Adding a solar photovoltaic system to a home or business is an exceptional way to lower one’s energy costs over decades of electricity usage. But, as with any investment, the smart money is on maximizing the return and ensuring the dividends aren’t negatively impacted by external market effects.
When it comes to solar, you’re making a great investment; you’re locking in a low energy cost, increasing the value of your property, selling power back to the grid, and, in some markets, reaping incentive payments. That’s all in addition to replacing dirty fossil-fuel energy with clean power.
How secure is your investment in solar power?
External conditions can negatively impact your return on your solar investment and reduce your potential savings. Let’s review these conditions, and then look at the best way to secure your solar investment against them.
The Solar Problem
Not everyone appreciates your decision to buy solar panels. Some utilities or state legislators have taken a hard stance against renewables, in some cases destroying the economic viability of adopting solar. Why do some policymakers fight renewables? Usually, it’s a response to the difficulty utilities have responding to peaking demand for grid power. Utilities respond to ramping electricity demand in real time, usually with no inventory (storage) to help provide readily-available energy when it’s in high demand.
More homes and businesses are adopting solar power, and until we build a smarter grid that includes batteries, those periods of peaking demand will be harder for utilities to predict and manage. Therefore, U.S.-based solar buyers face a very real threat: The possibility of policymakers resisting renewables by creating policies that impede or remove the economic benefits of buying solar.
Some states and utilities have repealed net metering (crediting solar-powered homes and businesses for their back-feeding energy), or have begun to bill customers based on their highest peaks of consumption, rather than their actual monthly total of consumed energy. So, solar panels are a great investment, unless your state legislature or public utility decides to curtail the economic benefits of producing clean power.
The Solution: Batteries
By relying on the grid to supply evening power and provide credits for daylight power that’s exported back to the grid, solar buyers are vulnerable to the changing whims of utilities and legislators. The solution? Using a home smart battery to keep the balance of power in your favor, no matter what happens.
Why Solar Needs Batteries
Solar panels produce the most power during daylight hours when most homes aren’t using much power. That power gets sold to the grid and bought back at night when homes need more electricity. When utilities stop paying solar customers for their back-fed power, a battery maximizes the use of free solar power. As these charts show, the use of batteries stabilizes the grid, benefitting the utility, too.
States with strong cases for adding batteries to solar
Case 1: Nevada
In 2015, the state of Nevada eliminated net metering for all producers of solar power – including everyone who already has solar. Rather than selling to the grid for no benefit, these customers are better of with a battery to maximize the amount of free solar power they consume. If lawmakers continue to pursue legislation of this kind, all solar installations in Nevada will need batteries in order to be a good case versus buying grid power.
Case 2: Arizona
Some areas of Arizona are set to implement residential peak demand charges, billing homes monthly based on short periods of their highest usage. Homes and businesses with this type of billing can save big by using batteries to off-set peaks.
Case 3: California
California has proposed a time-of-use (TOU) schedule that charges customers more for power at night when demand is highest. Batteries shift daylight solar power to evening energy needs, avoiding peak utility prices. This is a smart way for the grid to manage its electrical supply/demand relationship, and batteries give customers an edge in managing costs.
What is a ‘Smart Battery?’
A smart battery is simply a modern term for a home-scale battery, typically using lithium ion, that runs at a high internal voltage to increase efficiency and power output. These batteries are less like conventional batteries and are more like modern appliances – sleek, lightweight, and powered by smart electronics and software. Smart batteries are maintenance-free and are designed for long periods of heavy use.
Why Own a Smart Battery?
Reason number one: A smart battery system creates meaningful long-term savings for owners of solar power in markets that don’t provide full net metering credits, or where energy use is billed based on peaking periods.In addition to these savings and the ability to secure your investment, there are, of course, additional benefits to owning a battery-enabled solar system with smart controls.
Additional Benefits of Owning a Smart Battery-Enabled Solar System
- Clean, quiet, no-maintenance backup power when the grid fails, providing a smart, high-efficiency alternative to a gas generator
- Self-consumption of clean power: For environmental –and sometimes economic– benefit, owners can use a battery to maximize the amount of solar energy they consume, in some cases avoiding purchasing grid power altogether
- Access to financial incentives: Some states and utilities offer incentives and crediting programs to encourage homes to buy batteries that utilities can remotely dispatch when needed to support peaking demand
- Energy arbitrage: Manage your energy bill by shifting your highest periods of usage to your battery, rather than buying from the grid. This is key to winning the supply/demand game with time-of-use billing.
We’ve just looked at the reasons it could make sense for you to add a smart battery to your solar investment. This decision can keep the balance of power in their favor, no matter what happens.
If you’re not sure about whether you need a battery right away, read more about your options here.
If you’re ready to secure your energy investment, contact us to learn about whether the Pika Energy Island™ and its compatible smart battery options are right for you.
By Chip Means, Director of Marketing