Policy options for enhancing economic profitability of residential solar photovoltaic with battery energy storage

Zakeri, B. ORCID: https://orcid.org/0000-0001-9647-2878, Cross, S., Dodds, P.E., & Castagneto Gissey, G. (2021). Policy options for enhancing economic profitability of residential solar photovoltaic with battery energy storage. Applied Energy 290 e116697. 10.1016/j.apenergy.2021.116697.

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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.

Item Type: Article
Uncontrolled Keywords: Electrical energy storage; Energy policy; Renewable energy market; Decentralized energy system model; Sector coupling Smart grid; Vehicle to grid; Energy modelling; Cost-benefit analysis
Research Programs: Energy, Climate, and Environment (ECE)
Energy, Climate, and Environment (ECE) > Integrated Assessment and Climate Change (IACC)
Energy, Climate, and Environment (ECE) > Sustainable Service Systems (S3)
Depositing User: Michaela Rossini
Date Deposited: 19 Mar 2021 13:05
Last Modified: 27 Aug 2021 17:34
URI: https://pure.iiasa.ac.at/17123

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