Lawrence Berkeley National Laboratory

Compensation structures for residential solar are evolving toward a model that incentivizes using battery storage to maximize solar self-consumption. Using metered data from 1,800 residential customers across six U.S. utilities, we show that batteries operated solely in this manner provide customer bill savings up to $20-30 per kWh of storage capacity annually, but virtually no grid value. Relative to market-based dispatch, this value gap remains across customers and will become more severe over time, insofar as increased renewable energy penetration leads to more volatile wholesale prices. This inefficiency primarily stems from residential batteries largely sitting idle on peak days. We show that incentivizing storage customers to respond to market prices, particularly on peak days, would enhance both private and public value. Unconstrained grid discharging increases exports to distribution networks, but 50-70% of the potential market value could be achieved without materially degrading solar self-consumption levels or increasing local grid stress.