The Price Of A Rooftop Solar System With Batteries

Recently, not too long ago, the Rocky Mountain Institute and associates including Global X and HOMER Energy published a study, The Economics of Load Defection, that explored how grid-connected solar-plus-battery systems will compete with traditional electric service.

The decisions showed that declining costs for such systems, combined with retail price hikes for grid power, would make grid-connected solar-plus-battery systems economically optimal for customers in many sectors of the country by 2030. Furthermore, solar-plus-battery systems can offer other important benefits to customers, such as backup power for demanding loads in the event of a grid outage and cost savings via peak-demand shaving and time-of-use shifting. However, at the time, RMI’s research did not detail the exact nature of energy storage costs.

Comparing Things Solar

To break down the installed costs of PV-plus-storage systems today, RMI and NREL first analyzed data across a variety of existing studies from sources including Lazard and GTM, in an extension to our own experience in the RMI Innovation Center.

One challenge to analyzing component costs and system costs for PV-plus-storage installations is choosing an suitable metric. Unlike standalone PV, energy storage lacks a regular set of widely accepted benchmarking metrics, such as dollars-per-watt of installed capacity or levelized cost of energy. Energy storage prices can vary both by the total energy capacity of the system, expressed in $/kilowatt-hour (kWh), and the time at which it charges or discharges, expressed in $/kilowatt (kW).

Some customers may prefer to optimize their system for longer-duration discharge, while others may have high peak need and want to optimize their storage solution for power (kW) rather than energy capacity (kWh). Given the diversity of household preferences and load profiles, using a single figure that can artificially distort reported costs, making it difficult to compare across varying systems. Therefore, we utilized the total installed price as our primary metric, rather than using a metric normalized to system size.

To analyze part costs and system prices for PV-plus-storage installed in the first quarter of 2016, we adapted NREL’s component- and system-level bottom-up cost-modeling path for standalone PV. Our methodology includes accounting for all component and project-development costs incurred when installing household systems, and it models the cash purchase price for such systems, excluding the federal Investment Tax Credit (ITC).

Let’s Look Further

Applying these techniques, we looked at two primary cases: one that we refer to as the small-battery (3 kW/6 kWh) case, and we added that we refer to as the large-battery (5 kW/20 kWh) case. For all, we test sensitivities around two sets of alternatives: DC- or AC-coupling configurations, and retrofit or new installations. The separation between DC and AC coupling determines whether the battery stores power directly from the PV panels or first converts it to AC power, which allows AC charging from both the PV panels and the grid.

The small-battery case is designed for a typical customer’s self-consumption of electricity, including peak-demand shaving and time-of-use shifting, whereas the large-battery case is designed to support greater backup energy requirements for improved resiliency to outages.

Here’s what we got: The benchmarked price of the small-battery case, which uses a 5.6-kW solar PV array and a 3-kW/6-kWh lithium-ion battery, is about twice as high as the cost of a standalone grid-connected 5.6-kW solar PV system (see Figure 1). The DC-coupled system cost ($27,703) is $1,865 lower than the AC-coupled system price ($29,568) for a new PV-plus-storage installation.

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