By Mike Winka and Betsy Longendorfer • Building Electrification Committee
Power companies already use storage batteries on the grid for resiliency and reliability. They provide electricity during peak periods when electricity prices are highest and help to lower prices for all. Can you achieve savings by installing batteries as standalone systems or as complements to your solar panels? The New Jersey Board of Public Utilities has proposed new rules that may provide the answers.
Why Consider Batteries?
Here are some common reasons homeowners consider installing batteries.
Emergency Resilience
If your intent is only to supply power to your home in case of short-duration power outages, you could do that with portable battery power stations. Dozens of companies make these, and costs range from about $400 to $4,000. This is the easiest and cheapest way to have battery storage in your home.
These systems can provide standalone emergency electricity or they can be connected to your electrical panel with a transfer switch, as with any other portable generator. The battery and transfer switch installation is subject to municipal electrical approval. If you do install a transfer switch, it is recommended you also notify your local utility.
Once your batteries are charged, they can supply several hours of power to your home. You can add portable solar panels to your battery storage unit to recharge it during power failures. Some companies offer portable solar panels as a package deal.
Electric vehicle batteries can also be used to power homes during power outages. This is called vehicle-to-home (V2H) electricity. Some car manufacturers supply accessories to facilitate V2H. However, use of vehicle batteries must be isolated from the electric system with a transfer switch, and installation should comply with municipal electric code requirements.
Environmental Benefits
Making your own electricity with solar helps to reduce air pollutants including greenhouse gas emissions. If you store unused solar electricity and use it during peak energy periods, you can avoid even more emissions and help reduce stress on the grid. During peak electricity periods, power companies switch on their dirtiest generators to help meet demand. Therefore, if you can use stored solar electricity during peak demand, you can provide a larger environmental benefit.
However, your ability to feed electricity back into the grid is limited. You are allowed to generate electricity based only on your past usage, so this may not result in a significant amount of excess electricity.
Financial Savings
Residential users are charged a fixed energy rate by their utility. They are reimbursed at the same rate when their solar panels supply power to the grid. This payment arrangement is called net metering—you pay the net difference between the electricity you supply to the grid and the electricity you consume.
There has been a 30% federal tax credit for residential storage installations and electrical panel upgrades, but new policies may change the availability of this incentive. At this writing, there were no NJ clean energy financial incentives for battery storage, but that might also change.
New Jersey has a goal of installing 2,000 megawatts of storage by 2030, and the NJ Board of Public Utilities is considering how to implement Federal Energy Regulatory Commission Order 2222, which could allow small individual suppliers of energy (e.g., owners of batteries) to supply power to the grid. This would help out in emergencies and during peak demand, while earning money for owners of batteries.
To determine the amount of storage to install, you must decide which appliances in your home will be powered, and for how long. Batteries lose energy during charging and discharging (typical efficiency is 80%), meaning that you pay for energy to charge the battery, but don’t recover the full amount.
Installed battery systems, as opposed to standalone battery packs, have many parts to install, as well as labor costs. Installed residential battery systems typically have an energy rating of 9 kWh to 13 kWh and cost $8,000 to $12,000, after the tax credit, assuming it still exists. This size range will supply roughly half of a typical NJ residential user’s daily energy needs. These systems last 8 to 10 years.
Battery Installation Requirements
Battery installation requires a lot of custom work. Because most batteries are lithium-ion, installations must comply with the fire code, including provisions for ventilation, smoke or heat detection, fire-resistant finishes, and perhaps impact protection. If you install more than a 20-kWh storage capacity, you must meet even more requirements. You will need building construction approval and, depending on the setup, utility interconnection approval.
If batteries are installed with solar, they require utility interconnection approval. Battery systems must be installed by a licensed electrician/home improvement contractor. You may have to upgrade your electrical panel, and it must have a transfer switch. Lastly, batteries require regular monitoring and maintenance.
Case Examples
Installing batteries will likely add significantly to the costs of a solar installation, but depending on the size of the batteries, a modest return on investment is possible. The following are simple payback examples:
Dave Homeowner purchases a 7 kWh solar installation without batteries costing $14,700 after the federal tax credit. This enables Dave to avoid using $1,789 worth of grid electricity each year. Each year, he is able to sell 9 Solar Renewable Energy Credits (1 MWh each @ $85/MWh) for a total of $765. This means his total annual savings would be $2,554 ($1,789 + $765). He pays off the costs of his solar system over 6 years, earning a return on his investment of 17%.
Jill Supersaver buys the same solar panel system but also installs a 6 kWh battery setup. This costs $10,000, leading to a total system cost of $24,700, and requiring 10 years to pay off. Jill is still able to earn a 10% return on her entire investment in solar panels and batteries. Ten years is typically the lifetime of a battery system, so installing a larger, more costly battery system may not have enabled her to pay for her full investment.
Outlook
The good news is that battery prices, just like solar, are declining. The BPU may establish incentives for residential and commercial battery systems. If the BPU implements FERC Order 2222 and allows residential owners of batteries to supply power to the grid, this could make NJ homeowners part of a wider solution!
Resource
A video that presents this information in more depth is available from the Sierra Club’s Building Electrification Webinar series.