How Solar Home Energy Storage Works
Much has been made in the media and marketing world of home energy storage in the past few years. In the wake of significant, recent weather events which have caused multi-day power outages and billions of dollars in losses to the economy, the need for on-site energy storage and better grid resiliency is clear.
We frequently get requests from customers and potential customers with regard to purchasing solar systems with energy storage or adding energy storage to existing solar systems. Most people at this point have at least heard of Tesla’s Powerwall energy storage system and are curious about how it could work for them.
What we as industry insiders see at this point is a divergence between what these devices were engineered and designed to do, and how they are being marketed. We find much of the current energy storage marketing to be misleading and confusing to the customer.
What are these systems designed for?
Quite simply, energy arbitrage. What is energy arbitrage you ask? Good question! Energy arbitrage refers to using batteries to store energy at one point in time and using it at another to the end-user’s financial advantage. This works primarily in utility markets that have more sophisticated billing methods knows as “Time of Use” or “Tiered”. “Time of Use” billing is a system whereby utility customers are charged different rates for electricity based on the time of day at which they use it. One kilowatt hour at 11:00 AM on a weekday would be offered at a lower rate than the same kilowatt hour at 5:00 PM that evening. This pricing is based on grid demand, and encourages customers to use energy when the grid is less stressed. Solar with storage marries well with this type of metering. Excess energy generated during the peak sun hours of the late morning and afternoon can be stored in batteries. Then later, when the rate increased in the late afternoon, the home can be powered using the stored battery energy rather than drawing from the grid.
Why is the marketing misleading?
Most of the marketing we see for energy storage systems, especially residential storage systems, targets storm resiliency and energy independence. The number of kilowatt hours which are capable of being stored in a typical residential battery bank would power the average house for a couple of hours at best. This is fine, and actually quite useful, when trying to avoid using utility power during a peak power window, but not so good at providing emergency power to a home during a storm or outage of greater duration. It’s not atypical in our area during and after major storms to see power outages lasting 24+ hours. This could easily require 30 or more kWh of battery storage which would be exorbitantly expensive, take up a great deal of space, and be difficult to maintain.
In most New York utility markets, especially those Upstate, customers are not billed using “Time of Use” metering. Our energy costs the same regardless of what time during the day or week we use it. Given our “flat” rate structure there is no opportunity to take advantage of energy arbitrage.
As we see it, the case for battery-based energy storage in our market is still a weak one. We at Lighthouse Solar want to see effective, reliable, and cost-effective energy storage come to market as much as anyone. We are keeping a close eye on the industry’s development and product offerings. When we see a solution come to market that is reliable and aligns with the needs of our customers, we will proudly offer it.