SOLAR PLUS BATTERY STORAGE

CLIENT

CONFIDENTIAL: Large investor-owned utility in northeast U.S.

CHALLENGE

A large investor-owned utility in the northeast U.S. needed to understand the likely economics and adoption of solar PV and combined solar PV plus battery storage systems in their service territory They needed to facilitate resource planning and to understand the relationship between electricity rates, customer value, and market potential (for possible investment purposes).  They did not have the tools needed to understand the complex interaction between battery storage and solar PV systems from an economic or adoption standpoint.

approach

Lumidyne staff (Cory Welch), while employed by Navigant Consulting, developed the modeling architecture and guided creation of a model that could calculate the customer benefits and forecast adoption of combined solar PV and battery storage systems. The model employed a linear program (LP) that simulated the optimal dispatch of a battery storage system for any given customer load profile, electricity rate, battery configuration, or solar PV production profile. The battery dispatch LP integrated with a Bass diffusion model of system adoption through application of a multi-attribute nested-logit market-share model applying random utility theory. Mr. Welch also facilitated creation of a Discrete Choice Analysis survey, conducted by a marketing firm, to statistically estimate the parameters of the logit market share model. The resultant model was used to calculate the value to the customer of different system configurations under various assumption regarding system cost trajectories over time and for several postulated electricity rates. A discounted cash-flow optimization model also simulated a likely system lease price from a third-party-owner. Parameters of the diffusion model were calibrated using historical PV adoption data and nonlinear parameter optimization algorithms.

RESULTS

The calibrated model was used to forecast adoption over a 20-year time horizon under a range of assumptions regarding future electricity rates and structures. The client used the results of the forecast to inform their investment strategy, to plan for future capacity requirements, and to understand the likely impact of various electric rate structures.

BASS DIFFUSION, SYSTEM DYNAMICS, & NESTED LOGIT MARKET SHARE MODEL

The analysis incorporated Bass diffusion theory in a System Dynamics modeling construct – integrating results of a Discrete Choice Analysis to feed nested logit market share parameters.

OPTIMAL BATTERY STORAGE DISPATCH

The model calculated value to the customer after simulating the optimal dispatch of a battery storage system, considering multiple electricity rate structures (e.g., net metering, TOU, peak demand charges). (Image Source: Welch 2017)

Welch, C. "Making the Case for Using Analytica for System Dynamics Modeling: A Reference Guide and Comparison with Classical Platforms." International System Dynamics Conference. Cambridge, MA. July 2017.

ADOPTION FORECAST SCENARIOS

The model was used to forecast solar PV and combined solar PV and battery storage system adoption over a 20-year horizon under many scenarios on system cost trajectories and electricity rate structures.

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