Abstract
Share of solar photovoltaic (PV) is rapidly growing worldwide as technology costs decline and national energy policies promote distributed renewable energy systems. Solar PV can be paired with energy storage systems to increase the self-consumption of PV onsite, and possibly provide grid-level services, such as peak shaving and load levelling. However, the investment on energy storage may not return under current market conditions. We propose three types of policies to incentivise residential electricity consumers to pair solar PV with battery energy storage, namely, a PV self-consumption feed-in tariff bonus; “energy storage policies” for rewarding discharge of electricity from home batteries at times the grid needs most; and dynamic retail pricing mechanisms for enhancing the arbitrage value of residential electricity storage. We soft-link a consumer cost optimization model with a national power system model to analyse the impact of the proposed policies on the economic viability of PV-storage for residential end-users in the UK. The results show that replacing PV generation incentives with a corresponding PV self-consumption bonus offers return on investment in a home battery, equal to a 70% capital subsidy for the battery, but with one-third of regulatory costs. The proposed energy storage policies offer positive return on investment of 40% when pairing a battery with solar PV, without the need for central coordination of decentralized energy storage nor providing ancillary services by electricity storage in buildings. We find that the choice of optimal storage size and dynamic electricity tariffs are key to maximize the profitability of PV-battery energy storage systems.
Highlights
The cost of distributed energy storage (EES) is typically higher than the benefits that it can offer to prosumers2 under current market conditions [12], leaving the deployment rate of distributed EES com bined with PV very low [13]
Residential solar PV with energy storage We model the hourly operation of solar PV and a battery energy storage technology for a residential consumer with a medium-sized, three-bedroom dwelling with an annual electricity consumption of Annual load Building type Location Load profile
We find that battery storage can substantially reduce the cost of electricity to consumers, and that ToU are the most appropriate tariffs to realize the value of EES to consumers in reducing their import from the grid
Summary
Elec trical energy storage (EES) systems are one of the flexibility options that can contribute to, inter alia, the integration of high shares of VRE [3], minimizing the need for fossil fuel-based peak generation and backup power capacity [4], decreasing carbon emissions [5], and reducing electricity prices and price volatility [6]. Residential solar PV has grown signifi cantly globally, with an annual average growth rate of about 50% between 2010 and 2020 [7]. In this respect, government subsidies have encouraged many households to install roof-top solar PV in different countries [1]. The cost of distributed EES is typically higher than the benefits that it can offer to prosumers under current market conditions [12], leaving the deployment rate of distributed EES com bined with PV very low [13]
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