Solar Batteries: Should Install Them?

Jessica PirroJanuary 10, 2020 2094 2

When installing solar batteries alongside a solar panel installation, you can store all of the excess solar electricity that your solar panels are producing excess solar electricity, and when your solar panels aren’t producing any solar electricity, you can draw the stored solar electricity from the solar batteries.

Solar batteries are going to provide a lot of benefits for property owners, which is going to include increased savings and disaster resiliency. If your electric utility uses a time-of-use (TOU) rate structure or demand charges, the solar power systems with solar batteries can help you save money on your electricity. Besides, areas without a net-metering policy, solar batteries are also going to save money on your bill.

Besides just saving money on your electric bill, solar batteries can provide backup power in case there is a grid blackout. If the power does go out, you will have solar electricity stored in a residential energy storage system, you can power your home for a period using the electricity that is generated by your solar panels.

Should You Install Solar Batteries Alongside Your Solar Power System?

When installing solar batteries alongside your residential solar power system, you can store the extrasolar electricity that your solar panels are going to produce at home instead of feeding it back to the electricity grid. The solar batteries are going to maximize your ability to use the solar electricity that is generated on a day to day basis. When you are going to need more electricity than your solar panels are producing, you can use the solar electricity that you have stored.

Whether or not you save money by getting a solar panel installation with solar batteries is going to depend on your electric utility charges its customers. In the states that offer net metering, you will typically receive a credit on your utility bill for each kilowatt-hour (kWh) of solar power that you send back to the grid. You can use those credits later on when you need more electricity than your solar panels are generating. For homeowners that are in this situation, when you install solar batteries they won’t increase the savings the electric grid is providing the same financial benefits as the solar batteries.

But, some electric utilities are changing their rates in ways that make solar batteries a smart investment for homeowners. If your utility rate policy includes any of the following, energy storage can help you save more with solar panels.

- How Time-Of-Use (TOU) Electricity Rates the Economics of Solar Batteries

If your utility has TOU rates, the per-kWh rate that you pay for electricity will change depending on the time of day. Electricity is high, typically in the late afternoon and evening. Electricity rates are lower during the daytime when home electricity use is lower and solar panels are at their most productive. If your utility uses TOU rates, you can benefit from residential energy storage systems by using the electricity from your solar batteries during peak hours when utility electricity rates are at their highest.

TOU rates are becoming more common in the United States, with California leading the way. Under a new solar power policy, for the homeowners who get a solar panel installation in California will automatically be required to pay TOU rates instead of a single per-kWh rate.

- How Demand Charges Affect the Economics of Solar Batteries

If your utility has demand charges for residential customers, you are going to be charged a fee that is going to change depending on how much electricity you use. The fee might depend on how much electricity you purchase during peak hours when electricity demands are the highest. It may also be determined by the total amount of electricity that your household is going to use in a month. If your utility uses demand charges, you are going to benefit from solar batteries because you might be able to avoid a higher fee by relying on a residential energy storage system instead.

While the demand charges are more common for commercial customers with big electricity bills, some states and utilities are considering the addition of demand charges to their electricity rates to motivate people to reduce their electricity use. Utilities in Arizona and Illinois, among others, are evaluating residential demand charges.

- How Reduced or No Net Metering Credits Affect the Economics of Solar Batteries

In the states that have true net metering, you are going to receive a per-kWh credit equal to the cost of electricity on your bill for the energy your solar panels produce.

But in certain states, homeowners are going to receive a credit for the wholesale or the avoided cost rate, which will typically equal the rate that your utility would have paid to buy the electricity elsewhere. As a result, the monetary value of one kWh of solar power that you use at home is higher than one that you send back to the grid.

At the end of 2015, the Nevada Public Utilities Commission (PUC) voted to change its net metering policy to a policy that is based on the avoided cost rate - one of the very first states to make that change. In Hawaii, where more than 10 percent of homes have a rooftop solar panel installation, the PUC has also reduced net metering credits in a way that will make a residential energy storage system a worthwhile investment.

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