Effect of tariffs on the performance and economic benefits of PV-coupled battery systems

Abstract

The use of batteries in combination with PV systems in single homes is expected to become a widely applied energy storage solution. Since PV system cost is decreasing and the electricity market is constantly evolving there is marked interest in understanding the performance and economic benefits of adding battery systems to PV generation under different retail tariffs. The performance of lead-acid (PbA) and lithium-ion (Li-ion) battery systems in combination with PV generation for a single home in Switzerland is studied using a time-dependant analysis. Firstly, the economic benefits of the two battery types are analysed for three different types of tariffs, i.e. a dynamic tariff based on the wholesale market (one price per hour for every day of the year), a flat rate and time-of-use tariff with two periods. Secondly, the reduction of battery capacity and annual discharge throughout the battery lifetime are simulated for PbA and Li-ion batteries. It was found that despite the levelised value of battery systems reaches up to 28% higher values with the dynamic tariff compared to the flat rate tariff, the levelised cost increases by 94% for the dynamic tariff, resulting in lower profitability. The main reason for this is the reduction of equivalent full cycles performed with by battery systems with the dynamic tariff. Economic benefits also depend on the regulatory context and Li-ion battery systems were able to achieve internal rate of return (IRR) up to 0.8% and 4.3% in the region of Jura (Switzerland) and Germany due to higher retail electricity prices (0.25CHF/kWh and 0.35CHF/kWh respectively) compared to Geneva (0.22CHF/kWh) where the maximum IRR was equal to −0.2%.