Bill Savings vs. Backup Power: Evaluating operational tradeoffs for home solar+storage systems

This study explores tradeoffs between the use of home solar+storage systems for backup power versus day-to-day utility bill savings. The study focuses specifically on the “reserve setting” available with most home battery storage systems, which allow the customer to maintain some minimum level of storage in reserve in case of an unforeseen power interruption. The more capacity that is held in reserve, the greater the customer’s ability to ride-through possible power interruptions, but less capacity is then available to manage utility bills on a day-to-day basis. This study evaluates this operational tradeoff across a diverse set of locations and residential electricity tariff structures, relying on Berkeley Lab’s PRESTO model to stochastically simulate power interruption events, and exploring a range of sensitivities, including variations in customer value of lost load (VoLL), interruption frequency, and other key drivers. 

The results show that, in most circumstances, the opportunity cost of holding storage capacity in reserve, in terms of foregone bill saving, tends to outweigh any gains in reliability value associated with mitigated power interruptions. This finding is robust across tariff structures and across most of the sensitivities considered, including those related to rate level, customer load level, and storage sizing. There are a limited set of circumstances where raising the reserve setting improves the overall customer value (comprised of bill savings plus reliability value). Specifically, that exception occurs when all of the following conditions apply: (a) the customer resides in a location with exceptionally poor reliability, (b) the customer has exceptionally high VoLL; (c) the customer is on a net billing rate or on a TOU rate that allows grid discharging but not grid charging; and (d), depending on the location, the price arbitrage differential on that rate is relatively small. In all other circumstances analyzed, total customer value declines with reserve level.