Solar Plus: A Holistic Approach to Distributed Solar PV
A new NREL report analyzes “solar plus,” an emerging approach to distributed solar photovoltaic (PV) deployment that uses energy storage and controllable devices to optimize customer economics.
Changes in electricity rate structures could make distributed PV adoption less economically attractive to customers. Several states and utilities have implemented or proposed policies to move away from net metering and have developed new residential time-of-use rate structures that affect the customer value of PV generation. At the same time, increasing PV adoption has raised concerns about the variability of PV generation and its impact on the electricity grid. These issues have prompted the PV industry to consider new ways to optimize the customer value of distributed PV systems.
This report develops the "solar plus" concept as an approach to optimizing how PV interacts with other electricity loads at the household level and the grid more broadly. Solar plus has the potential to increase value from the customer's perspective by combining PV with technologies such as controllable domestic water heaters, controllable air-conditioning (AC) units, batteries, and electric vehicles. These types of smart home devices can be programmed to maximize the use of PV electricity rather than grid electricity, allowing customers to shift more of their electricity load to earlier in the day, when their PV systems generate the most electricity, which would reduce their use of grid-supplied electricity. Solar plus also has the potential to help mitigate some grid-level issues associated with large-scale PV deployment. By shifting more peak period loads earlier in the day, solar plus could smooth energy demand throughout the day. Applying the solar plus concept more broadly could reduce peak period ramping requirements and thus reduce strain on the grid.
The report uses NREL’s Renewable Energy Optimization (REopt) model to explore "solar plus" economics under various utility rate structures and net metering rates in five case studies. REopt deploys different configurations of PV, controllable AC units, controllable domestic water heaters, and batteries, in response to different rate structures and customer electricity use profiles. Other technologies such as electric vehicles will be incorporated into future studies.
The analysis indicates that solar plus improves the customer economics of PV relative to standalone solar. REopt deploys at least one solar plus technology in addition to PV in all case studies. Solar plus increases the net present value of the customer’s total investment by about a factor of three, on average, across the five case studies.
The results of the analysis have four primary implications that are detailed in the full report:
- Solar plus increases system value.
- Solar plus generally affects the optimal PV system size.
- Solar plus may mitigate some negative impacts of declining net metering rates and evolving rate structures on PV economics.
- Current utility rate structures and battery costs generally do not support battery deployment based on customer bill savings alone.
This research is the second of three NREL studies on distributed PV plus storage. The first study provides cost benchmarking for residential solar plus storage systems. The third study will look at the value of aggregating multiple distributed PV plus storage systems to provide grid-level services.
This research is supported by the Energy Department's SunShot Initiative, which is a national effort to make solar energy cost-competitive with traditional energy sources by the end of the decade. Through SunShot, the Energy Department supports private companies, universities, and national laboratories that are working to drive down the cost of solar electricity. For residential PV, the SunShot goal is to get to $0.05/kWh by 2030. Learn more at energy.gov/sunshot.
About NREL Solar Market Research and Analysis
NREL is working to enable faster, easier, and less expensive installations by addressing soft costs and market barriers through data collection, analysis, and assistance to decision-makers who affect solar markets. This cross-cutting set of activities leverages NREL's unique analytical and deployment capabilities. Learn more.