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The weekend read: Energy storage efficiency and prices determine economics

The weekend read: Energy storage efficiency and prices determine economics

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The weekend read: Energy storage efficiency and prices determine economics


From pv magazine 06/2022

Based on available information on system performance and pricing research conducted by pv magazine Germany, the following analysis looks at the efficiency of different solar plus storage systems available on the residential/commercial market in Germany. The System Performance Index (SPI) was developed by researchers at HTW Berlin and allows for comparison of systems across two performance classes. This year, 21 systems participated, all of which can be found in the market overview. One manufacturer, Kostal, limited itself to having its own systems listed via the wholesaler EWS.

In the smaller power class, up to five kilowatts, the hybrid inverter Fronius “Primo GEN24 6.0 Plus” came out on top, together with the BYD “Battery-Box Premium HVS 7.7”. In the larger power class up to ten kilowatts, the “Power Storage DC 10.0” from RCT Power – also last years’ winner – achieved the highest SPI value with 95.1%.

In general, the HTW Berlin researchers recorded a positive development in the higher power class, and a number of systems that are close together in terms of performance. Six systems achieved an SPI of more than 93%, but in 2020, only one battery storage system managed this. For the smaller storage systems, an SPI value of 92% or more corresponds to efficiency class A. For storage systems up to 10 kW, an SPI value of at least 93.5% is required.

On average, system efficiency has increased in both size classes since 2018, but the researchers still see striking differences between systems available on the market. For example, the overall losses of the less efficient products were more than twice as high compared to the top storage systems. Manufacturers also provided efficiency data for 284 products in the market survey.

The researchers used an example, an AC-coupled system in a residential building with an electric car and heat pump, to illustrate the impact that average efficiency can have on cost savings from storage. The savings potential results from the avoided grid purchase of electricity at €0.32 ($0.34)/kWh, and a feed-in tariff for rooftop generated power of €0.065/kWh.

In this example, consumers without a PV system would have to purchase 9,363 kWh per year for €3,000. A 10 kW PV system without battery storage allows for savings of €1,360 per year. Adding battery storage of 10 kWh and an AC system utilization rate of 85% increases this annual saving to €1,950. If the system utilization rate is only 65%, that’s €120 a year less in your wallet.

The AC system utilization factor is the ratio of the AC output of the battery system to the AC energy input. The system utilization factor thus includes standby consumption and winter trickle charging. “As a rule of thumb, you can say a good AC-coupled lithium storage system gets 80% to 85%,” says HTW Berlin’s Johannes Weniger. This means that of 1,000 kilowatt-hours of photovoltaic electricity that flowed into the storage system over the year, the customer receives up to 850 back. The remaining kilowatt-hours are losses, or have to be offset against the grid purchase of the storage system. In less efficient systems, only 650 to 700 kilowatt-hours can be effectively used.

While the AC system utilization factor directly describes the energy losses, the SPI is an economic parameter that also takes into account electricity prices and compensation and is used to make DC and AC systems comparable. If the savings in the example with an ideal system are around €2,055, and the SPI of the real system is 95%, only 95% of the ideal value of €2,055 can be saved; i.e. the previously stated €1,950. One percentage point drop to the SPI correlates with €20 less revenue per year in this example. That may not sound like much, however, with an observation period of 10 years for a storage system, it is already €200. With an SPI difference of 5%, it adds up to €1,000 over 10 years. For situations with different consumption and dimensions, however, the absolute figures differ from the example calculation.

BYD’s battery box was among the most efficient systems in pv magazine’s survey. Overall system efficiencies have increased since 2018, but there are still striking gaps between some products available on the market. Image: BYD

System prices

The potential savings are offset by the investment costs, which are ultimately reflected in stored electricity cost. According to an evaluation performed by RWTH Aachen University, the average price for a residential storage system between five and 10 kilowatt hours in 2021 was around €1,000/kWh, including power electronics and sales tax. Prices had thus fallen by around 8%, according to RWTH. While this figure for residential storage below 5 kWh was €1,400, systems larger than 10 kWh had a median price of about €870/kWh.

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This is based on data from 2021, which does not yet reflect worsening supply chain conditions this year. In the pv magazine market overview, we collected price data from April 2022 and compared it with that of previous years. Energy Depot Swiss, ET Solar Power, neoom and Tesla have given us non-binding price recommendations for publication, and we have received non-public system prices from five other participants. For many other systems, we have determined a realistic sales price through our own research, often including the other necessary components for the system, such as a suitable energy manager, an energy meter or cabling, and taking into account a corresponding installer margin. We only consider total systems – that is, systems consisting of batteries and inverters. In order to make hybrid inverters and battery inverters comparable, we have deducted a power-dependent lump sum for hybrid inverters, which corresponds to the value you would have if you also connected a solar generator. For AC systems, an additional solar inverter is also required.

The average gross sales price per kilowatt hour for 135 systems was €956, with a range from €453 to €1,855. The range can also be explained by the different rated outputs and functionalities. For example, it usually costs extra if a system is to have emergency power capability. Last year, we calculated an average price of €896 in this way. So the average price has risen by 7%. However, since electricity prices have also risen sharply, the impact on the economy is likely to be small.

To be able to assess the economy in comparison, we have calculated electricity storage costs using the prices and the information provided by the manufacturers on warranty conditions. This is the cost of one kilowatt-hour of electricity that is stored and retrieved. We assume 300 cycles per year. The result is a value of what it costs to store and retrieve electricity under optimal use.

The hybrid inverter from Austrian manufacturer Fronius, in combination with BYD’s Battery Box Premium product, was the top performing system in the class up to 5 kW. Image: Fronius International

Service life

We base the cost of electricity for storage on the guaranteed service life, for which a quasi-standard has been established. 97% of products that include batteries offer 10-year warranties. Alpha ESS offers 15 years, and the rest offer five years or have chosen not to specify. For 90% of products, manufacturers guarantee 80% remaining capacity at the end of the warranty period. Senec offers 100%, the rest enter the race with 70%, or have waived more precise specifications.

Occasionally, better warranty conditions apply in Germany than in other European countries due to the subsidy guidelines. For 164 systems, the manufacturers offer a full system replacement instead of a current value replacement, though this does not mean that the manufacturer is obliged to deliver a new system. In any case, it is advisable to read the exact wording of the warranty text. Full replacement should mean that the customer can operate a functioning storage system with more than 80% capacity until the warranty period expires and does not just receive compensation for the residual value.

Taking all these parameters into account, the mean price of our 135 quotations is €0.38/kWh of stored electricity until the end of the warranty period. The average price has thus increased by 9% compared with last year.

The cheapest stored electricity cost, according to the graph, is €0.18/kWh for Goodwe’s 5-kilowatt, 15 kilowatt-hour system. A common combination of approximately 10 kW of output power and 10 to 15 kWh of capacity is priced from €0.23/kWh of stored electricity for manufacturers from the far east, and from €0.30/kWh among western manufacturers. However, these comparisons must always take into account that the different functionalities, especially with regard to sector coupling and emergency power capability, are not taken into account. Neither are possible differences in efficiency. Here, the calculation is based on the assumption of an ideal, loss-free system, since, except for the systems participating in the storage inspection, the efficiency cannot be estimated. The top three systems from this year’s HTW analysis are €0.37 and €0.38/kWh.

There is basically no change in the economics of battery storage compared to previous years. If the electricity purchase costs for a household are €0.33/kWh, and one is compensated €0.07/kWh for solar electricity fed into the grid, the storage system can only contribute positively to the return on investment if the stored electricity cost is below €0.24/kWh. However, if we assume that the storage units last longer than the warranty period, for example 15 years, the costs we calculated are reduced by one-third.

Furthermore, in addition to meeting consumers desire to contribute to the energy transition, storage provides electricity price certainty. If one assumes that electricity prices will rise, one can also accept higher stored electricity costs from an economic point of view. However, one can only really assess these effects in a more complicated scenario that also takes the tax into account. Consumers will have to consider whether the effort is worth it, since in the end it is usually not more than plus/minus €100 per year that make the difference in terms of economic efficiency in absolute terms. Regardless of whether one optimizes economically, or for self-sufficiency, getting the system dimensions right must be a primary concern. 

HTW efficiency classes
HTW Efficiency class SPI (5 kW) SPI (10 kW)
A ≥ 92% ≥ 93.5%
B ≥ 90% ≥ 92.5%
C ≥ 88% ≥ 91.5%
D ≥ 86% ≥ 90.5%
E ≥ 84% ≥ 89.5%
F ≥ 82% ≥ 88.5%
G < 82% < 88.5%

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