Abstract
Energy storage will be key to overcoming the intermittency and variability of renewable energy sources. Here, we propose a metric for the cost of energy storage and for identifying optimally sized storage systems. The levelized cost of energy storage is the minimum price per kWh that a potential investor requires in order to break even over the entire lifetime of the storage facility. We forecast the dynamics of this cost metric in the context of lithium-ion batteries and demonstrate its usefulness in identifying an optimally sized battery charged by an incumbent solar PV system. Applying the model to residential solar customers in Germany, we find that behind-the-meter storage is economically viable because of the large difference between retail rates and current feed-in tariffs. In contrast, investment incentives for battery systems in California derive principally from a state-level subsidy program.
Highlights
Energy storage will be key to overcoming the intermittency and variability of renewable energy sources
To effectively complement an intermittent solar PV system with storage, an optimally sized battery system will be such that the price premium is equal to the Levelized Cost of Energy Storage (LCOES) evaluated at the duration corresponding to the last power component
We find that this surcharge in combination with the state’s rebate program, titled Self Generation Incentive Program (SGIP), and the federal Investment Tax Credit (ITC) is sufficient to incentivize substantial investments in behind-the meter battery storage
Summary
Energy storage will be key to overcoming the intermittency and variability of renewable energy sources. Net metering would effectively eliminate any price premium, yet the state effectively created a price premium by imposing a non-bypassable surcharge on electricity consumed from the grid for customers with rooftop solar installations[14,15] We find that this surcharge in combination with the state’s rebate program, titled Self Generation Incentive Program (SGIP), and the federal Investment Tax Credit (ITC) is sufficient to incentivize substantial investments in behind-the meter battery storage. The structure of the rebates under SGIP will result in battery systems with a relatively short duration but large power rating
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