Hawaii has increased its PV solar systems in recent years. The energy is generated mostly between 10 am and 2 pm, whereas peak demand is later in the evening. Battery systems have been installed to shift a part of the solar energy to peak hours.
Here is a description of a PV solar/Battery system combo.
In Kauai, Hawaii, there is a 52 MWh of battery system, supplied by Tesla, combined with a 13 MW field-mounted PV solar system. Tesla and its subsidiary, Solar City, own the entire installation.
If daily solar production is 13 MW x 0.5 x 4 h = 26 MWh from 10 am to 2 pm, and 10 MWh could be used during that time, then 16 MWh would need to be shifted to peak hours. About 16 - 18% (loss) = 13.1 MWh would arrive at user meters, less transmission and distribution losses.
Battery system losses: 7%, charging + 7%, discharging + 3%, DC to AC conversion + 1%, balance of plant* = 18%.
* Electricity for lighting, HVAC, electronics, etc., drawn from a nearby distribution grid.
About half, or less, of the battery capacity, MWh, is available for daily energy shifting. Thus, if 25 MWh is available each day, shifting 16 MWh is a reasonable “day’s work”. Total shift would be 13.1 x 365 = 4689 MWh/y at user meters, less transmission and distribution losses.
Turnkey capital cost of the battery system 52000 kWh x $400/kWh = $20.8 million, based on Musk, CEO of Tesla, quoting battery packs at $250/kWh, and turnkey systems at about $400/kWh.
Just to recover capital costs, the cost of the energy shifting is ($20.8 million x 150/400)/(4689 MWh/y x 40 y) = $41.59/MWh, or 4.16 c/kWh, based on a life of 40 years of the balance of plant, plus ($20.8 million x 250/400)/(4689 x 15 y) = $184.83/MWh, or 18.48 c/kWh, based on a life of 15 years of the batteries.
If other costs, such as interest, return on investment, taxes, insurance, O&M, repairs and replacements, etc., were included the cost likely would be about 25 to 30 c/kWh. This cost likely would be reduced by subsidies of up to 50%.
Revenues from the sale of electricity, and revenues from capacity and ancillary services the batteries may provide would enable Tesla to sell STEADY electricity at 13.9 c/kWh under a long-term contract.
NOTE: Hawaii has the highest household electric rates in the US, about 33 c/kWh in 2017, whereas the US average was 11 - 12 c/kWh and the New England average was about 18 c/kWh, including taxes, fees and surcharges.
This cost may be all, or partially, offset, because a grid operator would charge the utility less for capacity charges, due to the utility shaving its demand on the grid during peak hours; these hours usually have high capacity charges.
Also, the wholesale price of electricity is usually higher during peak hours than during other hours. Utilities have power purchase agreements, PPAs, for almost all of their electricity supply. However, if a utility would have a need to buy some of its electricity on the wholesale market, then that utility would reduce its wholesale purchases during peak hours, due to the supply from the battery system.
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