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NREL report: Energy storage could enhance value of solar PV systems

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NREL report: Energy storage could enhance value of solar PV systems

Behind-the-meter energy storage products could enhance the value of rooftop solar photovoltaic systems while increasing the "flexibility of electricity consumers and enhancing grid operations," according to a new report from the U.S. Department of Energy's National Renewable Energy Laboratory.

However, considerable obstacles in both cost and value are hampering large-scale deployment of solar PV systems that include energy storage, the report found.

Released March 28, the report "Installed Cost Benchmarks and Deployment Barriers for Residential Solar Photovoltaics with Energy Storage: Q1 2016" was a collaboration between researchers at NREL, the Rocky Mountain Institute and DOE and examined system-level costs for residential solar PV systems equipped with energy storage.

Costs for a direct current-coupled system that incorporates a 5.6-kW PV array and a 3-kW/6-kWh battery is $27,703, divided roughly equally between hardware costs and "soft" costs, the report said. "An [alternating current]-coupled system, which can be more effective in applications that tend to use the energy from the PV array at the time of generation, costs $1,865 more if the battery is installed at the same time as the array."

In situations where the battery is retrofitted to an existing AC-coupled system, the cost would increase $3,218 to $32,786, according to the report.

A 5.6-kW PV array paired with a larger, more resilient 5-kW/20-kWh battery would cost $45,237 when DC-coupled and $47,171 when AC-coupled, which is 60% higher than the small-battery system price, the report said. The increase was mainly due to higher hardware, labor, and sales and marketing costs tied to more complex system design and engineering requirements.

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According to the report, the use of solar PV and wind technologies in the U.S. is growing rapidly, and interest in boosting the value of those resources with energy storage systems likewise is increasing. The report's authors cited California, Massachusetts, Oregon, Washington and New York City either as having set energy storage procurement targets or as being supportive of energy storage deployment.

The residential sector, however, is falling behind commercial, industrial and utility-scale sectors when it comes to the use of energy storage systems. "Of the total 226 MW of energy storage deployed in 2015, less than 35 MW were behind the meter, and only about 4 MW were residential," the report said.

But by 2021, 49% of total annual storage installations are projected to be behind the meter, including 463 MW in the residential sector, according to the report. Additionally, the percentage of residential solar PV systems combined with energy storage is projected to grow from 0.11% in 2014 to 3% in 2018.

The cost of lithium-ion batteries, which commonly are used in grid-tied residential storage systems, dropped by an average of 23% per year from 2010 to 2015, and continuation of that general trend is expected to contribute to more available energy storage in the future, the report said. "Still, the costs of residential storage systems remain high relative to the value proposition of these systems — in part due to regulatory and market barriers that impede deployment of storage systems," the report found.

One factor complicating the comparison of energy storage costs is that unlike standalone PV, which uses dollars per watt and levelized cost of energy that are relatively easy to interpret, storage costs "can be estimated based on capacity (kWh), power (kW), or both," according to the report.

"There is rapidly growing interest in pairing distributed PV with storage, but there's a lack of publicly available cost data and analysis," NREL's Kristen Ardani, the report's lead author, said in a statement. Ardani added that the report expanded on NREL's "well-established component- and system-level cost modeling methodology" and applied the same methodolgy to PV-plus-storage systems.