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Applied Energy 213 (2018) 11–21

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Solar plus: Optimization of distributed solar PV through battery storage and T

dispatchable load in residential buildings

Eric O'Shaughnessya,b, , Dylan Cutlera, Kristen Ardania, Robert Margolisa
National Renewable Energy Laboratory, United States
University of Wisconsin-Madison, Nelson Institute for Environmental Studies, United States


• Analysis of residential PV optimization with battery storage and load control.

• Economic analysis of PV optimization in a variety of rate environments.
• Findings show that load control in particular improves the economics of PV.
• Storage and load control improve PV value in challenging rate contexts.


Keywords: As utility electricity rates evolve, pairing solar photovoltaic (PV) systems with battery storage has potential to
Solar ensure the value proposition of residential solar by mitigating economic uncertainty. In addition to batteries,
Storage load control technologies can reshape customer load profiles to optimize PV system use. The combination of PV,
Load control energy storage, and load control provides an integrated approach to PV deployment, which we call “solar plus”.
The U.S. National Renewable Energy Laboratory’s Renewable Energy Optimization (REopt) model is utilized to
Residential buildings
evaluate cost-optimal technology selection, sizing, and dispatch in residential buildings under a variety of rate
structures and locations. The REopt model is extended to include a controllable or “smart” domestic hot water
heater model and smart air conditioner model. We find that the solar plus approach improves end user eco-
nomics across a variety of rate structures – especially those that are challenging for PV – including lower grid
export rates, non-coincident time-of-use structures, and demand charges.

1. Introduction proposed and implemented residential rate reforms such as time-of-use

(TOU) rates and customer demand charges pose further challenges to
The temporal mismatch between solar photovoltaic (PV) system future residential PV deployment [7].
output and residential electricity demand is one of the primary chal- Solar plus storage has emerged as an alternative to grid export in
lenges to wide-scale residential PV deployment [1–4]. PV output often evolving rate environments [7,9–12]. Energy storage solves the tem-
exceeds residential electric loads during the day but falls short of de- poral mismatch by storing excess PV output in a battery for later con-
mand in the late afternoon and evening when residential load tends to sumption. A growing body of literature and new PV product bundles
increase. Grid export – where excess PV output is sold to the electric indicate that in addition to batteries, load control technologies can
grid – has provided an economic solution to this temporal mismatch. reshape customer load profiles to optimize PV system use [13–19]. We
Through grid export policies such as net metering (U.S.) and feed-in use a time series optimization model formulated as a mixed integer
tariffs (Europe, Australia, Asia), customers earn returns from full PV linear program to explore the economics of solar plus storage and load
system output regardless of whether that output is used on site [5,6]. control under different rate structures. The combination of PV, energy
However, grid export rates are declining in many major PV markets storage, and load control provides an integrated approach to PV de-
around the world [7,8]. Lower grid export rates incentivize customers ployment, which we call “solar plus”.1
to reduce excess output and maximize on-site PV self-use. Other

Corresponding author at: National Renewable Energy Laboratory D.C. Office, 901 D Street NW Suite 930, Washington, DC 20024, United States.
E-mail address: (E. O'Shaughnessy).
This paper builds on an analysis previously presented in a National Renewable Energy Laboratory working paper: “Solar Plus: A Holistic Approach to Distributed Solar PV.”
Received 24 October 2017; Received in revised form 12 December 2017; Accepted 30 December 2017
Available online 11 January 2018
0306-2619/ © 2018 Elsevier Ltd. All rights reserved.
E. O'Shaughnessy et al. Applied Energy 213 (2018) 11–21

Fig. 1. Customer load shifting through solar plus. Grid net load is the total customer load at the utility meter; negative grid net load reflects excess PV output exported to the grid.

2. Solar plus some target temperature (Fig. 4, top). Programmable units can precool
the home with PV output and allow temperatures to drift up toward a
In solar plus systems, load control technologies shift electric load to maximum temperature without re-cooling with grid electricity (Fig. 4,
coincide with PV output (Fig. 1) [16–18]. For instance, PV customers bottom).
can manually shift load by using deferrable devices, like laundry ma- Electric vehicles (EVs) can potentially enhance the value of solar
chines, during the midday solar peak rather than in the evening. Solar plus systems [20]. A typical EV has around 30 kWh of electrical storage
plus automates this process by calibrating home devices to maximize capacity [21], far greater than the capacity of current residential bat-
their use of PV rather than grid electricity. Any remaining excess PV tery offerings and the thermal capacity of smart domestic water heaters
output may be delivered to a battery and then to the grid as a last resort. and AC units. EV owners could use this storage capacity to increase PV
Solar plus can improve overall end-user economics by increasing PV self-use by charging vehicles during peak PV output hours. In this sense,
self-use, reducing grid exports, performing grid arbitrage (where cus- PV optimization is an ancillary benefit of EV ownership. EV ownership
tomers pay TOU rates), reducing demand charge payments (where remains relatively uncommon. It is unclear whether PV owners would
applicable), and reducing customer electricity payments. be willing to invest in EVs for the purposes of PV optimization. Further,
A variety of home appliances can be included in a solar plus system to the extent that PV optimization is part of the value proposition of EV
such as domestic water heaters, air conditioning (AC) units, heat ownership, it is unclear how to apportion EV cost premiums between
pumps, and washing machines. This study focuses on programmable or the added benefits of EV ownership (e.g., lower fuel costs) and the solar
“smart” domestic water heaters and AC units (Fig. 2), given that load plus capabilities. To avoid speculating about the willingness of PV
control through thermal storage has been shown to have greater im- owners to invest in EVs, we exclude EVs from our analysis. EV in-
pacts than other controllable home appliances [17,19]. Conventional tegration into solar plus systems is a proposed area of future research.
electric domestic water heaters maintain a set tank temperature by A growing body of research explores solar plus in a variety of
heating water instantaneously following hot water draws (Fig. 3, top). configurations and contexts. The majority of this literature analyzes the
Programmable domestic water heaters can preheat water with PV technical capacity of solar plus to increase PV self-use, with limited
output then allow the tank temperature to drift down to a minimum economic analysis based on simplifying assumptions about the value of
temperature without reheating with grid electricity (Fig. 3, bottom). PV self-use [13–17,22,23]. In a review of this research, Luthander et al.
Conventional AC units maintain internal home temperatures around [18] find that batteries (including EV batteries) generally increase PV

Fig. 2. The solar plus home.

E. O'Shaughnessy et al. Applied Energy 213 (2018) 11–21

Fig. 3. Conventional domestic water heating (top) vs. smart domestic water heating with preheating and drift functions (bottom).

self-use by 13–24 percentage points, while load control strategies in- first to apply the U.S. National Renewable Energy Laboratory’s (NREL)
crease self-use by 2–15 percentage points. However, at current battery Renewable Energy Optimization Tool (REopt). Other tools have been
costs, some studies argue that load control options optimize PV use developed to study load control and storage for PV optimization, such
more cost effectively than batteries [14,15,24,25]. More recently, sev- as the Lawrence Berkeley Laboratory’s Distributed Energy Resources
eral studies have focused on the economic impacts of solar plus, gen- Customer Adoption Model [29], TRNSYS 17 [15], and GEDELOS-PV
erally finding that solar plus technologies – especially load control – [14,16]. Several studies develop their own optimization models for the
provide end-user economic benefits [19,24–28]. purposes of specific solar plus-related studies [13,19,22,24,25,27].
The extant literature provides a limited understanding of the effects These modeling approaches broadly fall into two categories. The first
of customer electricity rate structure on the economics of solar plus. approach focuses on detailed modeling of the solar plus technologies
Most studies assume flat electricity rates or simple TOU rates with and their optimal and coordinated dispatch. The dispatch problem is
simplifying assumptions about the value of PV exported to the grid typically addressed via heuristic/algorithmic methods [14,15] or dy-
[16,25,28]. However the customer’s rate structure is a key variable namic programming [13,19] and may incorporate forecasting into
impinging on both the value of PV and the optimal selection of solar short-term dispatch algorithms [16]. These approaches can accom-
plus technologies [24]. Our study fills this research gap by exploring the modate complex technology models, yet generally do not consider
economics of solar plus under rate structures that vary along three di- system sizing in conjunction with the dispatch. The second approach
mensions: the compensation rate for excess PV output delivered to the considers system size optimization in conjunction with optimal dispatch
grid, the timing of peak- and off-peak rates in TOU structures, and the [24,29]. Our extension of the REopt model for this analysis incorporates
amount of any levied demand charge. These three rate structures were and improves upon many of the capabilities from these extant models
identified as characteristics of evolving rate environments that are by integrating detailed models of building systems directly within the
particularly challenging for the value proposition of stand-alone re- mixed integer linear program. Further, we use the REopt model’s ability
sidential PV systems. By analyzing solar plus in these rate structures we to size systems while considering complex rate tariff designs to perform
can study how the economics of solar plus change in evolving rate concurrent selection, sizing, and dispatch of technologies while con-
environments and how solar plus may or may not address rate structure sidering the complex tariff environment that these technologies operate
challenges to the PV value proposition. within.
Our study offers a further contribution to the literature by being the

E. O'Shaughnessy et al. Applied Energy 213 (2018) 11–21

Fig. 4. Conventional AC cooling (top) vs. smart AC with precooling and drift functions (bottom).

Fig. 5. Relationship between BEopt and REopt models in the analysis. Customer loads are generated in BEopt and used as inputs in REopt.

3. Methods energy for a single entity by optimally selecting, sizing, and dispatching
from a set of available technologies. For the purposes of our study,
REopt is a techno-economic time-series model that provides mul- REopt minimizes life cycle energy costs for a residential household by
tiple technology integration and optimization capabilities [30]. The deploying an optimal configuration of PV, battery storage, smart do-
objective function of the model is to minimize the life cycle cost of mestic water heater, and smart AC unit. The model was run with hourly

E. O'Shaughnessy et al. Applied Energy 213 (2018) 11–21

timesteps for a full year to enable the life-cycle cost optimization. Pre- grid arbitrage.
existing REopt PV and battery storage modeling capabilities were used
in this analysis [30], however new models for smart domestic water 3.2. Air conditioner model
heating and AC were developed for this study.
REopt estimates local PV production based on inputs from Two components are added to REopt to model the smart AC unit: a
PVWatts®, an NREL tool that estimates the energy production of grid- simplified AC model and an energy storage component. The simplified
connected PV systems based on local insolation. REopt’s energy storage AC model is based on the direct expansion model in EnergyPlus, which
model is a “reservoir” based model that allows energy to be moved from uses performance curves to capture capacity and efficiency impacts of
one timestep to the next, while accounting for inverter, rectifier, and operation at off-rated conditions. The impacts of varying outdoor dry-
round-trip efficiency losses. The energy capacity and the inverter ca- bulb (subscript odb) temperature and entering wetbulb (subscript ewb)
pacity are sized independently in the model, and minimum and max- temperature are captured by the bi-quadratic curve shown in Eq. (1),
imum states of charge are observed in the model. For further discussion where y is a scaling factor on the rated performance of the system, T
of the larger REopt model formulation, see [30]. denotes temperature, and constants a through f are based on manu-
The annual energy simulation software Building Energy facturer performance data. Two of these curves are implemented in the
Optimization (BEopt) is used to establish modeled electrical/thermal/ model—one for capacity impacts and one for efficiency im-
hot water loads. The modeled loads are fed into the REopt model which pacts—enabling accurate calculation of capacity and power consump-
then selects, sizes (in the case of PV and battery storage), and dispatches tion at every timestep in the model. Curve coefficients are taken from
the technologies to meet the calculated loads (Fig. 5). BEopt is a re- [33]. Rated system capacity and efficiency were taken from BEopt. The
sidential building modeling tool that utilizes the physics based simu- available system capacity and associated efficiency are pre-processed
lation engine EnergyPlus to model all energy flows and interactions according to the TMY file assuming the indoor setpoint is maintained.
with environmental conditions for residential buildings. EnergyPlus These are subsequently passed to the optimization model, thus cap-
provides high fidelity building system modeling and enables rapid re- turing the impact of ambient conditions on AC performance.
calculation of the residential loads in different locations. EnergyPlus
2 2
has been validated against American Society of Heating Refrigerating y = a + bTewb + cTewb + dTodb + eTodb + fTewb Todb (1)
and Air-conditioning Engineers (ASHRAE) and American National
The remaining performance curves from the full EnergyPlus model
Standards Institute (ANSI) standards and research projects. It has in-
(flow fraction and part load fraction) are not implemented for this
corporated tests outlined in the Building Energy Simulation Test
analysis. An additional constraint is added to REopt to ensure that the
(BESTest) that have not entered into ANSI/ASHRAE Standard 140.
cooling load is met in all timesteps:
BEopt builds upon this modeling foundation and provides residential
modeling assumptions as defined in the Building America House Si- Xtĥ fthp + Xhc ̂ = δ c ∀h (2)
mulation Protocols [31]. BEopt was run at 10-min timesteps for a full
year, and consistency was maintained between the typical meteor- where Xtĥ is the decision variable for rated production of a given
ological year (TMY) files used for load modeling and TMY solar re- technology t in timestep h, fthp is the production factor in each timestep
source data used for REopt PV modeling. The following sections de- for technology t (scaling the rated capacity of the AC unit, based on Eq.
scribe the load modeling in further detail and describe the modeling (1)), Xhc ̂ is the energy delivered from the energy storage capacity of the
approaches for the smart domestic hot water heater and the smart AC house, and δ c is the cooling load determined by BEopt.
unit. The presence of the AC unit in the model enables REopt to optimally
Throughout this section, let h denote a single timestep. The condi- dispatch the unit to meet the cooling load, yet without an energy sto-
tion “for all timesteps” (∀ h ) is applied to certain equations to specify rage element there would be zero degrees of freedom in the constraint
that the constraint must be met in every timestep. shown in (2), and the AC unit would be dispatched to meet the load in
all timesteps. In order to capture the flexibility of a smart AC unit, we
3.1. Load modeling incorporated an energy storage model to allow the smart AC unit to
store energy through a 19 °C to 23 °C drift (see Fig. 4). The energy
We model a representative household based on median values for all storage model is modeled as a “reservoir” type model where energy can
single-family detached homes in the U.S. as documented in the Energy be stored during one timestep and removed during subsequent time-
Information Administration’s Residential Energy Consumption Survey steps. Losses for the energy storage are handled by forcing the model to
database. This results in a three bedroom, two bath, 199 m2 home. The maintain setpoint, such that the state of charge (SOC) of the energy
modeled house conforms to the Building America Benchmark design as storage unit is maintained. Due to the cooling load being calculated at a
defined in [31]. This is generally consistent with the International En- constant 21 °C, there may be some additional losses when the energy
ergy Conservation Code from 2009, the most widely used energy code storage is at full SOC (e.g. 19 °C), and reduced losses when the SOC is at
for new construction in the United States. Accordingly, the home has R- minimum (e.g. 23 °C), but these were not accounted for in the model.
13 walls and R-30 roof (both nominal), 0.37 U-value windows, and a Due to the capacity and efficiency adjustments from (1) being calcu-
SEER 13 AC system. The house was modeled with an electric water lated considering a fixed indoor setpoint of 21 °C (e.g., no feedback loop
heater (0.9 energy factor). While there are certainly cost-effective en- from thermal storage SOC to the AC performance), there may be ad-
ergy efficiency measures available to such a homeowner, the current ditional AC performance impacts that are not fully captured when SOC
analysis focused on controllability of loads in association with PV. is high or low. This simplification retains a mixed integer linear pro-
There is a large body of literature dealing with the more “static” effi- gram formulation, while still capturing the impact of air temperature on
ciency analysis that could benefit such a residence. Climatic conditions AC performance.
are represented by a TMY file for the selected location. We used a resistance–capacitance (R-C) model [34] to quantify the
The home’s energy demands – as calculated by BEopt – are dis- energy required to lower the house temperature from 23 °C down to
aggregated into cooling load, domestic hot water load, and all other 19 °C and to estimate the drift duration from 19 °C up to 23 °C. To
electrical load. Hot water draw profiles in BEopt are based on the do- isolate the home’s inherent thermal storage capacity, we calculated the
mestic hot water event schedule generator [32]. The disaggregation of energy required to move from 23 °C to 19 °C when the outdoor air
AC and hot water loads allows REopt to dispatch the smart AC or water temperature is at 21 °C. This removes most external loads on the system,
heater to meet thermal loads while also shifting the electrical demand as the outdoor temperature is already within the deadband of the
to different periods within the day to increase PV self-use or perform thermostat. Some ambient temperature impacts remain when the

E. O'Shaughnessy et al. Applied Energy 213 (2018) 11–21

system is at high/low SOC, yet these impacts are in opposite directions tdhw (1−Z d ) ⩽ Xhď (7)
and are expected in large part to offset each other. The energy required
to cross that deadband is calculated at 14.3 kWh-thermal, and defines where tdhw is the exact charging profile as dictated by the BEopt si-
the capacity of the energy storage system. The max rate of charge is set mulation, Z d is the binary that determines whether the smart domestic
by the capacity of the AC unit. The max rate of discharge is determined hot water heater is deployed, and Xhď is the decision variable de-
by outdoor conditions, therefore we use the R-C model to estimate the termining charging of the domestic water heater system. Therefore if
time to cross the deadband at 37 °C as an upper thermal threshold. This the model wants to avoid charging exactly to meet the load (i.e., shift
time is 2.38 h or 5.97 kW-thermal (converted into power units given the electrical load incurred to meet the hot water demand), then Z d must
14.3 kWh-thermal of stored energy). These values are inserted into Eqs. resolve to 1, such that the capital cost of the smart water heater is in-
(3) and (4) to control the charge and discharge of the energy storage cluded in the objective function. It can be noted that this constraint
system, where Xhč and Xhc ̂ are decision variables for charge and dis- would not restrict a water heater from overcharging in the presence of
charge of the energy storage system and bč and b c ̂ are the max charge an incentive to consume excess energy (e.g., negative electricity pri-
(13.8 kW-thermal) and discharge (5.97 kW-thermal) parameters: cing). This type of pricing was not present in our analysis and therefore
did not affect model performance.
Xhc ̂ ⩽ b c ̂ ∀h (3)
3.4. Financial assumptions
Xhcˇ ⩽ bcˇ ∀h (4)
The cost of installing the smart AC unit is included in the objective System net present values (NPV) are calculated relative to the cus-
function by multiplying the cost of the improved controls by a binary tomer’s electricity costs without any PV system. System NPV represents
variable (Z c ) that determines if the smart controls are installed. Any the full discounted lifetime value of all electricity cost savings accrued
increase/decrease in operational costs for the adjusted AC operation from the standalone solar or solar plus system less the customer’s in-
(e.g., pre-cooling and drift) are captured in the energy required to op- vestment costs in PV and solar plus technologies. A discount rate of
erate the unit, calculated according to the AC model outlined herein. 6.2% is assumed [36], and electricity costs are escalated based on Na-
The determination of the binary costing variable is shown in Eq. (5), tional Institute of Standards and Technology utility cost escalators [37].
where W c is the decision variable determining the energy capacity of The value of solar plus is determined by the difference in NPV between
the energy storage and w c is the maximum capacity of the system the standalone and solar plus scenarios, as estimated by REopt. The
(14.3 kWh-thermal in this analysis): NPV incorporates the capital cost of all system components, the present
W cZ c ⩽ w c (5) value of operation and maintenance costs ($20/kW/year for PV system)
[38], and present value of grid purchases. Of the three candidate solar
plus technologies, batteries are the most versatile but also the most
3.3. Domestic water heater model costly option. Modeled battery installed costs are $1060/kWh for the
battery pack and $1271/kW-alternating current for the balance of
The water heater is modeled in REopt as an energy storage system. system based on benchmarked costs from [39]. The smart domestic
Similar to the energy storage system described above, the total capa- water heater upgrade is assumed to cost $250, and the smart AC unit
city, maximum charge, and maximum discharge parameters were de- upgrade is assumed to cost $200 [40]. These assumed costs affect RE-
fined for this model. It is assumed that the water heater has an 189L opt’s selection of batteries versus load control technologies in our
tank and a 4.5 kW element. A tank temperature range of 49–82 °C is analysis. These financial assumptions are based on the best available
assumed. The installed cost of the smart water heater includes a mixing estimates of current technology costs. Battery costs, in particular, are
valve to avoid scalding and controls to enable water temperature con- projected to decline over time [41,42]. The implications of falling
trol. The tank size and temperature range result in a total capacity of battery costs are discussed in further depth in Section 5.
7.32 kWh. The maximum charge is limited to the heating element in the We use REopt to analyze the economics of solar plus under three
tank (4.5 kW) and the maximum discharge is assumed to be unlimited rate structures that are less favorable to stand-alone PV: lower grid
(e.g., able to drain the whole energy storage system within a single export rates, non-coincident TOU peak rate periods, and demand
timestep) to account for large hot water draws such as a bath or mul- charges. In each analysis, we allow a single rate parameter to vary
tiple showers. Eqs. (3) and (4) must hold for the water heater for these while holding all other factors constant. This approach allows us to
input parameters. isolate the effects of different parameters on the economics of solar
Additionally, a losses parameter is added to capture tank jacket plus, as determined by the differential value between the standalone
losses. Eq. (6) incorporates that parameter to enforce that energy dis- and solar plus approaches. All analyses use a customer load profile
charged from the system ( Xhd ) plus tank losses in every timestep ( Xhd ) based on a home in Las Vegas, NV U.S.A unless otherwise noted (see
are always less than the stored energy in the previous timestep ( Xhd− 1). Section 4.1). Our rate assumptions reflect realistic ranges of parameters
̂ based on representative U.S. rate structures.
Xhd + f d Xhd ⩽ Xhd− 1 ∀h (6)
The losses parameter, f d,
was calculated assuming a heat loss 4. Results
coefficient for the tank of 0.916 W/m2-C [35] and an indoor tempera-
ture of 21 °C. This parameter ranges from 1.44%/hr at 82 °C to 2.76%/ Most major PV markets have proposed or implemented reductions
hr at 49 °C (note that the higher percentage per hour value at lower to grid export compensation rates. Lower grid export rates reduce the
temperatures is due to the low stored energy at the lower temperature). value of residential PV systems and incentivize customers to increase
Given the mixed integer linear formulation of the problem, a fixed PV self-use. In the United States, grid export is compensated through
value of 2%/hr is assumed for this analysis. net metering, where customers receive utility bill credits for each kWh
The smart hot water heater is included in the objective function by of excess PV output delivered to the grid. Fig. 6 illustrates how the
multiplying the cost of the improved controls by a binary variable (Z d ) economics of solar plus compare with the economics of standalone solar
that determines if the smart water heater is deployed. The smart water at different net metering rates. REopt deploys the smart domestic water
heater enables the model to choose when to charge the storage (and heater and smart AC unit at every net metering rate under the solar plus
provide more capacity) versus the standard water heater that must approach, but does not deploy a battery at any net metering rate. The
charge exactly to meet the load. This is reflected in the constraint solar plus approach reduces grid exports and increases PV self-use re-
shown in Eq. (7): lative to standalone solar at all net metering rates. The incentive to

E. O'Shaughnessy et al. Applied Energy 213 (2018) 11–21

Fig. 6. Solar plus economics under different

net metering rates. Figure assumes a flat vo-
lumetric electricity rate of $0.22/kWh.

increase PV self-use is greater at lower net metering rates. As a result, systems are ineffective at reducing on-peak electricity use for late
the incremental value of solar plus is higher at lower net metering rates. afternoon peak periods. Solar plus systems allow customers to shift on-
In this case, solar plus system NPV is about 3% greater than standalone peak load to coincide with PV output, thus reducing on-peak grid
solar NPV at a net metering rate of $0.22/kWh but about 53% greater at electricity use even with non-coincident peak periods. For this reason,
a net metering rate of $0.02/kWh. This result indicates that solar plus the incremental value of solar plus is generally higher for customers
mitigates the impacts of lower grid export rates on residential PV with non-coincident peak periods. In this case, solar plus system NPV is
economics. about 28% greater than standalone solar system NPV for a 9 a.m.–2
In TOU rate structures, customers pay higher volumetric ($/kWh) p.m. peak period, but nearly six times greater for a 5 p.m.–10 p.m. peak
rates during peak periods and lower rates during off-peak periods. period. This result indicates that solar plus mitigates some of the ne-
Residential peak load typically occurs in the late afternoon when cus- gative impacts of non-coincident TOU peak rate periods on residential
tomers return home from work and engage in domestic evening activ- PV economics.
ities. Residential TOU rate structures are often designed to reduce peak Demand charges are a final class of residential rate reforms that can
residential electricity use by applying peak rates in the late afternoon. undermine the economics of residential PV. In a demand charge rate
This type of TOU rate structure reduces the value of standalone PV structure, customers pay a fee based on their peak power (kW) usage
systems, as PV output mostly coincides with lower-value off-peak over some defined time period. Demand charge customers generally
electricity rates. Fig. 7 compares the economics of solar plus to stan- pay lower volumetric ($/kWh) rates. PV systems are relatively in-
dalone solar for different TOU periods. Here we analyze a range of 5-h effective at reducing customer demand charges when peak power use
peak periods, with each period starting at a different time on the hour does not coincide with peak PV output. At the same time, the value of
from 9 a.m. to 5 p.m. For instance, the point at 9 a.m. corresponds to a PV self-use is diminished due to low volumetric rates. As a result, de-
peak period of 9 a.m.–2 p.m. REopt deploys the smart domestic water mand charge rate structures can significantly reduce the value of re-
heater and smart AC unit at all time periods, but does not deploy a sidential PV systems. Fig. 8 compares system values under both ap-
battery under any scenario. System values under both approaches are proaches at different demand charges. REopt does not deploy a
highest when the TOU peak period coincides with midday PV output. standalone solar PV system under any demand charge scenario, illus-
System values decline for later peak periods, as standalone solar trating the potentially significant implications of demand charges for

Fig. 7. Solar plus economics under different peak

and off-peak periods. Figure assumes off-peak rate
is $0.08/kWh, peak rate is $0.22/kWh, and net
metering rate is $0.03/kWh.

E. O'Shaughnessy et al. Applied Energy 213 (2018) 11–21

Fig. 8. Solar plus economics under different de-

mand charges ($/kW). Figure assumes flat volu-
metric rate of $0.06/kWh, and net metering rate
of $0.03/kWh.

residential PV deployment. REopt deploys a PV system paired with a Table 1

battery at demand charges greater than $16/kW, and deploys the smart REopt results: Hawaii self-supply rate case study.
domestic water heater and smart AC unit at every demand charge. The
Standalone solar Solar plus
solar plus approach uses load shifting to more effectively reduce cus-
tomer demand charges than the standalone solar approach. Therefore PV system size (kW) 4.6 8.0
the incremental value of the solar plus approach increases as customer Battery size (kWh/kW) – 7.8/1.3
demand charges increase. Smart water heater – Deployed
Smart AC – Deployed
To summarize, the REopt analysis shows that the solar plus ap- PV generation (kWh/yr.) 6247 11,663
proach mitigates the negative economic impacts of three types of rate Electricity savings ($/yr.) $957 $2690
reforms on residential PV. First, solar plus increases system value for System cost ($) $5933 $16,598
customers with low grid export rates by increasing PV self-use. Second, NPV $5684 $16,851
solar plus increases system value for customers with non-coincident
TOU peak periods through load shifting. Third, solar plus increases
use, particularly during the peak period, relative to the standalone solar
system value for customers with demand charges by using load shifting
approach. Reduced grid electricity use and TOU period arbitrage gen-
and batteries to more effectively shave customer peak demand.
erate additional customer savings under the solar plus approach: solar
plus increases system NPV by about a factor of three relative to stan-
4.1. Solar plus case studies dalone solar.
Fig. 10 provides a closer view of a single day (Thursday) from the
We further explore the potential benefits of the solar plus approach full week dispatch shown in Fig. 9. The standalone solar case shows PV
in four real world applications. We concentrate on a case study of output covering midday load, however additional potential output is
Hawaii, where a recent rate structure reform exemplifies the evolving curtailed due to the prohibition on grid exports in the self-supply rate
PV rate environment in the United States and internationally. scenario. The solar plus case clearly demonstrates a shift of late after-
In late 2015, the Hawaiian Public Utilities Commission (PUC) ef- noon AC load back into peak PV output hours, as well as the elimination
fectively ended net metering in Hawaii. The new self-supply rate pro- of sporadic domestic hot water draws into a consolidated midday water
hibits PV customers from exporting excess PV output to the grid. heater operation. The remaining excess PV is then placed into the
Following the reform, SolarCity (the largest U.S. residential PV in- battery, which is discharged during peak pricing (battery discharge not
staller) began offering a bundled PV package in Hawaii that includes shown, only demand presented for clarity) to reduce the remaining AC
PV, battery storage, a smart electric water heater, and a smart ther- and miscellaneous loads to zero as the PV output tails off in the late
mostat. The Hawaiian solar plus market may gain additional support afternoon/evening.
from proposed state incentives [43]. Further, in late 2016, the PUC While the impact of climate on the optimal selection, sizing, and
approved an optional TOU rate with an evening (5 p.m.–10 p.m.) peak dispatch of solar plus technologies was not central to this analysis
period. The TOU rate is lowest during the midday (9 a.m.–5 p.m.) to (focus was on tariff impacts), the modeling approach enables efficient
encourage electricity customers to use more electricity during peak PV analysis of other locations/climates. Re-location is achieved by running
output hours. the BEopt model with the TMY file for the desired location, passing
We used REopt to design an optimized solar plus system for a cus- those modified loads to REopt, and updating the solar resource in REopt
tomer in Honolulu, HI U.S.A. under the self-supply tariff and TOU rate. for the new location. This approach was utilized to enable analysis of
Table 1 compares the system specifications and economics of the two emerging rates in three additional case studies, located in Arizona,
approaches for the Hawaiian customer. REopt deploys a 4.6-kW PV California, and Nevada (see Table 2). In addition to these case studies,
array for standalone solar and an 8-kW PV array (maximum size based the inputs for the Hawaii scenario were run in the colder climate of
on roof space available) coupled with a 7.8-kWh battery, smart AC unit, Albany, NY. Consistent with results from [24], we find the reduced
and smart domestic water heater for solar plus. Fig. 9 compares cus- customer load (lower AC demand) in the cold climate reduces optimal
tomer load profiles in the two approaches. The bottom pane of Fig. 9 PV and battery system size but does not otherwise change the outcome.
depicts clear load shifting from the peak periods under the PV output In other words, the rate structure in the self-supply rate scenario pro-
curve through battery storage, home pre-cooling, and hot water pre- vides substantial incentives for investments in solar plus technologies,
heating. The solar plus approach significantly reduces grid electricity

E. O'Shaughnessy et al. Applied Energy 213 (2018) 11–21

Fig. 9. Hawaii case study PV and customer load

profiles under standalone solar and solar plus sce-
narios. Pink regions depict peak rate periods,
BESS = battery energy storage system. (For inter-
pretation of the references to color in this figure le-
gend, the reader is referred to the web version of this

with small changes in optimal system size correlated to specific cus- plus is higher for customers facing lower grid export rates. The rela-
tomer load. tively significant value of solar plus in the demand charge scenario is
Table 2 summarizes the results of three additional U.S. case studies consistent with the results depicted in Fig. 8.
exploring how the solar plus approach can alleviate the economic im-
pacts of certain rate reforms in real world applications. The three ad- 5. Discussion and conclusion
ditional case studies correspond to three challenging rate environments:
lower net metering rates (falling grid export rate), TOU rates (non-co- Evolving rate environments in major PV markets around the world
incident “super” peak), and a residential demand charge. Consistent are changing and, in some cases, undermining the economics of re-
with the other analyses presented in this section, REopt deploys the sidential PV. The reliance of standalone solar PV systems on favorable
smart domestic water heater and smart AC unit in all three scenarios grid export rates may no longer be a tenable model for future wide-scale
but only deploys a battery in the demand charge reduction. The relative residential PV deployment. Solar plus offers an alternative approach to
impact of solar plus on system NPV is higher in the Hawaii case study sustain the economic case for residential PV in these evolving rate en-
than in the low net metering and TOU cases in Table 2. This outcome is vironments. Using an NREL optimization model we show that solar plus
consistent with the results depicted in Fig. 6, where the value of solar increases customer system value under a variety of rate structures. The

Fig. 10. Detail of Hawaii dispatch, showing operation for

Thursday of example week, pink region depicts peak rate
period. (For interpretation of the references to color in this
figure legend, the reader is referred to the web version of
this article.)

E. O'Shaughnessy et al. Applied Energy 213 (2018) 11–21

Table 2
Case study results.

Case study Assumptions REopt results

Falling grid export rate: In 2015 the Public Utilities Volumetric rate: $0.106/kWh; service charge: $29.23/ REopt deploys the smart AC unit and a smart domestic
Commission of Nevada approved a new rate structure month; net metering: $0.055/kWh. Load profile based on water heater (but no battery) for solar plus. Solar plus
with declining net metering payments, falling a home in Las Vegas, NV increases system NPV by about 80% by increasing PV
volumetric rates, and increasing basic service charges self-use
Non-coincident “super” peak: The Arizona “super peak” tariff Peak period: 12 pm-7 pm; off-peak rate: $0.06/kWh; REopt deploys the smart AC unit and a smart domestic
is designed to incentivize customers to reduce winter (May-Oct) peak rate: $0.20/kWh; summer peak water heater (but no battery) for solar plus. Solar plus
electricity use during peak hours of the summer months rate: $0.24/kWh; super peak (3pm-6 pm, Jun-Aug): increases NPV by about 60% by increasing PV self-use
$0.47/kWh; net metering: $0.03/kWh and performing grid arbitrage
Residential demand charge: The Arizona demand tariff Peak period: 12 pm-7 pm; off-peak rate: $0.04/kWh, REopt deploys a smart AC unit, a 0.3-kWh battery, and
includes a monthly demand charge based on the winter (May-Oct) peak rate: $0.06/kWh; summer peak smart domestic water heater for solar plus. Solar plus
customer’s maximum demand during peak hours rate: $0.09/kWh; winter demand charge: $9.3/kW; increases system NPV by about a factor of 8, primarily
(weekdays 12 pm–7 pm) summer demand charge: $13.5/kW; net metering: through demand charge reduction

incremental value of solar plus is highest in some of the most challen- and then deploy them at optimal capacities. We find that load control,
ging PV rate environments, including lower grid export rates, non-co- rather than battery storage, provides a more cost-effective approach for
incident TOU peak periods, and demand charge structures. near term solar plus applications. However, falling battery costs and
Our optimization model deployed the smart domestic water heater supportive policies may ensure a growing role for batteries in solar plus
and smart AC unit under all rate structure scenarios and in all case systems. Our results suggest that the solar plus and other creative ap-
studies. In contrast, the model only deployed batteries in certain con- proaches to PV optimization could support the residential PV value
texts with either relatively high demand charges or high retail rates proposition in evolving rate environments.
coupled with no grid export compensation (Hawaii case study). These
results are consistent with previous studies [14,16,24,25,44], in which Acknowledgements
lower-cost load-control devices are deployed first and more often than
batteries. Lithium-ion batteries remain a relatively costly technology. This work was supported by the U.S. Department of Energy grant
Our analysis assumes battery costs of $1060/kWh, equating to over number DE-AC36-08GO28308.
$3000 for 3 kWh of storage capacity. In contrast, the smart domestic
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