Can batteries reignite the UK solar market?

The decline in Feed In Tariff rates has reduced the level of solar installations, and it's a hot topic whether adding battery storage can save the solar market.

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While the UK basks in a heatwave that has come with record solar generation, small scale solar, which contributes almost half of UK capacity, has been faltering. The decline in Feed In Tariff rates has reduced the level of solar installations, and it’s a hot topic whether adding battery storage can save the solar market.

I was intrigued by recent analysis published by Navigant Research into the growing number of suppliers offering domestic solar and battery storage, including EdF and EOn. Their analysis concluded that adding storage to the solar package increases the cost by 67%, but gives a 107% higher return – “not a bad deal.” I took a closer look, and found that a number of questionable assumptions would be required to support this analysis.

Solar market

Two issues puzzled me – firstly that the system would be able to consume 100% of all electricity generated, and secondly, that the system owner would still be paid for 50% deemed exports if there were none. The Feed in Tariff has already been criticised for the asset-rich receiving subsidies paid for by the fuel-poor.

In my analysis, I assume no round trip battery losses, all prices rise with inflation, and that installation costs are included in the figures used by Navigant. While it isn’t clear that this is the case, with inverter integrated batteries, the additional installation cost of a battery to a solar system may be minimal.

The Navigant analysis assumes a 5 kW PV System. While output will vary depending on a number of factors, annual generation should be in the region of 4800 kWh, with daily generation peaking above 30kWh in the summer.

For all generation to be consumed onsite, it must be equal to or less than total consumption, so there is likely to be a need to import power from the grid at times. Typical UK consumption is now assumed to be 3200 kWh, so at least a third of the power generated by this system would be exported, and not benefit from the avoidance of imports. Navigant must be assuming a household with significantly higher electricity demand.

Unless heating is electrified, demand will be relatively flat between summer and winter, especially if lighting demand has been reduced. PV generation, however, is significantly lower in the winter months, so imports will be required to top up generation, unless Navigant’s house has very unusual seasonal demand.

My calculation for a PV only system shows benefits of £200 from the generation tariff, £130 from the export tariff and £120 from avoided imports, based on the Navigant assumption of 20% self consumption.

Adding a 6.6kWh battery would ensure virtually all winter generation is consumed, and significantly increases self consumption of summer generation. However, a 6.6 kWh battery will not allow all summer generation to be consumed on site, and I calculate that nearly 40% will be exported. This does increase the proportion of power generated that is consumed onsite from 20% to 60%, but the additional benefit of £220 is only 48% higher.

EON’s own figures, as reported on the launch of their pv and battery offer, are even worse at a 27% higher return. This is based on 4900 kWh demand, 3.84 kW system and 9.6 kWh battery, and it is not clear if this system matches the costs used by Navigant. The PV generation matches my analysis, but self consumption works out as double the 20% assumed by Navigant. Starting from this higher figure, adding storage only increases the benefit by £120. At a cost of £3000, this would require a 25 year battery life just to break even. I have also seen reports that the additional saving from storage could be £260, which still leaves the payback longer than the product warranty.

Rather than the financial benefits, Eon are promoting the benefit of self sufficiency, defined as producing more power than you consume. Leaving aside the fact the consumption is likely to be measured as net imports, this ignores the very seasonal pattern of generation, and the opposing seasonal pattern for demand.

Solar market

Amending my analysis for this system gives self consumption of 85% of generation, and a return of £300 by adding the battery (which at 9.6 kWh is larger than that assumed by Navigant). This would still require 1700kWh to be imported.

Higher demand appears crucial to maximising self consumption, and my model with demand at 4900kWh has the return from adding a battery at 69%, matching the increase in cost.

However, this is based on a lack of regulatory reaction to exports falling below the deemed 50%, the most likely solution being a requirement for export meters for all pv systems with battery storage. If an export meter is required, the benefit of adding storage falls to 56%, below the increase in costs even before considering the cost of the meter.

Navigant’s sums and conclusion don’t seem to stand up to basic scrutiny. I can replicate their results, but only for 8000kWh consumption, which would leave the building importing as much as the average home.

There is no doubt that batteries will have an increasing role in the future electricity grid, but even assuming regulatory stability over long term contracts, for the average UK household energy storage is not yet as good a deal as Navigant would have us believe.

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