Why people should consider solar energy battery systems
For all of the benefits of solar energy, there’s one obvious disadvantage it has relative to other sources of electricity: The sun doesn’t always shine. That’s why people should consider solar energy battery systems.
Solar panels are an intermittent power source. That is, they only produce electricity when struck by sunlight. Meanwhile, power plant operators can simply burn more coal or natural gas to keep their turbines spinning and electricity flowing.
That doesn’t mean solar panels are unreliable or a bad financial investment, but their dependence on light energy is a reality that solar system designers have to contend with.
But increasingly, solar users and utilities are installing systems that store the energy produced by their panels for later use. That can come in handy when the panels are no longer producing electricity at night, or when electricity from the utility company is unavailable during an outage.
Commercial power users can also use backup energy systems to employ a “peak-shaving” strategy to eliminate spikes in electricity use that result in demand charges.
As battery prices decline, experts say storage will play an important role in the transition to renewable energy in the U.S. in the coming years. You’ll probably be hearing the term “solar plus storage” more often.
In this blog, we’ll discuss why solar users should consider backup energy systems, as well as the limitations of storage equipment.
In a typical grid-tied solar system, a homeowner uses energy produced by their panels, which reduces their reliance on their utility company and results in a smaller electricity bill. But electricity produced by solar panels has to go somewhere. Either it’s used on site immediately or it’s sent back onto the grid.
In this common setup, the homeowner still relies on the grid for power when the sun isn’t shining enough to meet their energy needs. After all, the sun is usually shining the most during the middle of the day, when people aren’t home to use electricity.
By using their own backup energy system, a homeowner can store extra energy produced by the sun during the day and use it to power his or her house at night.
While theoretically this kind of system makes sense, the financials haven’t necessarily lined up. Given the upfront cost of a backup energy system and below-average utility rates in the Duluth area, it may make more sense financially to use the grid as a source of backup energy. Click here to read more about getting a return on investment using solar panels.
But changes in utility rates and battery prices could make installing backup energy systems more enticing.
Minnesota Power, which serves Duluth and many surrounding communities, said earlier this year that they would begin to transition customers to a new rate structure. Under the new rates, electricity will cost more when demand is higher and will be cheaper during so-called “off-peak” hours.
In other words, the price of electricity would vary depending on the time of day. “On-peak” pricing, when electricity prices are highest, will occur between 3 and 8 p.m.
This is known as a “time-of-use” (TOU) or “time-of-day” (TOD) rate structure. Currently, Minnesota Power’s electricity rates are based on how much electricity a customer uses, with the rate increasing as the customer uses more energy.
While the specifics of how this change may affect solar users is a bit unclear right now, it theoretically could make backup energy more financially feasible. During periods when electricity prices are higher, solar users could instead use energy produced by their panels and stored in their batteries.
The U.S. has seen a sharp rise recently in the number of so-called “behind-the-meter” storage systems, or systems designed for onsite energy use. One of the reasons for this trend, according to the National Renewable Energy Laboratory, are TOU rates.
In a nationwide study of the economics of battery storage for commercial properties, researchers found “three-quarters of the territories with the greatest potential savings also feature energy TOU pricing.”
Meanwhile, prices for battery systems are declining.
The NREL said in 2020 that the price of lithium-ion batteries had dropped by 80% over the previous five years, “enabling the integration of storage into solar power systems.” Researchers at MIT, meanwhile, said battery prices had dropped 97% over the past three decades. One effect of that change has been the proliferation of electric cars.
“In addition to helping to boost the ongoing electrification of transportation, further declines in lithium-ion battery costs could potentially also increase the batteries’ usage in stationary applications as a way of compensating for the intermittent supply of clean energy sources such as solar and wind,” MIT said.
And although backup energy systems may come with a significant price tag, they can qualify for the federal tax credit for solar projects, according to Aurora Solar, as long as the batteries must be completely recharged by solar panels. (That requirement is a bit looser for commercial projects.)
The 26% tax credit will be reduced to 22% for systems installed after 2022, and it’s scheduled to be phased out for homeowners in 2024. The tax credit for commercial projects is slated to stay at 10% starting in 2024.
In case of emergency
A seemingly obvious benefit of storing electricity is that homeowners or businesses could rely on it when the power goes out. That can provide users some peace-of-mind that no matter what happens with their power company or the weather, they’ll have electricity.
Duluth has been fortunate in its grid reliability. Data from the U.S. Energy Information Administration shows the average customer of Allete, which is the parent company of Minnesota Power, only lost power for less than three hours in 2019. That’s well below the national average of nearly five hours.
But it’s hard to plan for the unexpected — that’s why it’s called the unexpected.
National Geographic documented a case of a Texas man whose solar and storage system kept his lights on during the cold snap that wreaked havoc on the state’s electrical grid earlier this year.
More locally, utilities in the Duluth area reported thousands of customers had lost power when heavy winds damaged power lines in 2014. The average customer of Lake Country Power, which serves a large swath of the Northland, lost power for about 13 hours that year, according to federal data.
People worried about losing power could also rely on a cheaper option: an old-fashioned, gas-powered generator. But that may go against their eco-friendly goals, so they might favor solar energy battery systems to store energy produced by their panels. And generators take longer to power up than a battery system, which could be important if a customer needs to keep computers, medical equipment or other critical devices running continuously.
Hopefully this blog gave you a better idea of the advantages and limitations of backup energy systems that are paired with solar panels.
If you’re interested in such a system for your property, don’t hesitate to reach out for a free consultation. We can help talk you through what kind of solar batteries you’d need, as well as storage capacity requirements and other aspects of your project.
Read more from Northland’s solar energy experts:
- REAP grants for solar: How to get financing for your system
- Net metering in Minnesota: What to know
- “How many solar panels do I need?” Find out here
- Solar panel warranty: How to protect your investment
- Getting solar quotes? Here’s how to read your proposal