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American Residential Solar + Energy Storage System Cost Analysis
- May 10, 2018 -

Recently, the residential solar + energy storage market has received extensive attention. With the continuous emergence of new low-cost products and the introduction of time-share pricing and demand-rate tariff structures by power companies, the overall economic efficiency of solar PV+storage systems is continuously increasing. However, in order to realize the wide deployment of solar energy photosynthetic energy storage systems, what kind of market environment do we ultimately need? This is a problem that has always existed. To better understand the evolution of the market, the Rocky Mountain Institute has conducted research on the services and value that battery energy storage can provide. In addition, we have also conducted further research with the National Renewable Energy Laboratory (NREL) to test the cost and value of solar photovoltaic + energy storage systems.


The “Installation Cost Criteria and Deployment Barriers for Residential Solar PV+Energy Storage Systems: First Quarter 2016” is the first of a series of such topical studies. The report provides the most detailed breakdown of the cost of each part of the latest residential solar photovoltaic + energy storage system and the total cost of the system, and quantifies for the first time the previously unknown soft costs. The report also shares insights into the market barriers that system applications face.


Promote system popularity


As early as April 2015, the Rocky Mountain Institute and partners including global X and HOMER Energy released a research report titled "Economic Analysis of Load-Off Nets." The report investigated how solar + battery systems connected to the grid will compete with traditional electricity services. The results of the study indicate that by 2030, the continuous decrease in system costs, coupled with the rise in retail prices of grid electricity, will make solar-battery systems connected to the grid more economical and will become the first choice for many US consumers. In addition, solar + battery system can provide users with other important value. For example, in the event of a power outage in the power grid, it is used as a backup power supply for critical loads, as well as cost savings by cutting peak demand and transferring power consumption. However, the Rocky Mountain Institute's study did not elaborate on the exact cost of energy storage at the time.


Determine the comparison method


Now that the costs of installation of solar photovoltaic + energy storage systems have to be disassembled, the Rocky Mountain Institute and the National Renewable Energy Laboratory first analyzed data from various existing studies including Lazard and GTM, as well as our Innovation Center at the Rocky Mountain Institute. Experience accumulated in the project.


A major challenge in analyzing the cost of each part of the solar photovoltaic + energy storage system and the total cost of the system is to select the appropriate metrics. Unlike single solar photovoltaics, energy storage systems lack metrics that are widely accepted by the general public, such as the cost per watt of installed capacity or levelized energy costs. The cost of energy storage varies with the total energy capacity of the system (expressed in U.S. dollars/kWh) and the rate of charging or discharging (expressed in U.S. dollars/kW). Some consumers tend to use the system's long-time discharge function, while others may have higher peak demand, more emphasis on energy storage power (kW) rather than energy capacity (kWh). Due to differences in family preferences and load characteristics, the use of a single metric can artificially interfere with the published costs of the system, making it difficult to compare cost differences between different systems. Therefore, we use the total installation price as the main metric for the study, rather than the standard based on system size.


In order to analyze the cost of each part of the solar photovoltaic + energy storage system installed in the first quarter of 2016 and the total system cost, we used the bottom-up cost model of each part and system level of the National Renewable Energy Laboratory to analyze the independent Solar photovoltaic system. Our methodology includes the calculation of all component costs and project development costs that occur during the installation of a residential system, and simulates the cash purchase prices for such systems, irrespective of investment tax relief (ITC) preferences.


Specific case analysis


In applying these methods, we focused on two major cases: one we call a small battery, 3 kW/6 kWh, and another called a large battery, 5 kW/20 kWh. In each case, we tested the sensitivity of two types of variables: DC or AC coupled configurations, as well as retrofit projects or new projects. The difference between the DC and AC coupling configuration determines whether the battery directly stores the amount of electricity generated by the solar photovoltaic panels or whether it is first converted to AC, thereby allowing both the photovoltaic panels and the grid to be charged. The small battery case is designed for consumers' own use of electricity, including cutting peak demand and transferring electricity. The large battery case is intended to serve as a backup power source for large-scale energy needs and to meet the demand for electricity during power outages.


We found that the benchmark price for a small battery case using a 5.6 kW solar photovoltaic panel and a 3 kW/6 kWh lithium-ion battery is approximately twice that of a single grid-connected 5.6 kW solar photovoltaic system (see Figure 1 for details). For newly installed solar photovoltaic + energy storage systems, the price of the DC system (US$27,703) is US$1,865 lower than the price of the AC system (US$29,568). The price premium for the AC system is primarily due to the hardware and labor costs incurred by the additional grid-connected inverters required for the AC configuration. However, when comparing AC and DC systems, installation price is not the only consideration: AC systems are more efficient in applications where PV energy is immediately available, while DC systems are more efficient in PV energy storage applications. .

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Figure 1: Total installed cost and price composition model for residential solar photovoltaic + energy storage systems, small battery cases (current US$ 2016)


In order to compare with the small battery system shown in the above figure, we also analyzed a large-scale battery system for supplying backup power for a long time when the grid is powered off. Large-scale systems use 5.6 kW solar photovoltaic modules and larger 5 kW/20 kWh lithium-ion batteries (see Figure 2). The price of a DC-configured large-scale system is US$45,237, which is 63% higher than that of a DC-equipped small system. The price for the exchange of large-scale systems is US$47,171, which is 60% higher than the price of small systems. Although the cost is higher, under the same conditions of other factors, the time that a large system can supply critical load to a household is about four times that of a small system.

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Figure 2: Total installed cost and price composition model of residential solar photovoltaic + energy storage system, small battery vs. large battery case (2016 USD current price)


All economic feasibility is regional: There are huge differences in non-hardware costs in different regions


The price component breakdown shows that the hardware cost accounts for only half of the total price of a small battery system and about 60% of the total price of a large battery system. Other costs depend on where the system is installed: Local costs and administrative approvals, networking, metering, etc., and fire safety standards vary greatly across regions. This will not only affect project costs, but will also affect project schedules. The variables that have the greatest impact on the financial viability of solar photovoltaic + energy storage projects connected to the grid include the local electricity company's electricity prices, subsidies, and pricing of ancillary services. Among them, the grid company's electricity price structure (for example, whether the peak demand electricity price, time-sharing electricity price and other policies) is often the key factor that determines whether the addition of energy storage in the solar photovoltaic system is economically viable.


Outlook


Although the cost of solar photovoltaic + energy storage systems continues to decline, the related soft costs of administrative approvals and management barriers make them still relatively high for many residential users. However, with the increasing familiarity of power companies and approval agencies with residential energy storage systems, we expect the residential energy storage market to grow faster in the United States. The work presented here will provide important help for technology manufacturers, installers, and other stakeholders to identify cost reduction opportunities while helping decision makers understand the regulations, policies, and market characteristics that hinder the deployment of solar PV+ energy storage systems. Technology costs are rapidly changing, and this cost baseline has laid the foundation for our continued focus on the development of this system in the real world.