Evaluating the True Value of a Home Battery Backup System (Based on PG&E’s Solar (E-TOU) Rates)

Solar companies are starting to capitalize on home energy storage as homeowners are quickly adopting battery backup systems as a solution for potential power outages. Though whether or not home batteries are “worth it” is a rather subjective question. This analysis will touch on the dollar value of a home battery backup system so homeowners can make an educated investment decision.

Foremost, forget the myth that by investing in a home battery you can potentially break-even, because the reality is, you won’t even come close on PG&E’s solar rate plan!! By adding the cost of a battery backup system into the solar installation equation, it reduces your return on investment and extends the payback period. Still, any salesman can sell a battery when bundled with solar because the ROI for solar is that high!

 

How Lithium-Ion Batteries work:

The surplus energy you produce during the day is stored in your battery. At night, as your production decreases, or during an outage, you can draw from the electricity that you have stored. In addition, you can program your battery to run during peak hours, to “maximize” your savings; though how significant are these “savings” and is this worth the investment?

The actuality is that the money you save on slightly lower electricity rates by programming your battery to run during peak hours is not significant enough to break-even and in the long run, you will most likely loose money on your investment, unless you are on PG&E’s EV (Electric Vehicle) rate plan.

 

Comparing Storage Options:

Home energy storage is the most valuable during peak hours and power outages, but how much are you willing to pay for that added sense of security?

Cost calculations below are made using the average advertised installation and electrical upgrade costs plus total equipment cost with supporting hardware with tax included. Installation and electrical upgrade costs will vary greatly depending on your electrical panel and where you would like your battery. Mind you, Tesla & LG home battery installations typically range between $11,000 – $15,000.

Calculating the True Dollar Value & “Maximizing” Your Savings:

How much money you can “save” depends entirely on the difference in price between off-peak pricing and peak pricing. With PG&E’s current solar rate plan (E-TOU), Peak Pricing during summer, (June 1 – September 30), is about $0.40, Off-Peak is $0.32. In winter, (October 1 – May 1), Peak pricing is about $0.28, Off-Peak is $0.27. This means you can save about $0.08 per kWh during Summer Peak Hours, and $0.01 per kWh during Winter Peak Hours.

With the LG Chem RESU 10H storage system, the battery can hold and displace 9.3 kWh of usable energy per day. In the absolute best case scenario, if you use all 9.3 kWh during Peak Hours (3PM – 8PM, Monday – Friday), and save 8 cents per kWh during Summer Peak Hours and 1 cent per kWh in Winter, (excluding weekends),  you can save up to 74 cents a day in summer and up to 9 cents a day in winter to potentially accumulate a maximum of $86.03 in annual savings with PG&E’s current solar rate plan.

However, there is an unspoken consequence of programming your battery to run during peak hours: you waste kilowatt hours. Both the LG and Tesla battery only have 90% round trip efficiency, therefore, it takes an additional 10% of energy to charge your battery. So the money you save by shaving peak hours is more or less cancelled out by this reality.

After reviewing the calculations above, one can conclude that in the most ideal situation, with PG&E’s current solar rates, you can save up to $1.77 a month. You should not consider this an investment.

Total Net Cost – “Maximized” Savings + Cost of Lost kWh = Actual cost

Actual Cost (10 Year) =   LG ~ $5,579 – $860 + $714 = $5,433    Tesla ~ $5,897 – $1,249 + $1,037 = $5,685

With PG&E’s EV rates, it gets more complex, but we ran the numbers nevertheless and you can maximize your savings by load shifting with LG Chem RESU and StorEdge Monitoring ~4% return on investment.  With Tesla, Time-of-Use load shifting controls just went live and so far the many customers have been experiencing glitches and inconsistencies in the functionalities when trying to take advantage of the TOU arbitrage. At least a home battery back-up system could break-even if you are on PG&E’s EV rate plan, just not if you are on PG&E’s E-TOU rates.

If PG&E changes their solar rate plan to make batteries more cost effective, then we will recommend them to those investing in solar, but chances are (knowing PG&E), they’re going to make it more expensive, not less! For now, PG&E can be viewed as an ideal battery system through their NEM 2.0 program for solar homeowners.

If your main concern is having power during an outage, we recommend investing in a ultra-quiet generator. Emergencies require generators, not batteries that “depending on the weather” may help you. Not to mention, they cost less and last a lifetime!

Bottom line is solar energy saves you money, energy storage adds security.

With Green Stock Solar, your financial interests are of our interest. We are certified to install LG Chem RESU 10H home batteries, however we don’t recommend them at this time. We can also install solar, “storage ready” so that when and if you decide a battery is worth it, you’re home is already equipped with the proper inverter.

Never forget to do your research. Numbers don’t lie, salesmen do. If you have any questions about solar, batteries or generators, please don’t hesitate to reach out!

 

*Future Thoughts*

If you have, or are thinking about owning an electric vehicle, the ideal situation would be using your EV battery to power your home. EV car batteries, averaging 50-75kW, can store way more that the current home battery. In Japan, they are already using EV batteries to power homes. One would think this option would be available in the US sooner or later. For example, Tesla model 3 car batteries have capacities up to 75kWh, and start at $35,000, that’s about the same cost per kW as a home battery for a standard EV, but you get a car!! What would you rather spend your money on?

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