Quantifying the impact of policy on the investment case for residential electricity storage in the UK

Abstract

Electrical energy storage has a critical role in future energy systems, but deployment is constrained by high costs and barriers to 'stacking' multiple revenue streams. We analyse the effects of different policy measures and revenue stacking on the economics of residential electricity storage in the UK. We identify six policy interventions through industry interviews and quantify their impact using a techno-economic model of a 4kWh battery paired with a 4kW solar system. Without policy intervention, residential batteries are not currently financially viable in the UK. Policies that enable access to multiple revenue streams, rather than just maximising PV self-consumption, improve this proposition. Demand Load-Shifting and Peak Shaving respectively increase the net present value per unit of investment cost (NPV/Capex) by 30% and 9% respectively. Given projected reductions in storage costs, stacking these services brings forward the breakeven date for residential batteries by 9 years to 2024, and increases the effectiveness of policies that reduce upfront costs, suggesting that current policy is correctly focused on enabling revenue stacking. However, additional support is needed to accelerate deployment in the near term. Combining revenue stacking with a subsidy of £250 per kWh or zero-interest loans could make residential storage profitable by 2020.

A Comprehensive Robust Techno-Economic Analysis and Sizing Tool for the Small-Scale PV and BESS

“…In the UK, small-scale PV investments have proven to breakeven as well as achieving positive net present value (NPV). However, domestic BESS is currently not an economic-effective option without subsidy [5].…”

“…In this paper, the economic feasibility and sizing of smallscale PV/BESS systems are investigated. Different studies have addressed this topic for different case studies [5]- [28]. These studies evaluate the viability of PV/BESS through a sizing algorithm or by testing different sizes for a case study.…”

“…The PV/BESS sizing and/or profitability based on optimization approaches have been addressed in [5]- [19]. Where the objectives include the minimization of the annual electricity bill, and degradation, as well as maximizing the NPV by considering the investment costs.…”

“…For BESS degradation, the annual reduction in savings due to degradation was modelled as a rate of 1% in [5], 5% in [22] and 0.4% in [23]. In [7], [27], EV battery degradation model was adopted.…”

Improving the feasibility of household and community energy storage: A techno-enviro-economic study for the UK

“…Another solution is to obtain extra revenues by aggregating HES and CES to provide grid services. According to [57], a household with 4kWp PV coupled with a 4 kWh storage system can harvest £33.24 revenues by peak shaving, compared to £5.4 for just self-consumption. For this study, the aggregator and its participation in grid services are beneficial, but unlikely to improve the feasibility significantly.…”