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The use of batteries, like the Tesla Powerwall or Enphase IQ10, for residential electricity storage is growing rapidly. The March 2023 edition of Wood Mackenzie’s “US Energy Storage Monitor” noted an 88% increase in residential battery storage capacity in the US in 2023 and projected a four-fold increase in residential battery installations from 2022 through 2027.
While battery storage is most often used to capture excess energy from solar panels and provide backup power during blackouts, residential electricity storage is also emerging as a tool to save money on utility bills year-round.
To round out our discussion of choosing the most cost-effective residential electric rate plan for you, let’s explore two possible opportunities for cost savings using residential batteries:
My friend Sibley is a Cobb EMC customer and uses their Smart Choice rate plan, which includes a demand charge based on the customer’s highest one-hour consumption of energy during Peak Notification Periods in the current month and the previous eleven billing periods. Cobb’s Peak Notification Periods occur from 2-7 pm on days that Cobb EMC announces in advance as Energy Saving Peak Days.
Leading up to the summer of 2022, Sibley’s demand charge was $8.40 per month and made up about 10% of her monthly bill. In July 2022, Sibley set a new peak demand that drove up her demand charge four-fold, to over $34 per month. Her demand charge stayed at $34 for the next year and accounted for nearly 30% of her average monthly bill.
Sibley had installed a 10-kWh Enphase battery in late 2022 as a backup power source to avoid blackouts, but her high demand charge offered a compelling opportunity to explore using her battery differently. In the early days of the summer of 2023, I helped Sibley adjust her battery settings to dramatically reduce her peak usage during Peak Notification Periods.
We missed the first two Energy Saving Peak Day notifications in late June. Fortunately, Sibley’s peak use didn’t spike too high on those days, staying below 5 kW (the peak demand on her bill was 9.1 kW). During the next six peak periods, though, Sibley used her battery in tandem with her solar system to keep her peak hourly use to 3.7 kW or less. The figure below shows her hourly load profile on a day when Sibley managed to keep her hourly demand below 1 kW throughout the five hours of the Peak Notification Period.
Sibley cut her demand charge from $34 per month to $11 per month on her August 2023 bill. She could have cut it further if we had not missed the first two Peak Days. Even though she used more electricity in August 2023 than she did in August 2022, her more recent bill was 12% lower. And these savings should continue for Sibley for the next eleven months. While not a perfect effort, we achieved worthwhile savings.
Next, we’ll look at a few savings opportunities from using a residential battery for energy arbitrage. Though two of these examples are hypothetical, all show the advantages of buying electricity from utilities when the cost is lowest.
Sibley’s Super Off-Peak Charging
Cobb EMC also offers a time-of-use rate with three “buckets” called NiteFlex, designed to encourage nighttime electricity use (midnight to 6:00 am). NiteFlex charges customers zero cents per kWh for the first 400 kWh of Super Off-Peak (SOP) electricity used each month. After a customer exceeds the 400-SOP-kWh-per-month threshold, they pay 4.5 cents per kWh for SOP electricity.
If we assume Sibley fully charges her 10-kW battery each night with SOP electricity (in addition to what she already uses for her house and car) and discharges it during the more expensive peak and off-peak hours, Sibley could drop her annual electricity bill by $270 to around $1,020, a 21% savings compared to her next cheapest rate option.
Georgia Power Customer with Two Home Batteries
I recently met a couple that actively use their two Tesla Powerwall batteries in conjunction with Georgia Power’s Plug-In EV time-of-use rate. At night, they charge their two electric vehicles (EVs) and their Powerwall batteries. They use the stored low-cost electricity in their batteries and the production from their solar system during the day to power their house. While the two batteries do not cover all their electricity use every day, particularly in summer months, they can cover most daytime use.
During the 12 months from July 2022 – June 2023, this couple paid $792 for electricity. Under the Standard Residential rate, the same level of net electricity use (after net metering) would have resulted in an annual bill of about $1,445, more than $650 higher. Their current use of batteries in conjunction with a time-of-use rate amounts to 45% annual bill savings compared to what their Standard Residential bill would have been.
Hypothetical Batteries for My Case Study Volunteers
In an earlier post, I presented five case studies where I used customers’ hourly energy data to determine their lowest cost rate option with Georgia Power. I expanded this analysis and calculated how these customers’ annual bills would change if they used a Tesla Powerwall or equivalent size battery (13.5 kWh capacity) to store SOP energy under Georgia Power’s Plug-In EV rate, discharging the battery during Peak and Off-Peak daytime hours. I assumed the battery maintained a 15% reserve charge every day and operated at 90% round-trip efficiency. These case study households might save from $160-$425 (8-32%) on their respective annual electricity bills compared to the least cost rate option identified for their current (pre-battery) electricity use.
Strategic Battery Use Has Broader Benefits
Both peak demand control and energy arbitrage can save you money while also helping the grid. The utility designed its residential rate schedules to charge you for the costs you “cause” on the electric system and to send you price signals designed to encourage you to use electricity in a way that benefits the utility and all customers. As you use your battery to save on your bill, you are improving the efficiency and resiliency of the grid by maximizing the use of low-cost baseload power resources and reducing strain on the grid during peak periods with an energy resource for which you paid the full cost. You are paying less while providing benefits to all customers.
You might ask whether installing a residential battery is worth it. Unfortunately, buying a battery to save on your electricity rate as a stand-alone proposition (not considering the reliability or other benefits) probably does not make financial sense. Intuitively, with a range of annual savings identified above of $160-$425 (higher with two batteries), it would take many years to pay back the upfront cost of approximately $11,500. But if you already own a residential battery as part of your solar energy system, rethinking how you use it could be worth your while.
The payback calculus may also change in the coming years. As EV technology advances, it may become common one day for an EV owner to run their home using the battery in their car, powering their transportation and saving money on their rate plan with the same battery. Additionally, through “Virtual Power Plant” programs, some electric utilities across the country have begun paying residential customers for the benefits their batteries can provide to the electric grid. These programs increase the value to battery owners too.
If you already own a residential battery, I encourage you to carefully consider what is the most cost-effective way for you to operate your battery. If you’re going to buy an EV to charge at home, it’s also worth asking if it can be set up to charge your home. If you’re like me and don’t own a residential battery, I hope I’ve at least stirred you to imagine a future when you only buy electricity at night and save money all day as your battery quietly hums in the basement. Thank you for joining me for the Electric Bills Decoded series.
Electric Bills Decoded is Southface Institute’s series exploring how Georgia Power residential customers can use data to help determine whether changing their electricity rate plan can lower their utility bills and offset recent rate hikes. Follow along to understand different types of rates and charges; identify electricity usage patterns; use your data strategically; consider the impact of going solar; explore several case studies; and learn about battery storage as a cost-saving tool. We’re decoding it all!