Solar combined with battery storage can help low-income housing

By Daniel Cusick | 10/14/2015 08:09 AM EDT

Residents and owners of multifamily residential buildings can reap sizeable benefits by adopting solar-plus-storage technology that allows energy from the sun to be harnessed and held for use during emergencies or for grid stabilization, according to a new analysis from the Clean Energy Group.

In a first-of-its-kind study evaluating the economics of advanced energy technology on high-density, low-income housing, the Vermont-based nonprofit found that vulnerable populations — including senior citizens, disabled people and low-income families — would see reduced energy costs and better electric reliability from the deployment of rooftop solar with battery storage.

Such systems, also termed "solar+storage," can provide critical energy supply during grid outages and deliver essential power to elevators, heating and cooling systems, water pumps and other equipment that are essential to the daily operation of multistory buildings, experts said.


When such systems fail, as occurred along the East Coast during Superstorm Sandy in 2012, residents and workers are vulnerable to a variety of health and safety risks, while governments face much higher costs and logistical hurdles to restore and maintain public services.

Clean Energy Group President Lewis Milford, a co-author of the study and nonresident senior fellow at the Brookings Institution, said that Sandy and its aftermath made clear that installing solar-plus-storage on large, low-income residential buildings "can mean the difference between safety and tragedy."

Cheaper, more reliable power

But, he added, market analyses for three major U.S. cities — New York, Chicago and Washington, D.C. — show that power-plus-storage makes good economic sense for developers and owners of apartments and other multifamily dwellings by helping avoid expensive utility demand charges that often exceed the value of the electricity itself.

"We know from experience that advanced energy technologies are adopted quickly on the high end of the economic spectrum, mainly in the private sector," Milford said in an interview. "But clearly the technology works for everyone. So what we’re saying is let’s try to bend the acceptance curve of this technology downward to serve public purposes right now, not 10 years or 20 years from now."

In a 36-page report evaluating the costs, benefits and economic rate of return of solar-plus-storage in those same three major cities, Clean Energy Group found that the technology can provide the same or even better outcomes than energy efficiency measures or stand-alone solar power systems.

This is especially true in regions of the country where owners of energy storage systems can be compensated for grid services, or helping maintain the alternating current (AC) frequency on the grid during peak and off-peak demand cycles.

"In some cases, the addition of batteries improves affordable housing project economics by generating significant electric bill savings through reducing utility demand charges and creating revenue by providing grid services," the report said.

Payback comes faster in some cities

Under Federal Energy Regulatory Commission rules, owners of energy storage systems can receive payment for sending supplemental power to the grid from batteries or fly wheels when signaled by regional transmission operators or utilities.

The establishment of this "frequency regulation market" has stimulated the expansion of battery storage systems across the country, but especially in the PJM Interconnection LLC grid covering much of the eastern half of the United States, including the three major cities studied by the Clean Energy Group.

By fully tapping the grid services market, owners of solar-plus-storage systems installed on large residential buildings can recoup their capital expense well within the expected life of the project, and sometimes more quickly than if they build stand-alone solar systems.

In Chicago, for example, the analysis found that a 200-kilowatt stand-alone solar system costing $493,000 would take more than 20 years to pay off through standard energy savings. But the same solar system combined with a 100-kW/50-kilowatt-hour lithium-ion battery, while costing $113,000 more to install, would pay for itself in less than 12 years when factoring in revenue from the sale of renewable energy credits (RECs) and other government incentives.

Analyses done in D.C. found more comparable rates of payback between stand-alone solar and solar-plus-storage systems, while policy conditions in New York actually lengthened the period of payback for solar-plus-storage by as much as 10 years.

But the benefits of providing backup power in such high-density, high-demand energy markets like New York and D.C. make the solar-plus-storage projects worthwhile, the authors said. And key policy changes in New York could substantially reduce the payback period for building owners while cutting tenants’ power bills by hundreds of dollars.

Robert Sanders, a co-author and senior finance director at Clean Energy Group, noted that solar-plus-storage on multifamily housing also helps to meet a more fundamental priority — the safety and security of residents. "In markets where these favorable economics exist, there is no excuse to leave low-income and vulnerable people at risk from power outages in the future," he said.