Solar+Storage/Impact of Utility Rate Design
Impact of Rate Design on Solar+Storage Economics
Key Questions
- How does the design of the utility tariff, such as demand charges and time-of-use elements, impact solar and/or storage economics?
- Do high demand charges make solar and storage economical in more cases?
Results
- Solar and/or storage systems are more likely to be economical under utility tariffs that have demand charges or time-of-use elements.
- Projects that include storage are most frequently economical at demand charge levels of $10 or higher.
- As technology prices drop, projects with storage become economical in more cases at lower demand charge rates.
Impact of Rate Structure Components on Cost-Optimal Technology Combination
Across the scenarios modeled, solar combined with storage is more likely to be economical under demand charges and under rates with time-of-use components.
Impact of Demand Charge Level and Technology Cost on Expected Percent Savings
Projects that include storage are most frequently economical at demand charge levels > $10, regardless of technology cost. As technology costs decline, the expected percent savings across all projects increases.
Impact of Demand Charge Level and Technology Cost on Solar and Storage Economics
As technology prices drop, solar-with-storage becomes economical at lower demand charge rates. As technology costs decline, solar combined with storage provides cost savings in an increasing number of cases, particularly when demand charges are above $10.
Savings from Demand Charge Reductions versus Energy Charge Reductions by Technology Combination
On average, savings were highest for projects that combined both solar and storage. The majority of savings from both solar-only and solar with storage projects were derived from reductions in energy charges. The limited number of storage-only projects resulted in mostly demand charge savings, though savings were marginal.
Savings from Demand Charge Reductions versus Energy Charge Reductions by Location and Building Type
Cost Point Definitions
| Cost Point | PV System Installed Cost ($/w) | PV O&M Cost ($/kW) | Battery Storage System Installed Cost for Power Rating* ($/kW) | Battery Storage System Installed Cost for Energy Rating ($/kWh) | Battery Storage Replacement Cost ($/kW) | Battery Storage Replacement Cost ($/kWh) |
|---|---|---|---|---|---|---|
| High Cost Point | $1.37 | $8 | $1,332 | $290 | $441 | $256 |
| Mid Cost Point | $1.11 | $8 | $1,062 | $256 | $407 | $238 |
| Low Cost Point | $0.97 | $8 | $1,193 | $151 | $326 | $106 |
| Stretch Cost Point | $0.90 | $8 | $787 | $106 | $276 | $97 |
* Battery storage projects costs vary depending on the power to energy ratio (also referred to as "duration"). The REopt model requires storage project costs to be input as two separate numbers, one for the power rating and another for the energy rating. These two cost variables are considered together in determining the optimal battery system configuration and, hence, the final project cost.