How a Home Battery Could Save the Grid

As good and cheap as solar and wind power are for generating clean electricity, the intermittency of their power generation creates a problem. You generate too much energy when you don’t need it, and don’t have enough energy when you do need it. That’s why energy storage is key for a future built on renewables. We have the technology available today to build out massive, grid scale energy storage systems using lithium ion batteries, flow batteries, and pump hydro storage systems, but the logistics around building those can be slow and costly. There’s a potentially faster way to build out large scale energy storage … do it virtually. About a year ago I had a Tesla Powerwall installed at my house. Not only has it been helping to stretch my solar power generation into the night, but I’ve been participating in a virtual power plant system with over a thousand other homeowners in my area. Let’s take a look at my experience with my Powerwall and if virtual power plants can be a viable path for the future of energy storage.

So about a year ago I had my Tesla Powerwall installed, which I did a video on that detailed my installation experience. If you haven’t seen that video, I’d strongly recommend checking it out because I’m kind of the poster boy for what not to do. Bottom line: I had a horrible experience with my installer. However, not too long ago I had a Span smart electric panel installed, which I also have a video on if you’re interested, and they helped to clean up and fix all of the Powerwall installation problems that I had.

Since November of 2020 my Powerwall has been helping to shift a decent amount of my excess solar production into the evening and some of the night. I only have one Powerwall, which isn’t enough to contain all of my excess production during the summer, so I’m still exporting a large amount of electricity back into the grid. In my area I have full net metering, which gives me a 1 to 1 payback. For every kWh I put into the grid, my utility wipes off 1kWh of use from my account. Each time I mention this, I inevitably get someone who doesn’t live in my area commenting that I’m mistaken about that … and I’m wrong, which I find funny. They typically reference what net metering pays back in their area. It’s not a universal credit, so you’ve got to look into it for your area. Mine is one to one. I get 100% of the value back, which in essence makes the grid act like a giant battery for me, cost-wise. That actually makes home batteries look like a bad return on investment in my area.

And that brings up the giant question of why someone would want to go through the trouble of getting a home battery installed. Is it worth it? The answer to that is going to vary based on your goals, but that basically boils down to a combination of three motivations: saving money, environmental concerns, and emergency backup & energy independence. You may only care about one of those three motivational buckets, or all three, so you have to evaluate this based on that. For me, I’m most concerned about the first two, but don’t want to break the bank doing so … so the money angle is still somewhat a part of it.

Which brings me back to net metering. If I did receive a partial net metering rebate, like a lot of you have brought up in comments on previous videos, like a utility only paying me wholesale prices for each kWh I put into the grid, then a battery would start working its price off by getting me back the full value of each kWh (including the lost delivery fees) by holding onto the energy for myself. We also don’t have time of use rates in my area, which is another way home batteries can help pay for themselves. This helps you pay for electricity from the grid when it’s cheap, like in the middle of the night, and use electricity from your battery when the grid is most expensive, typically in the evenings. Again, in my area … this is another knock against a battery investment. From a pure cost perspective, I get no financial gain from time shifting my energy use or hoarding the electricity generated from my solar panels for myself.

But that’s where virtual power plants come in.

In New Hampshire, Massachusetts, and Connecticut there’s a program that’s available through National Grid and Eversource, my utility. Homeowners who have home batteries or inverters from Enphase, Generac, Sol-Ark, SolarEdge, Sonnen, and Tesla can enroll in the Connected Solutions program. You may have seen or heard of similar programs like this springing up around the world. One of the first ones I heard about was Tesla’s virtual power plant system they set up in Australia. Just recently Tesla announced that they’re expanding that system.¹ By linking together thousands of smaller home batteries using software, they can create one massive virtual battery. None of the test VPP systems that I found rival the largest purpose built grid scale batteries out there. For instance, Tesla’s Hornsdale Power Reserve can supply 150MW of power, while many of these VPP systems are currently only a few MW.

In my area, there are 1,264 systems enrolled in the Eversource Connected Solutions program. When you sign up, you’re allowing the utility to use your battery for load shedding, which helps in moments of peak demand. The program’s in effect during the summer months, between July 1st and September 30th, when electricity use is the highest. Each event can last up to 3 hours and will fall between 2:00pm – 7:00pm. They limit the number of events per participant to 30-60 per summer. And the incentive is that you’ll receive $225 per the average kW your system provided into the grid. Not kWh, but kW.

In my case I have one Powerwall, which means I’m contributing a max of about 5.8 kW, so obviously my average will be somewhere below that because it’s going to fluctuate and I’m drawing from the battery at the same time. They only take excess capacity that my home wasn’t using at the time. If my house was pulling 2 kW for itself, then they can only pull about 3 kW, which hits my single Powerball’s capacity. This past summer I saw 34 events in my logs. If you’re curious what this looks like, here’s one from July 20th. You can see how my battery hit 100% charge from my solar panel production at around 11:00am. The rest of the afternoon my house was running completely off of solar power with some excess going off into the grid. Sometime before 5:00pm my battery starting discharging whatever I wasn’t currently using at the moment. It worked out to about 3.4 kW of power output for this session. Again, not kWh, but kW output. By about 7:00pm the event was over and my battery went back to normal operation. That meant sitting at its minimum charge level, which I had set to 20% during the summer. Overall, we never noticed that any of this was happening in the background day-to-day over the summer.

Based on the averages I’ve seen cited, you can probably expect around $1,000 paid out for a single Powerwall, minus Tesla’s cut they take to manage the program. I’ve received one check so far for $772. My Powerwall will be part of the system for 5 years, so I may end up getting around $4,000 total once the program is over. Given that a single Powerwall currently costs about $8,500 plus installation, this isn’t going to pay for itself. But it’s a decent dent into the cost of the system. The more battery capacity you have, the more you can earn. If I had two Powerwalls, the payback could end up covering one full Powerwall plus a little bit of the second.

I asked Eversource how the system performed this year in my area. Like I mentioned, there’s 1,264 homes participating, which ended up providing 2MW of load shedding to the grid. And there was an average of 5kW load shed per battery installation. That means an average payout of $1,125. What I find interesting is that Sonnen battery owners get the full amount, but Tesla Powerwall owners end up losing a small percentage to Tesla for maintenance fees.

The most interesting part of this particular program is that it was created by the utilities in an effort to save themselves money, and the payouts are coming from the benefits the program provides. Pilot programs like this have shown a lot of promise. Green Mountain Power launched a similar program in Vermont that paid back in a big way. In 2018 the network of batteries reduced consumption during New England peak hour, and saved about $600,000 in capacity fees. In 2019 after adding more batteries to the system for about 10 MW of capacity, it saved about $900,000 from a single hour of operation in a late July peak. So you can start to see why utilities are willing and able to offer to pay customers to contribute to systems like this. In fact, National Grid in Rhode Island offers $400 per kW during summer events in the Connected Solutions program. Almost makes me want to move to Rhode Island … almost.

And in Massachusetts, if you install a battery and solar panel system under the new SMART program, you can be enrolled in the SMART battery adder, which will pay you an additional amount of money based on the size of your solar panel system.² For instance, if you have an average system of 8 kW here in Massachusetts, you could be paid an additional $237 to $732 a year. And it pays out over the course of 10 years, which means an additional $2,000 – $7,000 on top of the VPP program. So in my area it may not make sense financially speaking for time shifting energy use or net metering shortfalls, but through those other incentive programs you could erase an additional $6000 – $12000 for a single battery, depending on your solar panel and battery capacity. That’s in the realm of covering the cost of the battery and installation.

But all of that brings me back to those three main motivations: saving money, environmental concerns, and emergency backup & energy independence. As I just went through, cost-wise in my area, you could make a battery make some financial sense depending on your specific setup. For environmental concerns, it makes perfect sense to maximize your solar production to try and reduce your home’s carbon footprint. And by participating in programs like virtual power plants, you’re helping your local community by reducing the need for dirty coal or natural gas peaker plants spinning up as much. And because of your battery storage, you’re helping to reduce the effects of flooding the grid with too much renewable energy in the middle of the day when it isn’t needed. That helps maintain a healthier grid.

That last area of energy independence and emergency backup is a little trickier. It’s all about what you’re willing to pay to achieve those goals. It’s about quality of life. When I’ve talked about blackouts in previous videos, a lot of folks, mainly in Europe, leave comments asking if blackouts are really that bad here. It really depends on where you live. I’m in the northeast of the US and we have a pretty old grid infrastructure, which is mainly power lines above ground on telephone poles. We sometimes get hurricane force winds with winter nor’easter storms. Freezing rain or very heavy snow that can stick to the lines and weigh them down. Or falling branches from trees that take out the power lines. In my area, it’s not that bad, but does happen once or twice a year at most. In fact, since I’ve had the Powerwall there have been three blackouts. Two were under 5 minutes and the third lasted for about 2 hours. With the Powerwall we barely noticed. I have friends a few towns away that have the power go out half a dozen times in the winter. It really depends on where you live. I know families that have installed natural gas or diesel generators for whole home backup that cost thousands of dollars. And they serve only one purpose, electricity in a blackout. Batteries can do that plus save you a little extra money along the way.

So do I think it’s been worth it for me. Yes, but I’ve got a special case here. My Powerwall was part of the Tesla Referral Program, so I only paid for installation. But my wife and I are actually in the process of building a new home, which we’ll be moving into in about a year or so. (Fingers-crossed.) For that house, I’m 100% going to be installing solar panels and a battery system. In fact, I want a bigger battery system than I have here. So I’ll be putting my money where my mouth is. In my area and for my motivations, it’s a big yes. But you’ll have decide that for yourself.

And if you’re interested in researching solar panels and batteries for yourself, I’d strongly recommend checking out Energysage as a great resource. They have great articles and reviews of products and you can use Energysage to find a local installer. I used Energysage to find a solar installer on my current home and loved the experience. After that I joined their affiliate program, so if you live in the US, you can use my portal to get free quotes from local, reputable installers in your area. Check out the link in the description. So far there’s been over 5 MW of solar installed through my portal. That’s like taking over 18,000 cars off the road. I love that.