Domestic photovoltaic systems, battery storage, and the economic impact of time-of-use electricity pricing

2013-10-31T09:28:06Z (GMT) by Eoghan McKenna Murray Thomson
Time-of-use electricity pricing is characterised by high 'peak' prices, generally throughout the day and evening, and low 'off-peak' prices, generally at night. Consumers can benefit from time-of-use pricing provided their ratio of peakto- off-peak electricity consumption is less than a ratio of the relative prices of the two tariffs. To alter their consumption ratio, consumers can time-shift their demand, known as demand response. Consumers with grid-connected PV systems, however, already have reduced net demand during the day-time peak, due to the PV generation. The first question of interest to this paper is whether consumers with PV systems would benefit financially from switching to timeof- use pricing even if they do not engage in demand response. There remains the concern, however, of high prices during the evening peak, when the PV is not generating. Consumers unwilling or unable to engage in demand response during these periods can install battery storage systems, which are charged during the day and discharged during the evening. Two additional questions are therefore: what is the additional financial benefit of battery storage to PV systems with time-ofuse pricing and are batteries financially viable for domestic consumers with PV? These questions are answered using data from real dwellings with PV in the UK and simulating power flows using a published lead-acid battery model. Economic impacts are measured for a range of time-of-use pricing tariffs from the UK and Ireland. Results indicate that PV has little effect on the financial benefit of time-of-use pricing with day period prices that are similar to the flat rate price. For tariffs where the day period price is greater than the flat rate price, PV improves the benefit, but not enough to make it an economic choice for the average consumer. Battery storage improves the financial return, but this is not enough to make the business case positive. Even using optimistic assumptions, such as lossless batteries and high electricity price increase, system costs need to be lowered by at least 33.5% for lead-acid systems, and 195% for lithium ion systems.