Economics of Behind-the-Meter Solar PV and Energy Storage
In this thesis, I present three research papers that focus on the economics of behind-the-meter technologies for residential, commercial, and industrial customers. Each of these papers takes the perspective of the customer, where the value of the technology comes from reducing their electricity bill. In Chapter 2, I assess whether solar photovoltaics are economically viable without subsidies for residential customers across the United States. I calculate the break-even electricity prices and installation costs and find that, at a state level, solar PV is only currently economically attractive in Hawaii without the use of subsidies. In order for widespread adoption of solar PV, I illustrate how the availability of favorable financing terms, installation costs at or below $1.5/W, and the continuance of net energy metering policies are each critical. In Chapter 3, I create a case study to better understand solar PV economics for commercial and industrial customers, who collectively account for the majority of annual electricity sales in the United States. While residential customers are billed based on the total amount of energy they consume, commercial and industrial customers are also billed according to their greatest 15- minute energy use in a month with a demand charge. I analyze the net present value of a solar PV investment using both simulated and measured load and solar data for a variety of commercial customers in North and South Carolina. I identify key factors that influence economic viability and find that solar PV is not presently economically viable for these customers without subsidies, but will be once installation costs drop to below $1.25/W. In Chapter 4, I evaluate the economics of using energy storage to further reduce demand charges for each of the customers examined in Chapter 3. Using a “black-box” approach, I apply several generic energy storage technical attributes of a high-energy lithium-ion battery to assess the ideal performance and maximum economic benefit of energy storage. I find that batteries with lower capacities are most profitable for the commercial and industrial customers examined using an optimistic algorithm, but require further cost reductions using a pessimistic algorithm.