By F. A. Amoroso and G. Cappuccino
Storage is potentially the game changer for the solar market nowadays, allowing self-consumption to be increased by using solar energy also to supply loads at night.
Other than the reduction of storage cost and the introduction of possible incentive schemes, the maximization of the storage efficiency is a key factor to increase the system profitability, making the investment on solar plus storage actually viable for end-users.
Feed-in tariffs for solar energy are decreasing continuously, whereas the electricity tariffs are increasing.
As a consequence, self-consumption of the energy produced by the PV plant has already become practically the sole business model to make the investment on solar viable in different regions, especially in European countries.
This is why, as well as for grid support in utility-scale applications , energy storage is in the spotlight today at the residential and commercial level , allowing self-consumption to be increased by using part of the produced PV energy at night.
Obviously, storage will actually become the game changer for the solar market only if it is profitable for end-users.
To this aim, the first key aspect to be controlled is evidently the price of storage systems, which is predicted to halve over the coming years going from about 700$/kWh (500 €/kWh) to about 300$/kWh (200 €/kWh) in 2020 .
To mitigate the relatively high current cost of storage, incentive programs are emerging, such as in Germany wherein up to 30% of the storage cost is reimbursed.
However, other than the reduction of storage cost and the introduction of possible incentive schemes, there is a further key success factor, which is often underestimated: the storage efficiency.
In fact, because of energy losses in both the inverter and the battery, a fraction of the solar energy used to re-charge the storage system is merely wasted rather than self-consumed. This is a “hidden” economical loss for the user, because the energy wasted has to be balanced by additional energy purchased from the grid.
Thus, despite several existing calculations of the return on investment (ROI) for PV plants with storage, the reality is that there is no unequivocal method to quantify the profitability of a storage system, because it strongly depends on the system efficiency.
To show this, a practical example is considered; that of a typical residential house with a PV power plant in Germany with the following characteristics:
- Installed PV power: 5kWp.
- Annual PV energy produced: 5000 kWh.
- Average annual energy consumption: 5000 kWh.
- Natural self-consumption rate (without energy storage systems): 30%. This means that 3500 kWh are fed to the grid, 1500 kWh are naturally consumed, when there is a production of PV energy, and 3500 kWh are consumed at night and bought from the grid.
With a feed-in tariff of about 0.14 €/kWh and an electricity tariff of about 0.29 €/kWh, the annual cost of the energy under the above assumptions is about 525 € (instead of 1450 € that the user would have to pay without the solar plant).
It is estimated that adding to the plant under examination a storage system with a capacity of 5 kWh can allow an increase of the self-consumption rate of about 30%.
In this case, 2000 kWh are then fed to the grid, 1500 kWh are naturally consumed when there is a production of PV energy and 1500 kWh are used to charge the battery of the storage system.
But, what about the amount of energy to be bought at night from the grid? This amount actually depends on the storage efficiency.
To understand this point, the performance of two different storage systems with the same capacity can be considered, for example:
- system 1, characterized by an 80% charging/discharging efficiency, resulting in a roundtrip efficiency of 64%;
- system 2, characterized by a 90% charging/discharging efficiency, resulting in a roundtrip efficiency of 81%.
For system 1, only 960 kWh of the 1500 kWh used to charge the battery can actually be used to supply the household loads at night, leading to 2540 kWh to be bought from the grid. This results in an annual cost of the energy of about 457 €, thus in a profitability of the storage system of just 68 € (the annual energy cost without storage system is 525 €).
Instead, system 2 guarantees 1215 kWh coming from storage to be really exploited during the night. This reduces the amount of energy to be bought to 2285 kWh and the annual cost of the energy to 383 €, leading to a storage profitability of 142 €.
Thus, the higher efficiency of the system 2 ensures a storage profitability of almost double that of system 1, allowing the payback period of the storage system to be reduced by more than half.
By assuming, for example, a storage price of 500 €/kWh and the 30% reimbursement guaranteed by the German incentive program (thus a total storage cost of 1750 € for 5 kWh), the two considered systems are characterized by the following economical performance:
- System 1. Payback period: 25.7 years. ROI at 20 years: -22%.
- System 2. Payback period: 12.3 years. ROI at 20 years: 62 %.
Thus, the presented analysis clearly highlights that, together with the reduction of battery cost, suppliers of storage systems have to cope with the maximization of storage efficiency in order to make the investment on solar plus storage really attractive for end-users.
To this aim, it will be fundamental to work on the development of both batteries and inverters characterized by high efficiencies, as well as on smart energy management devices capable of optimizing on the field the performance of energy storage systems .
 “Grid Storage under the Microscope: Using Local Knowledge to Forecast Global Demand”, Lux Research, 2012, https://portal.luxresearchinc.com/research/report_excerpt/10114
 “The role of energy storage in the PV industry”, IMS research, 2013, http://www.pvmarketresearch.com/report/the_role_of_energy_storage_in_the...
 “Energy Storage in Australia– Commercial Opportunities, Barriers and Policy Options”, Marchment Hill Consulting, 2013
 “Storage Efficiency: the Dividing Line Between Consumption and Self-Consumption”, CalBatt White Paper, 2014, http://www.calbatt.com/public/download/CalBatt_ESS_whitepaper_01_14.pdf
Francesco Antonio Amoroso is the head of R&D at CalBatt, which develops smart solutions for high-efficiency storage and electric vehicle charging systems. He is also Research Assistant at the University of Calabria, his main research interests include the design of high-performance electronic systems for energy storage, electric vehicles and smart grids.
Gregorio Cappuccino, is a senior member of IEEE, and serves as the IEEE CAS Society representative to the IEEE Transportation Electrification Project, he is also a member of the IEEE Technical Committee on Analog and Signal Processing and a member of IEEE PES. Dr. Cappuccino is Co-founder and CEO of CalBatt, a spin-off company of University of Calabria specializing in innovative solutions for improving the efficiency of energy storage battery-based systems.