The Economics of Battery Storage for Residential Solar Customers in Southern California

Battery storage coupled with solar panels became a consideration after the original net metering program in California (NEM 1.0) ended and gave way to the current net metering program (NEM 2.0). Under NEM 2.0, battery storage gives customers under time-of-use (TOU) rate plans the ability to store the excess electrical energy generated by their panels during sunlight hours (when electricity usage and resale rates are low) and then use that energy in the evening when rates are significantly higher. This reduces the amount of expensive electricity that the customer would have to purchase from the grid. It is widely expected that the current net metering program in California will be replaced by a more restrictive and much less financially attractive program when NEM 3.0 goes into effect in early 2022. The impending introduction of NEM 3.0 has accelerated the rate at which homeowners are installing solar panel arrays and battery storage. In this paper we examine the economics of installing battery storage for residential customers and examine whether battery storage makes financial sense. We use public data to model the electricity bills for an average sized residential customer in southern California and examine how much money this customer can save using battery storage under the current rate plans

The Economics of Residential Solar Panels: A Comparison of Energy Charges for Different Load Profiles, Rate Plans, and Panel Orientations

This paper examines the effect of different residential electrical load profiles (electrical energy consumption patterns within a day) on energy charges for customers with solar panels under different Southern California Edison time-of-use (TOU) rate plans. We identify the TOU plan which would be the most cost effective for solar customers with each load profile. The impact of the orientation of the solar panel array (whether it faces south or west or east) and shading patterns on electricity charges are examined. We also determine the ideal usage offset (the percentage of electricity consumption provided by the solar array) for the various scenarios presented in this paper. We perform these analyses using actual data for the average sized residential customer of Southern California Edison. While the data we examine are based on solar panel production estimates for southern California, the issues we address, and the methods we use, are applicable to virtually any locality. And our analysis reveals how myriad factors impact the economics of residential solar panel systems regardless of location

The Economics of Residential Solar and Battery Storage: Analyzing the Impact of the Joint IOU Proposal for Net Metering 3.0 in California

The California Public Utilities Commission (CPUC) is currently deciding on the structure of the next net metering program, which will determine how customers who install solar panels (and battery storage) under this new program will be compensated for excess energy that they export to the grid, and the additional fees that these solar customers will have to pay. The major investor-owned utility (IOU) companies in the state and some legislators have argued that the current net metering programs are far too generous to the customers and that they create an inequity by favoring the wealthy and causing a cost shift to the poorer non-solar customers. The IOUs have jointly proposed a set of regulations to the CPUC. In this paper, we examine the financial implications to residential customers who go solar under the new net metering program if the joint IOU proposal were to be adopted. We examine the case of a hypothetical southern California home that consumes the average amount of electricity (for that region) and estimate its electricity bills for various load profiles, assuming no solar or battery storage, with solar alone, and with solar and battery storage. For the two latter scenarios, we determine the ideal system configuration that will maximize the customer’s financial returns. In all cases, we determine that the joint IOU proposal for net metering will make residential solar panel and battery storage installations financially unattractive even in the best-case scenarios. In short, if the CPUC adopts the joint IOU proposal then residential solar installations in the state would likely come to an abrupt stop. We also analyze the economics of going off-grid (where a customer completely cuts himself off from the electrical grid) and find that it does not make sense for customers to go off-grid without being willing to cut consumption or make other compromises