The Solar & Storage Efficiency: A Hitchhiker's Business Guide

Insights into Economic Energy Solutions: The Net-Benefit Technique

The energy transition is no longer just a vision but an imperative step toward a more sustainable future. In this regard, photovoltaic (PV) systems and electric energy storage stand at the forefront of change. But how do we determine the optimal configuration of these systems to meet individual electricity needs while maximizing economic benefits?

The challenge lies in striking the right balance between the size of the PV system and the energy storage capacity to meet consumer demands while ensuring system profitability. This is where the Net-Benefit analysis comes into play.

Readers pressed for time or uninterested in the theoretical background can skip directly to the final chapter (Unraveling Energy Strategy: The 3/4 Solar to Double Storage Rule) to discover why the "3/4 Solar to Double Storage" Rule is so meaningful and helpful.

Exploring Renewable Economics: The Net-Benefit Analysis

The Net-Benefit analysis is a crucial tool enabling a comprehensive assessment of various factors. Notably, it involves the Levelized Cost of Energy (LCOE) of the PV system and the Levelized Cost of Storage (LCOS) of the energy storage. Moreover, it incorporates other elements such as grid feed-in tariffs for PV electricity and the effective electricity price from the conventional grid.

This approach is widely embraced in economics and cost-benefit analyses as it compares the overall benefits of a decision or investment with the associated total costs. Essentially, it examines the difference between the generated overall benefit and the total incurred costs.

When applied to renewable energies like PV systems and battery storage, this analysis includes various aspects such as expected energy generation, potential reduction in energy costs, environmental impacts, governmental incentives and subsidies, and the overall lifetime costs of the system.

This analytical approach enables informed decision-making by evaluating the total benefits of an investment or decision relative to the total costs. This clearer determination of profitability and value establishes the foundation for informed decision-making.

Optimizing Solar Power: A Deep Dive into the Net-Benefit Method

By amalgamating these factors in a comprehensive analysis, one can precisely determine the optimal size of the PV system and energy storage. A customized setup that fulfills both individual needs and is economically advantageous.

Combining the Levelized Cost of Energy (LCOE) of a photovoltaic (PV) system with the Levelized Cost of Storage (LCOS) of a battery storage unit can assist in determining the total costs for electricity generation and storage. To combine these costs, one might use the Net-Benefit approach. Here are steps you could follow:

Step 1: Calculating the LCOE of the PV System

1. Determine the total costs of the PV system: This encompasses investment costs, operational and maintenance costs, insurance, etc.
2. Calculate the expected electricity generation of the PV system over its lifetime: Consider factors such as sunlight exposure, module tilt angle, etc.
3. Divide the total costs by the expected electricity generation over the system's lifetime: This yields the LCOE of the PV system per generated kilowatt-hour (kWh).

Step 2: Calculating the LCOS of the Battery Storage

1. Determine the total costs of the battery storage: This includes acquisition costs, installation, maintenance, etc.
2. Estimate the effective capacity of the battery over its lifetime: Consider how much energy the battery can store and discharge.
3. Divide the total costs by the effective capacity over the system's lifetime: This yields the LCOS of the battery storage per stored kilowatt-hour (kWh).

Step 3: Identify the Framework Conditions

1. Consider effective electricity price and feed-in tariffs.
2. Consider total electricity demand, along with seasonal and daily distribution.
3. Consider the following consumers in your calculation: heat pumps, electric vehicles (EVs), electric heating, tankless water heaters.
4. Consider the following producers in your calculation: wind turbines, combined heat and power (CHP) systems, asymmetric PV output, e.g., shading or multi-area installations.
5. Consider the following regulatory influences in your calculation: dynamic electricity tariffs, tiered electricity tariffs, variable grid feed-in tariffs, tax-related peculiarities.

Step 4: Calculating the Net-Benefit

Conducting a Net-Benefit analysis is best suited for an annual perspective. Based on the determined LCOE, calculate the annual energy generation costs COE. Additionally, for stored electricity, calculate the annual energy storage costs COS. In our analysis, we also consider the effective electricity costs EEC, the grid feed-in tariff FIT, and the conventional electricity costs CEC without a PV system and energy storage.

However, bear in mind that this is a simplified method and involves certain assumptions. It could become more complex when additional factors are considered, such as asymmetric PV output due to shading or multi-area installations, or seasonal/daytime-dependent consumers like heat pumps or tankless water heaters.

For a precise calculation, specialized software tools or more detailed financial models might be necessary to simulate various scenarios and determine costs more accurately.

Step 5: Cost Optimization of PV System Size and Storage Capacity

Based on simulation results of the overall system with varying PV system sizes and energy storage capacities, the optimum annual total costs can be identified.

In our analysis, the basic energy demand and the resulting costs from conventional grid use CEC remains constant. The incurred effective costs from grid use EEC and the generated income from grid feed-in tariffs FIT are indirectly dependent on the generated energy quantity and stored energy quantity and the resulting costs COE and COS.

Consequently, EEC and FIT do not directly vary but are derived from COE and COS.

For minimizing the Net Benefit with this indirect variable dependence, the following holds:

At this point, our theoretical consideration concludes, acknowledging that in practical applications, we need to vary our entire system solely based on energy generation costs and energy storage costs.

Unraveling Energy Strategy: The 3/4 Solar to Double Storage Rule

The Net-Benefit analysis opens pathways to tailor-made solutions for expanding renewable energies. It enables the establishment of not only environmentally friendly energy systems but also maximizes economic efficiency.

Based on assumptions from my article on LCOS and LCOE, in our example, we assume the following fundamental premises:

• Energy demand of 4000 kWh with a distribution of 45% (1800 kWh) in the morning and daytime, and 55% (2200 kWh) in the evening and nighttime.
• 2000 hours of sunshine annually distributed to 25% (500 h) in spring, 35% (700 h) in summer, 25% (500 h) in autumn, and 15% (300 h) in winter. The PV yield factor PVPR is assumed as 0.5.
• The electricity tariff can be simplified to the effective electricity price EEC of 0.36 €/kWh and a grid feed-in tariff FIT of -0.08 €/kWh.
• The Levelized Cost of Electricity LCOE of the PV systems amounts to 0.13 €/kWh. The calculation can be found under this link.
• The Levelized Cost of Storage LCOS of the energy storage is 0.2 €/kWh. An overview of the LCOS can be found under this link.
• The Net-Benefit of the overall system is calculated for various PV system sizes and energy storage sizes.

Note: Depending on the system configuration, it might lead to local minima, which do not represent the optimum. In your consideration, choose a parameter variation for PV system size and energy storage size significant enough to find the global minimum.

Evidently, for the considered case, the optimal configuration lies in a system with approximately 3 kWp PV size and around 8 kWh storage size. As a rule of thumb for an initial examination, I personally prefer to use the:

“3/4 Solar to Double Storage” Rule To determine the size of the photovoltaic system, divide the annual total electricity demand in kilowatt-hours (kWh) by 1000 and multiply the result by 3/4. This yields the required PV system size in kilowatt peak (kWp). To ascertain the necessary energy storage capacity, multiply the calculated system size in kWp by 2.

Sustainable Energy: Charting the Course for Tomorrow

The Net-Benefit analysis not only provides insights into optimizing photovoltaic systems and energy storage but also serves as a guide for a sustainable energy future. By linking environmental consciousness with economic efficiency, it paves the way for tailored, profitable solutions.

Now is the time to utilize this approach as a catalyst for the energy transition. By relying on data-driven analyses and informed decisions, we can establish not only eco-friendly energy systems but also maximize economic benefits.