Making the case for time-of-use electric rates to boost the value of battery storage in commercial buildings with grid connected PV systems

Abstract

We performed a techno-economic analysis of behind-the-meter photovoltaics (PV) coupled with lithium-ion battery storage under a flat rate and a time-of-use (TOU) rate for commercial buildings using HOMER Grid software. Unique contributions from this work include determining the impact that the battery degradation limit has on the cost-effectiveness of the system, and demonstrating the impact of tariff rates using high-resolution real load data of commercial buildings with different energy usage during a project lifetime of 25 years. From the results, we found that delaying the replacement of the battery has a substantial economic benefit for the system owner. Letting the battery degrade to 50 % of initial capacity is comparable to a 30 % reduction in the battery capital cost during the lifetime of the project because the battery will be replaced only once instead of twice lowering the Net Present Cost. The ability of a given building to benefit from solar-plus-storage depends on the degradation limit and tariff structure, but it does not depend strongly on the load pattern and size. We conclude that TOU tariffs would promote more rapid cost-effective adoption of PV systems with batteries in commercial buildings in the upcoming years