Do Batteries Make Sense for Your Solar Project?
by Sage Energy Consulting
With battery costs decreasing and new financing mechanisms available, battery storage is increasingly important when considering strategies to reduce your energy bill.
Recent changes to the way utilities charge for energy have eroded the value of energy produced by solar PV systems, while conversely increasing the value of battery storage systems. At the same time, the cost of batteries for energy storage systems have dropped by 50% over the last five years, and are projected to drop by another 50% over the next five years. This, in combination with new financing mechanisms, makes storage a viable investment for many types of commercial customers. If you are considering installing a solar system on your property to lower energy bills and reduce environmental footprint, battery storage systems paired with solar may offer increased savings.
Example of a stationary energy storage rack module. (Source: UEP)
What are the Benefits of Energy Storage?
Reduction in Demand Charges. Most utility rates include two types of charges, usage (or energy) and demand charges. There is a trend toward increasing the demand charges to allow utilities to make expensive facilities upgrades and to influence customer energy use behavior. Storage mitigates the impact of increasing demand charges by storing energy during times of low demand and discharging that energy during times of high demand, reducing your demand peak and lowering demand charges.
Eligibility for Favorable Tariffs. By reducing peak demand with an energy storage system, it may be possible to change your utility tariff to a more favorable rate structure and further lower your energy cost.
Hedge Against Future Rate Changes. Recent rate changes (in PG&E, SCE and SDG&E territories, for example) have threatened the value of solar. However, these changes, including a trend toward higher demand costs, tend to increase the value of energy storage. Combining the two systems can help hedge future changes to utility rates.
How To Determine If Energy Storage Will Work For You
To determine whether energy storage will add value, you will need to have a thorough understanding of how you currently use energy and how storage would interact with an existing or planned solar PV system. Once this information is understood, an analysis is carried out to optimize storage and PV system sizing to access the optimal utility tariff. You must also consider the different forms of financing offered and determine what works best for your needs.
Want to learn more about how to finance your next solar energy project? Read more from our CEO, Arno Aghamalian, in the Washington Post.
Sage can model the full range of battery storage scenarios and clearly explain which factors have the greatest impact on project feasibility and outcomes so that you can make confident, informed decisions. Contact Sage to learn more.
To download Sage's in-depth Commercial Energy Storage (+Solar PV) Primer, subscribe to our Sage Energy Updates.
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