Economic Feasibility of Residential Behind-the-Meter Battery Energy Storage Under Energy Time-of-Use and Demand Charge Rates
The aim of this paper is to compare the economic feasibility of behind-the-meter battery energy storage (BMBES) when used with the strategies of time-of-use (ToU) energy arbitrage and demand charge (DC) reduction. The work targets home BMBES systems that are installed at residential premises to save on monthly electricity bills under residential energy ToU and DC rates. Case studies of two commercial home BMBES systems are used to study the savings that the two systems can achieve for a single-family home in the U.S. under the current kWh prices of both electricity and battery storage. To evaluate the achievable monthly savings and their determining technical and economic factors, the mathematical formulation of a residential electricity bill with and without storage is first presented for each strategy. Then, hourly, monthly, and annual simulations of the different case studies are conducted with the System Advisor Model (SAM) software tool. SAM provides a techno-economic model for battery storage systems and enables the application of practical data of ToU and DC rates, and the home load profiles in the simulations. The economic performance of the studied BMBES systems is compared in terms of the cash flow diagram, net present worth and the payback period. The results of this study can provide customers and practitioners with a set of implications on the effectiveness of residential BMBES in ToU energy arbitrage and DC reduction strategies.
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