A semi-empirical financial assessment of combining residential photovoltaics, energy efficiency and battery storage systems

Abstract

Extraordinary declines in the cost of photovoltaic systems (PV), combined with a growing range of energy efficient consumer technologies (EE), has driven significant deployment of these two options in many jurisdictions. This deployment has proven to be a key way to mitigate the risks of catastrophic climate change. However, existing retail electricity arrangements can create mixed incentives for households contemplating investing in both PV and EE. This is caused by net metering arrangements that value self-consumption of PV generation far more than PV exports to the grid. This means that falling household demand due to EE may significantly reduce the financial value of PV. Meanwhile, the continuous cost decline of battery storage systems (BS) has encouraged more PV owners to consider storing PV exports to maximise self-consumption. However, there has been little research on whether the addition of BS could reduce barriers to the combined uptake of PV and EE. In this paper, real PV generation and electricity consumption data is used from numerous households in Sydney (Australia), together with a battery cyclelife model, to assess the financial outcomes of combining PV, EE and BS. The results indicate that EE can reduce PV system revenue, that adding BS to a combination of PV and EE generally increases PV revenue, that BS costs are still high for this residential application, and that the uptake of EE can result in deeper BS cycling which reduces the battery lifetime.