Solar+Storage/Impact of Policies & Incentives
Impact of Policies & Incentives on Solar+Storage Economics
Key Questions
- How does the step-down of the Investment Tax Credit (ITC) from 30% to 10% impact solar+storage economics?
- How does the availability of net energy metering impact the economics of commercial-scale solar+storage?
- How much will it impact solar+storage economics if electricity price increases are slower than anticipated?
Results
- Anticipated reductions in technology costs, do not make up for the complete removal ITC step-down. Savings are maintained in the case where cost reductions reach the 'stretch cost point' and the ITC is stepped-down to 10%.
- Storage projects are found to be economical in more cases when net-metering is not available. When net energy metering is available the grid serves the same purpose as a battery, without the need for investment in a battery. Reduction of the net-metering rate from a retail to wholesale rate also stimulates storage.
- The average expected lifetime savings is highest when net-metering is available (averaging across all locations and building types).
- Varying electricity prices (compound annual growth rates) have little impact on expected savings.
Impact of ITC on Expected Savings
The graph below compares the average expected savings from solar and/or storage systems under different tax credit sensitivities. Averaging across all building types and locations, expected near-term or stretch goal technology cost reductions do not make up for a complete removal of the investment tax credit (ITC).
Impact of Net-Metering Policy on Solar and Storage Economics
When net energy metering (NEM or net-metering) is available, the grid serves the same purpose as a battery. When net-metering is not available, storage projects are found to be economical in more cases. Reduction of the net-metering rate from a retail to wholesale rate also stimulates storage. Averaging across all locations and building types for one cost point, the average expected lifetime savings is highest when net-metering is available.
Impact of Electricity Price Increases on Expected Savings from Solar and/or Storage Systems
Varying electricity prices (compound annual growth rates) have little impact on expected savings. Across all scenarios modeled, low annual electricity price growth of 0.02% resulted in economical systems in 17% of the cases, while high annual price growth of 0.69% resulted in systems being economical in about 19% of the cases.
