TY - JOUR
T1 - Policy options for enhancing economic profitability of residential solar photovoltaic with battery energy storage
AU - Zakeri, Behnam
AU - Cross, Samuel
AU - Dodds, Paul E.
AU - Gissey, Giorgio Castagneto
N1 - Funding Information:
B.Z. acknowledges the funding from Whole System Energy Modelling (WholeSEM), University College London; Aalborg University, Denmark; and International Institute for Applied Systems Analysis (IIASA). The contribution of G.C.G. and P.E.D funded by the UK Engineering and Physical Research Council (EPSRC) through the Realising ES Technologies in Low-carbon Energy Systems (RESTLESS) project (EP/N001893/1). The authors would also like to thank Professor Richard Green (Imperial College London) and Professor Ramteen Sioshansi (Ohio State University) for useful suggestions, as well as Dina Subkhankulova (UCL) for data provision.
Publisher Copyright:
© 2021 The Author(s)
Copyright:
Copyright 2021 Elsevier B.V., All rights reserved.
PY - 2021/5/15
Y1 - 2021/5/15
N2 - 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.
AB - 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.
KW - Cost-benefit analysis
KW - Decentralized energy system model
KW - Electrical energy storage
KW - Energy modelling
KW - Energy policy
KW - Renewable energy market
KW - Sector coupling
KW - Smart grid
KW - Vehicle to grid
UR - http://www.scopus.com/inward/record.url?scp=85102640786&partnerID=8YFLogxK
U2 - 10.1016/j.apenergy.2021.116697
DO - 10.1016/j.apenergy.2021.116697
M3 - Article
AN - SCOPUS:85102640786
SN - 0306-2619
VL - 290
JO - Applied Energy
JF - Applied Energy
M1 - 116697
ER -
