UC San Diego

In many jurisdictions, policy-makers are seeking to decentralize the electric power system while also promoting deep reductions in the emission of greenhouse gases (GHG). We examine the potential roles for residential energy storage (RES), a technology thought to be at the epicenter of these twin revolutions. We model the impact of grid-connected RES operation on electricity costs and GHG emissions for households in 16 of the largest U.S. utility service territories under 3 plausible operational modes. Regardless of operation mode, RES mostly increases emissions when users seek to minimize their electricity cost. When operated with the goal of minimizing emissions, RES can reduce average household emissions by 2.2-6.4%, implying a cost equivalent of $180 to $5160 per metric ton of carbon dioxide avoided. While RES is costly compared with many other emission-control measures, tariffs that internalize the social cost of carbon would reduce emissions by 0.1-5.9% relative to cost-minimizing operation. Policy-makers should be careful about assuming that decentralization will clean the electric power system, especially if it proceeds without carbon-mindful tariff reforms.