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Are all Energy Storage Systems (ESS) Created Equal, Savings vs Back-up ESS

Updated: Jun 14

The primary purpose of an energy storage system (ESS) in residential homes is to store power, usually from solar. While the components of ESS have stayed the same over the years, their usages and designs continue to change. The two primary drivers for ESS have been back-up power needs and financial savings. 


First, let’s take a detour and review a brief history of residential ESS. In 2006, the primary ESS being installed were off-grid.  These systems were based on the need of properties in remote areas of Cazadero, the hills of Healdsburg and other Sonoma County areas with no power and/or where bringing power to those properties was cost prohibitive.   Starting in 2014 and 2015, we began installing a few grid-tied solar and ESS for back-up power, primarily to back-up emergency medical equipment, or wells on country properties. We saw the desire for grid-tied backup batteries start making sense for the average solar customer in 2017.  This was primarily for two reasons, cost was coming down for ESS and the devastation of the Tubbs fire in Sonoma County demonstrated the need for homes to have back-up power.  Many customers began evaluating the value of ESS vs a Generator, with ESS being more financially viable in the long term.  By the time the Kincade fire devastated Sonoma County in 2019, solar with ESS was being installed in about 25% of the homes vs solar by itself.


Pre-April 2023, PG&E added solar installations under their net energy metering program (NEM) which paid customers at retail, or near retail rates for exporting power to the PG&E grid.  The grid was like a financial battery for the customer, storing solar credits when solar was exported to the grid that could be cashed in during the evenings to cover nighttime usage. While there was a financial advantage to save power to the ESS when PG&E Rates were low and use power from ESS when PG&E peak rates were high, i.e.: “peak shaving”, the driving force under NEM was back-up ESS.


In late 2022, PG&E announced it would be moving all new solar customers to Net Billing Tariff (NBT), reducing the financial benefit of exporting power to the grid by 75%.  This drastically increased the time to break even on installation costs for a solar only system, effectively requiring energy storage systems for timely cost recovery in most cases. Solar only systems were all but dead.  This change had a big effect on the solar industry, and it could have been devastating if not for the fact that PG&E rates have increased 46% between 2021-2023, and another 13% in January 2024.  These continued increases are driving more and more customers to look at the alternatives to PG&E like solar with ESS.


With this history behind us, lets look at ESS solutions.  Currently there are two common strategies for deploying grid-tied residential solar panels with ESS, a savings ESS configuration and a back-up ESS configuration.  Which you choose depends upon a number of considerations. Here is a brief description of each:


Savings ESS – a lower cost solution that supports minimizing exporting & importing power to & from the utility but does not provide back-up power when the grid is down.

Back-up ESS – a more comprehensive (and more expensive) solution that supports minimizing exporting & importing power to & from the utility as well as back-up power when the grid is down.


In general, it is my belief that homeowners who desired a solar-only solution under NEM will be adding a savings ESS under NBT.  The suitability of a savings ESS can occur for a multitude of reasons.  They could include:

1)    The residence already has a generator installed for back-up power when the grid is down.

2)    The PG&E sub-feed they are on is rarely down (e.g. it’s shared with a hospital or emergency services).

3)    The homeowner is not concerned with back-up power during power outages.

4)    The electrical layout of the homeowner’s electrical system makes installing a back-up ESS difficult.


So based on the above, let’s look at how a savings ESS solution can work for these customers.


Back in 2017 Enphase released their first generation of storage battery.  My business partner and I each installed a pair of them, and I was happy with the result.  During the mornings when power was cheap, I could charge my savings ESS and then discharge it during expensive peak timeframes, lowering my costs.  Another benefit was it helped me minimize my dependence on the grid, storing my power locally instead of importing and exporting it to the grid.  I felt I was doing my part to minimize the need for power distribution to my house during the fires which were often caused by these transmission lines.  And in 2017, most people who were installing ESS were doing so for back-up, so this product was hard to sell, and a few years ahead of its time.


Now, with net billing tariff and PG&E reducing the rate it pays for exported solar power by 75%, the Enphase battery storage system is ready for prime time.  Many ask why a savings ESS can cost about 40% less than a back-up ESS.  The reason is that the savings ESS uses  fewer components:


1)    We do not need a power controller/grid disconnect.

2)    We need less storage since we do not need backup power reserves.

3)    We need significantly less electrical work and no protected loads panel (PLP)


Simply put, when the grid is up and solar is over producing, we charge our ESS rather than exporting it to PG&E for pennies.  Then, rather than importing expensive power at night, we discharge from our ESS.  The way we configure ESS for savings is to look at the average nights usage and install enough battery storage to cover it (usually 70-80% utility offset) or we look at maximum nighttime usage to get a higher utility offset (80-85%).  This simplified ESS with solar makes PG&E’s NBT a great savings opportunity for homeowners and allows more control over fixing a home’s utility costs.  The disadvantage of this system is that when the grid is down, the ESS does not provide any solar power to the home. (This is by design. The solar panel inverters shut off when the grid is down so power is not fed back to the grid, putting utility workers at risk.)


A back-up ESS solution offers all the benefits of the ESS designed for savings with the added benefit of providing power when the grid is down.  At my home I installed a back-up ESS in April of 2020 after the frustration of running a portable generator through the Kincade fires when our power was out for days.  About 6 months after I installed it, a car ran into the power pole near our home.  My wife never knew we lost power, and after the power was restored, I walked around the neighborhood advising neighbors the power was up and they could turn off their generators.


We need a few additional components, as mentioned above, for a back-up ESS solution.  The first is a controller or grid disconnect, which disconnects the ESS from the utility ensuring we do not back-feed the grid. (This makes it safe for Utility lineman to repair lines.)  We need additional storage since in addition to discharging the battery to cover nightly usage like with a savings battery, we want battery reserves to cover our needs if the grid goes down and the sun is not shining on the following day (designing for Murphy’s Law).  Installing a protected loads panel or PLP also offers a good design for backup.  At my house I have most of my home’s load on my PLP but have left my hot tub, and electric car off my PLP since the last thing I want to happen in an outage is to transfer the power in my home’s ESS into my car battery or keep my hot tub hot at the expense of running my refrigerator.


At First Response Solar, due to NBT, we are almost exclusively installing ESS with solar these days.  As part of the initial consultation, we work with you to discuss the options of savings vs back-up ESS.  Having both options allows us to provide the proper solution for your home, without forcing the solution.  With almost a 60% increase in PG&E rates over the past 3 years, isn’t it time to take control of your energy needs?

Dylan Mathias

Owner, First Response Solar


License #: 1039876


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