An illustration of why it’s so precious
By Adam Gerza, Chief Operating Officer of Energy tool base
Net energy storage energy metering (or NEM paired storage) allows a customer with a solar + storage system behind the meter to discharge their battery, export the stored energy to the grid and receive a net energy metering credit, if the battery can be verified 100% solar charge. In some cases, NEM paired storage can significantly increase the amount of savings that an energy storage system (ESS) can capture. As shown in the graph below, net energy storage metering effectively allows a battery to use its full capacity by fully discharging when a strong price signal exists, regardless of customer usage.
NEM paired storage was codified into law in California in February 2019 when the California Public Utilities Commission (CPUC) finalized a decision allowing customers with ESS to receive credits for storage energy returned to the grid if the storage system is verifiably fully charged from solar power. The policy change was initiated by the California Solar and Storage Association (CALSSA) which filed a Request for Modification (PFM) to grant permission for NEM paired storage. CALSSA’s PFM has received support from the Big Three California utilities owned by investors who filed a statement of support, which helped pave the way for the CPUC decision. Energy Toolbase posted a blog “CPUC approves net metering of energy storage” summarizing the eligibility requirements set out in this CPUC decision.
Several months later, IOUs began to allow NEM paired storage systems to be interconnected to their network. Energy Toolbase published another blog in December 2019 titled “California Utilities Now Accepts Net Energy Meter (NEM) Applications – Paired Storage”, which summarized many of the new measurement and verification requirements, including the new Certification Requirements Decision (CRD) standard, which allowed utilities to verify ESS charges entirely from PV. Previously, for ESS systems greater than 10 kW, customers had to install additional measurement hardware, which could be time consuming and prohibitively expensive.
Case study: NEM paired storage
To illustrate the value of net energy storage metering, we compared two identical solar + storage systems operating in time-of-use arbitration (TOU) mode. We kept all project inputs and assumptions constant, except in case n ° 1 we ran the ESS dispatch simulation assuming that the ESS cannot export to the grid, and in case n ° 2, we ran the simulation assuming the NEM paired storage: the ESS can export to the grid, but it needs to fully recharge from PV.
Assumptions used in the case study:
- Utility | Rates: Southern California Edison (SCE) | TOU-D-PRIME rate
- Annual consumption: 13,243 kWh
- Interval Data File: My Home, Located in Alhambra, California
- Photovoltaic system size: 8 kWCC
- Generation of PV production profile: API PV Watts v5 (10 tilt, 180 south azimuth)
- ESS size: 5 kW | 10 kWh
- Generation of the ESS distribution profile: Energy Toolbase, TOU Arbitrage distribution simulation
Case n ° 1: ESS cannot export to the network
Explanation: The graph above displays: energy consumption, photovoltaic production, distribution of ESS, net use and state of charge (SoC) of ESS over a period of 10 days: from 27 June to July 6. During the first five days, I was on vacation and had virtually no consumption. As a result, the ESS barely cycled, only discharging about 5% of its rated capacity each day, as it was limited to only discharging to compensate for the load.
The TOU-D-PRIME residential SCE price list is an advantageous price for the economy of the ESS because it has a significant TOU price differential all year round. The difference between peak and off-peak hours is $ 0.26 / kWh in summer and $ 0.23 / kWh in winter. But since I was gone and had not used for the first five days, the ESS was handcuffed and effectively missed the lucrative opportunity to unload during the 4pm to 9pm peak period. Also note that on July 4th, after I got home, I was away for the period of 4 to 9 p.m. and had virtually no use, which again prevented the ESS from sending and to use its full capacity.
Annual ESS result: Using the Energy Toolbase storage simulation engine, we ran a 365 day shipment with the restriction that ESS could not export to the network. ESS achieved $ 504 in utility bill savings, completing 236 equivalent cycles for the year.
Case n ° 2: NEM Paired Storage (ESS can export to the network)
Explanation: Zoom on the same period; In the first five days I was away, the ESS cycled fully, charging fully from solar power during the mid-day off-peak period, then fully discharging, from 100% SoC to 0 %, during the peak period. The NEM paired storage allowed me to fully grasp the lucrative arbitrage differential of $ 0.26 / kWh TOU while I was on vacation and had zero consumption.
Annual result: We ran an ESS dispatch simulation requiring the ESS to take full charge of the PV and allowing the ESS to export to the grid. ESS resulted in savings of $ 715 on utility bills by completing 360 equivalent cycles for the year. By being able to fully utilize the battery capacity, regardless of my peak consumption, I was able to achieve 30% more utility bill savings compared to running without ESS exports.
Note: This was not a handpicked example. This comparison was based on the actual usage of my home for 365 days. There are certainly cases where the percentage of increased savings that a homeowner could achieve from NEM paired storage would be much higher.
Why NEM paired storage is so valuable
As illustrated above, net energy storage metering has allowed the battery to use its full capacity by discharging when the price signal is strong, without any restrictions. For this same reason, NEM paired storage can also offer significant benefits to commercial and industrial (C&I) customers. Especially customers who have load profiles that use most of their energy during the day and then decrease dramatically at night, such as an office building. For C&I solar + storage customers in California, it is generally more economically advantageous to switch to a ‘solar-compatible’ tariff option, such as SDG & E’s DG-R tariff, PG&E’s B-19 (option R ) or the GS-2 of SCE – TOU rate (Option E). These “solar-compatible” tariffs effectively reduce the $ / kW demand charge in exchange for higher $ / kWh energy charges. Therefore, capturing the TOU arbitrage value stream becomes a much more meaningful part of the ESS savings opportunity. To maximize savings on utility bills, the Storage Energy Management System (EMS), which controls battery allocation, would target both demand load management and value streams. TOU arbitration. In Energy Toolbase, we allow users to run ESS value stacking simulations, either by restricting ESS exports to the network or by allowing them.
Finally, it is important to stress that NEM paired storage also offers significant benefits to utilities and independent system operators (ISOs). Allowing storage systems to distribute their full capacity can help alleviate low-supply and high-demand grid imbalance issues. In California, the “duck curve” is the result of a strong acceleration of the peak of the system in the early evening due to the entry of residential load, associated with a drop in the supply of solar photovoltaic production. going to zero. This is a perfect opportunity for NEM paired storage to play a role and is not much different from power grid service programs that allow distributed energy resources to participate in wholesale markets and generate revenue through to the response to the request. Net energy storage metering is a win-win situation: it allows a battery to use its full capacity and maximizes value capture, and it helps utilities balance the grid. Hopefully other states will codify this mechanism into law and create strong price signals so that all parties can benefit.