Are Residential Battery Systems a Waste of Money?

How to properly size a residential battery

In short: It can be. When planning a PV system, the common advice is to install as many solar modules as possible. Given the costs of panels relative to installation costs, it makes sense that “bigger is better”. But for batteries, it’s not so simple. From an supplier’s POV, there is an incentive to give less than optimal advice – a bigger battery means higher revenues. In this article I’ll lay out a better framework based on research from renewable energy experts at University of Applied Sciences Berlin.

The common advice for battery sizing is wrong

The outdated rule of thumb for storage sizing is as follows: Match storage capacity to installed PV capacity, i.e. 1 kWh per kWp. So if you have a 10 kWp PV system on your roof, you ought to buy a 10 kWh battery to accompany it.

But that doesn’t take into account energy consumption. Even on very sunny summer days, there needs to be enough surplus energy produced to charge the battery. Even for a small battery–if there isn’t sufficient power to charge it, it’s just an unused, expensive asset in the basement.

Three better rules

The reason we use batteries is to charge them with excess energy during the day when the sun is shining. At night, we discharge them; by morning, the battery should be empty.

Here are three rules of thumb to size the battery:

• Rule 1 tells us whether we produce enough surplus power.

• If so, rules 2 and 3 determine the size of the battery based on PV capacity and energy consumption.

As an example, let’s size the system for a single-family home that consumes 6,000 kWh/year:

• Rule 1: Have enough surplus solar power. Make sure your PV system generates enough excess energy to justify battery storage. As a general rule, you should have at least 0.5 kWp of PV capacity per 1000 kWh/year of electricity consumption.
  
  Our example: For 6,000 kWh/year of consumption, we need at least 3 kWp of PV capacity to justify battery usage at all.
  

• Rule 2: Limit battery size relative to PV capacity. Oversizing won’t help—every excess kWh of storage yields diminishing returns. The storage capacity should not exceed 1.5 kWh per 1 kW of PV capacity.
  
  Our example: At 3 kWp of PV capacity, the battery should not exceed 4.5 kWh.
  

• Rule 3: Match storage capacity to nighttime electricity use. Because we want to discharge the battery at night, the storage capacity should mirror our average nighttime electricity use. The university researchers converted that notion to kWh of storage per kWh of consumption. Their guideline is to not exceed 1.5 kWh per 1000 kWh/year of consumption.
  
  Our example: For 6,000 kWh/year of consumption, the storage capacity should not exceed 9 kWh.

Our example home has some surplus power available. But it won’t be enough to fully charge a battery of the size that rule 3 recommends. So we decide to install a 4.5 kWh battery. As the whole point of this rule set is to avoid paying for excess storage, we pick always pick the smaller size of the two suggested sizes.

If we wanted to use a bigger battery, we could install a larger PV system. At 6 kWp, rule 2 recommends a 9 kWh battery, the same size that rule 3 advocates.

Production vs. consumption

Here’s an overview of the appropriate usable storage capacity for numerous combinations of PV capacity and consumption. I calculated both rules for each combination and then picked the lower storage capacity:

Note: The outdated rule of thumb of 1 kWh storage for each kWp of PV capacity would oversize the system in 23 out of 56 combinations, or 41%.

When Oversizing Makes Sense

No rule without exceptions. If you plan to upgrade your energy system with additional AC, heat pump or an EV, a larger storage system may be worth the investment. But the benefits of a bigger battery diminish rapidly. Thinking bigger is always better is a trap when it comes to battery sizing, and is a waste of money.

Conclusion

The traditional advice for sizing residential batteries is wrong. It does not take into account the necessary surplus energy that we need to charge batteries during the day, in addition to powering the home. And it ignores energy consumption. In almost half of the different combinations of solar production and storage, the traditional advice would have lead to oversized battery systems. It benefits battery suppliers, but homeowners don’t need to invest as much to benefit from residential battery storage.