Economic feasibility of residential behind-the-meter battery energy storage under energy time-of-use and demand charge rates

In this paper, the economic viability of using behind-the-meter battery energy storage (BMBES) for time-of-use (ToU) energy arbitrage and demand charge (DC) reduction is compared. The study focuses on residential applications where the BMBES is installed at end-users premises and used for daily cycling under ToU and DC plans for saving on monthly electricity bills. Under the current U.S. electricity prices, different case studies of using two BMBES systems are discussed. The two systems are analyzed with practical load profiles of a two-story American family house. A number of ToU and DC plans from different utility companies and with different pricing structures are applied. First, the mathematical formulation of the monthly savings in the electricity bill is presented to determine the different technical and economic factors that affect the savings. Then, the System Advisor Model (SAM) software tool, which provides a techno-economic model of battery storage systems, is used for hourly, monthly, and annual analysis. In each scenario, the economic performance of the BMBES systems in terms of the cash flow diagram, net present worth and payback period is presented and discussed. Based on the analysis results, a set of implications on the profitability of the ToU energy arbitrage and DC reduction schemes under current prices of energy storage and electricity rates are stated. Such implications can be beneficial to customers and practitioners for selecting and designing residential electric rates.