Insights / Energy & Environmental Law Blog
Power Outages and the Case for Solar + Storage
By William M. Friedman
06.13.19
Recent power outages related to wildfires and other weather-related events suggest that a battery storage system might be a sensible addition when installing a solar photovoltaic system. The cost of battery storage is dropping, and there are alternatives available to reduce the cost further.
“The era of available electricity whenever and wherever needed is officially over in wildfire-plagued California,” declared one California newspaper reporting on recent power outages for tens of thousands of customers in five Northern California counties. Pacific Gas & Electric’s forced blackouts are the most recent attempts to prevent wildfires in fire-prone areas of California. They are also an example of weather-related electricity outages that are increasingly affecting customers across the country. From nor’easters to hurricanes, tens of millions of customers throughout all sections of the United States experienced power outages last year.
These increasingly common outages have become a major selling point for individuals and businesses considering whether to add a battery storage system in conjunction with their decision to install solar panels. The combination of solar plus storage allows the customer to store excess electricity generated by the solar panels for consumption at a later time, such as when electricity prices are highest during the day. It also allows the customer to keep its electricity on for some period of time during a power outage. A prominent residential solar developer reported last year that one in five new solar projects it installed in California included a storage component, with many customers citing concerns about wildfire-caused blackouts as the reason.
The largest drawback to adding a battery onto a solar project is cost. Although recent research shows that the levelized cost of lithium-ion batteries (the most common battery type for pairing with solar) has fallen 35% since the first half of 2018, adding a battery is still a significant expense in addition to the cost of a solar photovoltaic system. In reviewing the costs, customers can explore different ownership models, including leasing the solar panels and battery from a developer rather than purchasing them outright.
A customer should also consider whether adding storage is a good value proposition for its particular use case. For example, if a customer is installing a battery to manage time-of-use billing, a model can calculate the expected bill savings for self-supplying electricity during peak pricing hours. Modeling can also calculate how to monetize excess storage capacity, such as participating in wholesale energy and ancillary services markets.
However, it is often more difficult to model to a customer the value of resiliency, where the fundamental question is how to value the backup power a battery can supply. For some customers, the number is quantifiable. In a real-world example, a medical research facility that included a clean room experienced a blackout. The loss of power to the clean room meant a loss of approximately $40,000, including costs associated with re-sanitizing the room, loss of active research projects, and lost research time. Adding solar plus storage as a backup power source made economic sense for the facility given the extreme cost associated with a blackout. For other customers, the peace of mind solar plus storage provides may not be as readily quantifiable.
With the increasing prevalence of weather-related power outages in California and across the United States, the value proposition of adding storage may be changing. As in parts of California, the once-remote possibility of a blackout may be more real than ever. With battery costs falling and the value of storage increasing, the continued expansion of solar plus storage seems inevitable.
“The era of available electricity whenever and wherever needed is officially over in wildfire-plagued California,” declared one California newspaper reporting on recent power outages for tens of thousands of customers in five Northern California counties. Pacific Gas & Electric’s forced blackouts are the most recent attempts to prevent wildfires in fire-prone areas of California. They are also an example of weather-related electricity outages that are increasingly affecting customers across the country. From nor’easters to hurricanes, tens of millions of customers throughout all sections of the United States experienced power outages last year.
These increasingly common outages have become a major selling point for individuals and businesses considering whether to add a battery storage system in conjunction with their decision to install solar panels. The combination of solar plus storage allows the customer to store excess electricity generated by the solar panels for consumption at a later time, such as when electricity prices are highest during the day. It also allows the customer to keep its electricity on for some period of time during a power outage. A prominent residential solar developer reported last year that one in five new solar projects it installed in California included a storage component, with many customers citing concerns about wildfire-caused blackouts as the reason.
The largest drawback to adding a battery onto a solar project is cost. Although recent research shows that the levelized cost of lithium-ion batteries (the most common battery type for pairing with solar) has fallen 35% since the first half of 2018, adding a battery is still a significant expense in addition to the cost of a solar photovoltaic system. In reviewing the costs, customers can explore different ownership models, including leasing the solar panels and battery from a developer rather than purchasing them outright.
A customer should also consider whether adding storage is a good value proposition for its particular use case. For example, if a customer is installing a battery to manage time-of-use billing, a model can calculate the expected bill savings for self-supplying electricity during peak pricing hours. Modeling can also calculate how to monetize excess storage capacity, such as participating in wholesale energy and ancillary services markets.
However, it is often more difficult to model to a customer the value of resiliency, where the fundamental question is how to value the backup power a battery can supply. For some customers, the number is quantifiable. In a real-world example, a medical research facility that included a clean room experienced a blackout. The loss of power to the clean room meant a loss of approximately $40,000, including costs associated with re-sanitizing the room, loss of active research projects, and lost research time. Adding solar plus storage as a backup power source made economic sense for the facility given the extreme cost associated with a blackout. For other customers, the peace of mind solar plus storage provides may not be as readily quantifiable.
With the increasing prevalence of weather-related power outages in California and across the United States, the value proposition of adding storage may be changing. As in parts of California, the once-remote possibility of a blackout may be more real than ever. With battery costs falling and the value of storage increasing, the continued expansion of solar plus storage seems inevitable.