In our previous TerraBlog post on microgrids, Sizing and Modeling the Performance of a Microgrid, we presented the methodology and tools we deploy for resiliency needs. For this fifth installment in our microgrid blog post series, we present the financial and technical performance of two different types of resiliency systems:

  • adding battery energy storage to an existing solar PV system
  • installing new solar PV and battery energy storage

The two major components for facility energy resiliency projects are solar PV and battery energy storage systems (BESS). These two resources can either be implemented together with a microgrid controller, or an existing solar PV system can be retrofitted with BESS and a microgrid controller. The following two case studies illustrate the differences in these methods.

Case Study 1: Adding Battery Storage to an Existing PV System

In Northern California, specifically PG&E territory, many facilities with existing solar PV systems have an opportunity to be utilized as a community resiliency. However, these facilities face economic headwinds from a utility rate structure perspective.

Many existing solar PV systems in PG&E territory are on the time-of-use (TOU) A-6 rate schedule, which does not have demand charges. In most cases, savings from demand charge management (DCM) provide the largest financial benefit to electricity customers when considering the financial viability of a battery energy storage system. For facilities on the TOU A-6 rate, there is a reduced possibility of savings from adding a BESS to an existing solar PV system.

Depending on when the system was installed, facilities with existing solar PV systems may also be on grandfathered mid-day TOU peak period rate schedules. The grandfathering allows the facilities to continue to operate under the current PG&E peak hours of 12-6pm, when the mandatory new TOU hours go into effect. The new peak hours come into effect in March of 2021 and will be from 4-9pm. The grandfathering of TOU rate schedule is beneficial to the solar PV system because the peak hours of 12-6pm coincide with solar production. However, TOU grandfathering can further undermine potential BESS savings as the battery cannot offset any of the electricity usage during the peak hours. With the new TOU peak hours from 4-9pm, the battery will be able to offset electricity usage during peak periods as solar PV system production drops.

For this case study (adding battery to existing solar), we have assessed a facility with an existing solar PV system on the TOU A-6 rate schedule with TOU grandfathering. The following table provides details about the site.

Annual Usage (ex-solar) 445,000 kWh
Annual Max Demand (ex-solar) 333 kW
Existing Solar Array 240 kW DC
Annual Solar Production 327,000 kWh
Required BESS size for 2-days of resiliency 350kW/2100kWh
SGIP Incentive Level: Equity Resiliency $1.00/Wh

Since this facility is eligible for the Self-Generation Incentive Program (SGIP) Equity Resiliency budget, the entire cost of the BESS and the microgrid controller are covered. Thus, we only needed to assess the savings against the cost to operate the battery. This assessment did not include any savings or costs associated with the solar PV system, since it is already in place at the site.

Under this scenario, it was determined that the BESS can provide about $36,000 in savings over the 10-year lifetime of the battery. However, there are additional costs associated with operating and maintaining the battery, which include:

  • Insurance
  • Performance Monitoring
  • Warranty Enforcement
  • Preventative Maintenance
  • Equipment Replacement when needed

These additional costs amount to approximately $88,000 over the 10-year lifetime of the battery. Thus, the net costs for this project will be $52,000 over the 10-year life of the battery.

Case Study 1 Cash Flow (click to expand)

Case Study 2: Installing a New PV System and BESS Together

For this case study, we have assessed the same example facility from above, except we removed the existing on-site solar PV system. The starting rate schedule in this scenario will be TOU A-10, the rate the site qualifies for based on its ex-solar usage and demand, as can be seen in the table above. The TOU A-10 has demand charges, increasing the possibility for savings from the BESS. Additionally, this facility will not receive TOU grandfathering, therefore providing greater possibility for the BESS to offset usage during peak hours.

Like the example above, the SGIP incentive will cover the cost of the battery. We will then assess the cost to purchase and install the solar PV systems, as well as the operating costs for both the solar PV and the BESS. The savings from the solar PV and BESS will then be compared against their cost. We chose to analyze the first 10 years of the project to easily compare the case studies. However, the solar PV system has a useful life of up to 25 years, allowing for a higher savings potential. The following table provides details on these values.

Cost to purchase and install solar PV $480,000
Cost to operate the resiliency system (solar + BESS) $195,000
Savings from the solar PV $581,000
Savings from the BESS $329,000

As can be seen in the table above, under these conditions, this facility will be cashflow positive, saving about $234,000 in the first 10 years of the project.

Case Study 2 Cash Flow (click to expand)

This case study did not take into account other potential economic benefits from a resiliency system, which include:

We hope that you have enjoyed our TerraBlog series on microgrids, thanks for staying tuned.

As independent advisors, TerraVerde is supporting CCAs and Public Agencies in evaluating and deploying energy resiliency programs. Over the past 10 years, we have developed over 100 MW and over $400M worth of solar & battery programs. To learn more about our feasibility analysis, program design, and project development services, reach out to us at hello@terraverde.energy.

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