How Do Energy Storage Systems Save Money?
Energy storage has become a trending topic in the energy industry, and there is a strong reason. Solar panels and wind turbines can now produce electricity at a lower cost than fossil fuels, but they depend on inputs that cannot be controlled - sunlight and wind. These renewable sources can compete with fossil fuels in price but not reliability, since fossil fuels can produce electricity at any time. Energy storage systems are promising because they can eliminate the main limitation of solar and wind power systems. There are many energy storage technologies, but lithium-ion batteries have gained popularity for several reasons: Like with most energy storage technologies, the upfront cost is the main limitation for lithium-ion batteries. Achieving an installed price below $400 per kilowatt-hour of storage is difficult, even with utility-scale systems. For smaller residential battery systems, the price often exceeds $800 per kilowatt-hour. However, the International Renewable Energy Agency (IRENA) has determined that electricity storage could become 66% cheaper by 2030. In general, energy storage makes economic sense for building owners when savings are higher than ownership costs. Local electricity prices and government incentives are also important factors that influence the cost performance of energy storage. The project location also matters since it affects shipping and installation costs. According to an article by IEEE Spectrum, energy storage costs must drop to $20/kWh to operate an electricity grid with only solar panels and wind turbines. Reaching such a low cost is a major challenge for the industry, and unlikely in the short term. However, a power grid could rely on renewables over 90% of the time with an energy storage cost of $150/kWh, which is less difficult to reach. In buildings, there are two main ways in which energy storage can reduce electricity bills. In both cases, a low-cost power source is necessary to charge the system: As of 2020, the US offers a federal tax credit of 26% for renewable energy systems, including solar panels and small-scale wind turbines. Energy storage systems can also get the tax credit if they get at least 75% of their charge from an eligible renewable generation system. Buildings with demand charges can configure an energy storage system to keep the total power consumption below a specified value. For example, if a building is charged $40 per kW of demand, a peak demand of 500 kW leads to a $20,000 monthly charge. In this case, an energy storage system that reduces peak demand by 150 kW saves $6,000 per month. This concept is called peak shaving. Buildings with time-of-use tariffs can also save energy storage, but following a different approach. In this case, the energy storage system must be charged with a cheap source of electricity, and there are two main options for building owners: If low-cost electricity is stored in batteries, it can be used when power companies are charging the highest tariffs of the day. This typically occurs when the grid is experiencing peak demand. Electric companies often give credit if you sell surplus generation, but they normally pay the wholesale kWh price instead of the retail price. For this reason, a kWh that is stored and used later normally yields a higher benefit than a kWh sold. For example, a surplus generation of 1,000 kWh is only worth $120 with a feed-in tariff of 12 cents/kWh. However, this same energy is worth $400 when used to avoid a peak tariff of 40 cents/kWh. Consider that the federal tax credit only covers storage if at least 75% of the electricity comes from an on-site renewable energy system. The electricity consumption of each building is unique, and power companies apply different tariffs depending on the type of property. For this reason, the potential savings of energy storage can change a lot from building to building. The best recommendation is contacting an energy consulting firm, to get a professional feasibility study of energy storage for your building. Energy storage achieves the best results when it can be used to reduce peak demand or to avoid peak electricity rates. Incentives from governments and power companies can reduce upfront costs when available. Also, some power companies around the world are testing demand response programs - owners of energy storage systems are rewarded for letting the power company use their storage capacity. The first step to saving energy is knowing how your building uses it. NY Engineers can analyze your consumption with energy modeling: call or write at info@ny-engineers.com. Everyone wants to stop paying so much for power, right? Price increases for traditional energy forms continue to reach staggering new heights so customers are spending more and more every year to heat, light and run their homes. If this sounds like you, you’re no doubt thinking there must be a better way. There is. Solar energy can offer significantly reduced power bills for a lifetime, and you can start saving as soon as you install a solar system. And, having more money in your pocket is just one of the advantages of using the sun’s clean, renewable energy to power your home. Perhaps you’re wondering whether you can afford to add solar to your house or if it will actually have much of an impact. We can help. In this blog post we give you an overview of one of the most important sections of our new eBook, which uncovers how much you could potentially save by installing solar in your home, and the factors that influence your level of potential savings. Find out if investing in a solar energy system will pay off for you. Solar meets the majority of power needs for New Zealand homes, but usually not all of them. For this reason, most customers choose a hybrid model that combines conventional power (i.e. “the grid”), and solar power. This option gives you control, with back-up from the main electricity grid when you need it. In addition to that, if you go for a system with a battery storage option, your solar system will also store excess power that can be used during low daylight times. A hybrid solar system enables you to maximise your power bill savings as energy generated from your solar panels is used first. Therefore, you only use electricity from the grid when you need it. However, solar can be effectively generated and used by any type of household so you can start saving money straight away. Individual results will vary but our customers regularly save 50% and more off their power bill. And some savvy users have even saved up to 90% over the summer months, by making their home as energy efficient as possible. Switching to solar will save you money — from the first day you install, and for many years to come. When it comes to how much you’ll save, the answer depends on a range of factors so it’s important to consider these as part of your decision. If you’re curious to find out more about what factors will affect your potential savings when you add solar to your house, download our new eBook “Is solar the right choice for your home? 10 common questions and answers that will help you decide”.
Reduce your power bills with renewable generation and energy storage.
Energy Storage: Costs, Benefits and Incentives
Reducing Power Bill Charges with Energy Storage
Conclusion
How can solar help my household?
The potential to save money is often the fundamental reason why people add solar, and rightly so. It makes sense to choose a solution that can deliver a reliable power supply to your home, at a reduced price.How much will I save?
There are set-up costs for installing a solar system, so households that use a lot of power will benefit more initially, as their savings will more quickly pay off the investment cost.What factors will influence my savings?
Several factors can impact how much you save with solar. Learning more about these will help you understand their influence on your solar energy production and determine how quickly your investment will pay off.