage.

“But rates are changing, and if that differential collapses, so does the savings opportunity,” Gerza says. “When you dive into the new model, it will lead to more questions than answers. It is 37 cents today, but what about two years from now?”

The biggest proposed change is PG&E moving that summer on-peak window to much later in the evening — from noon to 6 p.m. (current) to 4 p.m. to 9 p.m. That’s a major shift. Additionally, PG&E proposes a radical flattening of TOU differentials. That 37 cent difference is looking to collapse to less than 10 cents.

Lastly, the six month TOU seasons of summer and winter would just collapse into a 12-month, one-year period.

“While a bunch of big changes are being proposed at once, having interval meter data and being able to accurately quantify the savings for your customers when a lot of these things are concurrently happening is important,” Gerza says.

One Last Example

Let’s compare one building’s load profile under PG&E’s current and proposed A6 rates. This building uses about 455,000 kWh annually and has a 200-kW DC rated system that has a 66 percent offset. Under current rates, the average blended savings is 30.5 cents per kWh. Under the proposed rates, that drops to 20 cents per kWh.

We say one last time: The examples here were extreme, but those extremes help convey the importance of using granular data to identify system economics and also to illustrate just how far we may still be from solar + storage on a wider scale. But at least we can figure out when we are there.

“These examples illustrate that accurately estimating the avoided cost of solar + storage projects can get complex,” Gerza says. “It’s important that salespeople are ethical and realistic in the savings analysis they present to customers.”

Chris Crowell is managing editor of Solar Builder.

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