Applied Energy 213 (2018) 11–21

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Applied Energy
journal homepage: www.elsevier.com/locate/apenergy

Solar plus: Optimization of distributed solar PV through battery storage and T

dispatchable load in residential buildings
⁎
Eric O'Shaughnessya,b, , Dylan Cutlera, Kristen Ardania, Robert Margolisa
a
National Renewable Energy Laboratory, United States
b
University of Wisconsin-Madison, Nelson Institute for Environmental Studies, United States

H I G H L I G H T S

• Analysis of residential PV optimization with battery storage and load control.

• Economic analysis of PV optimization in a variety of rate environments.
• Findings show that load control in particular improves the economics of PV.
• Storage and load control improve PV value in challenging rate contexts.

A R T I C L E I N F O A B S T R A C T

Keywords: As utility electricity rates evolve, pairing solar photovoltaic (PV) systems with battery storage has potential to
Solar ensure the value proposition of residential solar by mitigating economic uncertainty. In addition to batteries,
Storage load control technologies can reshape customer load profiles to optimize PV system use. The combination of PV,
Load control energy storage, and load control provides an integrated approach to PV deployment, which we call “solar plus”.
Optimization
The U.S. National Renewable Energy Laboratory’s Renewable Energy Optimization (REopt) model is utilized to
Residential buildings
evaluate cost-optimal technology selection, sizing, and dispatch in residential buildings under a variety of rate
structures and locations. The REopt model is extended to include a controllable or “smart” domestic hot water
heater model and smart air conditioner model. We find that the solar plus approach improves end user eco-
nomics across a variety of rate structures – especially those that are challenging for PV – including lower grid
export rates, non-coincident time-of-use structures, and demand charges.

1. Introduction proposed and implemented residential rate reforms such as time-of-use

The temporal mismatch between solar photovoltaic (PV) system
output and residential electricity demand is one of the primary chal-
lenges to wide-scale residential PV deployment [1–4]. PV output often
exceeds residential electric loads during the day but falls short of de-
mand in the late afternoon and evening when residential load tends to
increase. Grid export – where excess PV output is sold to the electric
grid – has provided an economic solution to this temporal mismatch.
Through grid export policies such as net metering (U.S.) and feed-in
tariffs (Europe, Australia, Asia), customers earn returns from full PV
system output regardless of whether that output is used on site [5,6].
However, grid export rates are declining in many major PV markets
around the world [7,8]. Lower grid export rates incentivize customers
to reduce excess output and maximize on-site PV self-use. Other
(TOU) rates and customer demand charges pose further challenges to
future residential PV deployment [7].
Solar plus storage has emerged as an alternative to grid export in
evolving rate environments [7,9–12]. Energy storage solves the tem-
poral mismatch by storing excess PV output in a battery for later con-
sumption. A growing body of literature and new PV product bundles
indicate that in addition to batteries, load control technologies can
reshape customer load profiles to optimize PV system use [13–19]. We
use a time series optimization model formulated as a mixed integer
linear program to explore the economics of solar plus storage and load
control under different rate structures. The combination of PV, energy
storage, and load control provides an integrated approach to PV de-
ployment, which we call “solar plus”.1

⁎
Corresponding author at: National Renewable Energy Laboratory D.C. Office, 901 D Street NW Suite 930, Washington, DC 20024, United States.
E-mail address: eric.oshaughnessy@nrel.gov (E. O'Shaughnessy).
1
This paper builds on an analysis previously presented in a National Renewable Energy Laboratory working paper: “Solar Plus: A Holistic Approach to Distributed Solar PV.”

https://doi.org/10.1016/j.apenergy.2017.12.118
Received 24 October 2017; Received in revised form 12 December 2017; Accepted 30 December 2017
Available online 11 January 2018
0306-2619/ © 2018 Elsevier Ltd. All rights reserved.
E. O'Shaughnessy et al.
Fig. 1. Customer load shifting through solar plus. Grid net load is the total customer load at the utility meter; negative grid net load reflects excess PV output exported to the grid.
2. Solar plus
In solar plus systems, load control technologies shift electric load to
coincide with PV output (Fig. 1) [16–18]. For instance, PV customers
can manually shift load by using deferrable devices, like laundry ma-
chines, during the midday solar peak rather than in the evening. Solar
plus automates this process by calibrating home devices to maximize
their use of PV rather than grid electricity. Any remaining excess PV
output may be delivered to a battery and then to the grid as a last resort.
Solar plus can improve overall end-user economics by increasing PV
self-use, reducing grid exports, performing grid arbitrage (where cus-
tomers pay TOU rates), reducing demand charge payments (where
applicable), and reducing customer electricity payments.
A variety of home appliances can be included in a solar plus system
such as domestic water heaters, air conditioning (AC) units, heat
pumps, and washing machines. This study focuses on programmable or
“smart” domestic water heaters and AC units (Fig. 2), given that load
control through thermal storage has been shown to have greater im-
pacts than other controllable home appliances [17,19]. Conventional
electric domestic water heaters maintain a set tank temperature by
heating water instantaneously following hot water draws (Fig. 3, top).
Programmable domestic water heaters can preheat water with PV
output then allow the tank temperature to drift down to a minimum
temperature without reheating with grid electricity (Fig. 3, bottom).
Conventional AC units maintain internal home temperatures around
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Applied Energy 213 (2018) 11–21
some target temperature (Fig. 4, top). Programmable units can precool
the home with PV output and allow temperatures to drift up toward a
maximum temperature without re-cooling with grid electricity (Fig. 4,
bottom).
Electric vehicles (EVs) can potentially enhance the value of solar
plus systems [20]. A typical EV has around 30 kWh of electrical storage
capacity [21], far greater than the capacity of current residential bat-
tery offerings and the thermal capacity of smart domestic water heaters
and AC units. EV owners could use this storage capacity to increase PV
self-use by charging vehicles during peak PV output hours. In this sense,
PV optimization is an ancillary benefit of EV ownership. EV ownership
remains relatively uncommon. It is unclear whether PV owners would
be willing to invest in EVs for the purposes of PV optimization. Further,
to the extent that PV optimization is part of the value proposition of EV
ownership, it is unclear how to apportion EV cost premiums between
the added benefits of EV ownership (e.g., lower fuel costs) and the solar
plus capabilities. To avoid speculating about the willingness of PV
owners to invest in EVs, we exclude EVs from our analysis. EV in-
tegration into solar plus systems is a proposed area of future research.
A growing body of research explores solar plus in a variety of
configurations and contexts. The majority of this literature analyzes the
technical capacity of solar plus to increase PV self-use, with limited
economic analysis based on simplifying assumptions about the value of
PV self-use [13–17,22,23]. In a review of this research, Luthander et al.
[18] find that batteries (including EV batteries) generally increase PV
Fig. 2. The solar plus home.
E. O'Shaughnessy et al.
Fig. 3. Conventional domestic water heating (top) vs. smart domestic water heating with preheating and drift functions (bottom).
self-use by 13–24 percentage points, while load control strategies in-
crease self-use by 2–15 percentage points. However, at current battery
costs, some studies argue that load control options optimize PV use
more cost effectively than batteries [14,15,24,25]. More recently, sev-
eral studies have focused on the economic impacts of solar plus, gen-
erally finding that solar plus technologies – especially load control –
provide end-user economic benefits [19,24–28].
The extant literature provides a limited understanding of the effects
of customer electricity rate structure on the economics of solar plus.
Most studies assume flat electricity rates or simple TOU rates with
simplifying assumptions about the value of PV exported to the grid
[16,25,28]. However the customer’s rate structure is a key variable
impinging on both the value of PV and the optimal selection of solar
plus technologies [24]. Our study fills this research gap by exploring the
economics of solar plus under rate structures that vary along three di-
mensions: the compensation rate for excess PV output delivered to the
grid, the timing of peak- and off-peak rates in TOU structures, and the
amount of any levied demand charge. These three rate structures were
identified as characteristics of evolving rate environments that are
particularly challenging for the value proposition of stand-alone re-
sidential PV systems. By analyzing solar plus in these rate structures we
can study how the economics of solar plus change in evolving rate
environments and how solar plus may or may not address rate structure
challenges to the PV value proposition.
Our study offers a further contribution to the literature by being the
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Applied Energy 213 (2018) 11–21
first to apply the U.S. National Renewable Energy Laboratory’s (NREL)
Renewable Energy Optimization Tool (REopt). Other tools have been
developed to study load control and storage for PV optimization, such
as the Lawrence Berkeley Laboratory’s Distributed Energy Resources
Customer Adoption Model [29], TRNSYS 17 [15], and GEDELOS-PV
[14,16]. Several studies develop their own optimization models for the
purposes of specific solar plus-related studies [13,19,22,24,25,27].
These modeling approaches broadly fall into two categories. The first
approach focuses on detailed modeling of the solar plus technologies
and their optimal and coordinated dispatch. The dispatch problem is
typically addressed via heuristic/algorithmic methods [14,15] or dy-
namic programming [13,19] and may incorporate forecasting into
short-term dispatch algorithms [16]. These approaches can accom-
modate complex technology models, yet generally do not consider
system sizing in conjunction with the dispatch. The second approach
considers system size optimization in conjunction with optimal dispatch
[24,29]. Our extension of the REopt model for this analysis incorporates
and improves upon many of the capabilities from these extant models
by integrating detailed models of building systems directly within the
mixed integer linear program. Further, we use the REopt model’s ability
to size systems while considering complex rate tariff designs to perform
concurrent selection, sizing, and dispatch of technologies while con-
sidering the complex tariff environment that these technologies operate
within.
E. O'Shaughnessy et al. Applied Energy 213 (2018) 11–21

Fig. 4. Conventional AC cooling (top) vs. smart AC with precooling and drift functions (bottom).

Fig. 5. Relationship between BEopt and REopt models in the analysis. Customer loads are generated in BEopt and used as inputs in REopt.

3. Methods
REopt is a techno-economic time-series model that provides mul-
tiple technology integration and optimization capabilities [30]. The
objective function of the model is to minimize the life cycle cost of
energy for a single entity by optimally selecting, sizing, and dispatching
from a set of available technologies. For the purposes of our study,
REopt minimizes life cycle energy costs for a residential household by
deploying an optimal configuration of PV, battery storage, smart do-
mestic water heater, and smart AC unit. The model was run with hourly

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E. O'Shaughnessy et al.
timesteps for a full year to enable the life-cycle cost optimization. Pre-
existing REopt PV and battery storage modeling capabilities were used
in this analysis [30], however new models for smart domestic water
heating and AC were developed for this study.
REopt estimates local PV production based on inputs from
PVWatts®, an NREL tool that estimates the energy production of grid-
connected PV systems based on local insolation. REopt’s energy storage
model is a “reservoir” based model that allows energy to be moved from
one timestep to the next, while accounting for inverter, rectifier, and
round-trip efficiency losses. The energy capacity and the inverter ca-
pacity are sized independently in the model, and minimum and max-
imum states of charge are observed in the model. For further discussion
of the larger REopt model formulation, see [30].
The annual energy simulation software Building Energy
Optimization (BEopt) is used to establish modeled electrical/thermal/
hot water loads. The modeled loads are fed into the REopt model which
then selects, sizes (in the case of PV and battery storage), and dispatches
the technologies to meet the calculated loads (Fig. 5). BEopt is a re-
sidential building modeling tool that utilizes the physics based simu-
lation engine EnergyPlus to model all energy flows and interactions
with environmental conditions for residential buildings. EnergyPlus
provides high fidelity building system modeling and enables rapid re-
calculation of the residential loads in different locations. EnergyPlus
has been validated against American Society of Heating Refrigerating
and Air-conditioning Engineers (ASHRAE) and American National
Standards Institute (ANSI) standards and research projects. It has in-
corporated tests outlined in the Building Energy Simulation Test
(BESTest) that have not entered into ANSI/ASHRAE Standard 140.
BEopt builds upon this modeling foundation and provides residential
modeling assumptions as defined in the Building America House Si-
mulation Protocols [31]. BEopt was run at 10-min timesteps for a full
year, and consistency was maintained between the typical meteor-
ological year (TMY) files used for load modeling and TMY solar re-
source data used for REopt PV modeling. The following sections de-
scribe the load modeling in further detail and describe the modeling
approaches for the smart domestic hot water heater and the smart AC
unit.
Throughout this section, let h denote a single timestep. The condi-
tion “for all timesteps” (∀ h ) is applied to certain equations to specify
that the constraint must be met in every timestep.
3.1. Load modeling
We model a representative household based on median values for all
single-family detached homes in the U.S. as documented in the Energy
Information Administration’s Residential Energy Consumption Survey
database. This results in a three bedroom, two bath, 199 m2 home. The
modeled house conforms to the Building America Benchmark design as
defined in [31]. This is generally consistent with the International En-
ergy Conservation Code from 2009, the most widely used energy code
for new construction in the United States. Accordingly, the home has R-
13 walls and R-30 roof (both nominal), 0.37 U-value windows, and a
SEER 13 AC system. The house was modeled with an electric water
heater (0.9 energy factor). While there are certainly cost-effective en-
ergy efficiency measures available to such a homeowner, the current
analysis focused on controllability of loads in association with PV.
There is a large body of literature dealing with the more “static” effi-
ciency analysis that could benefit such a residence. Climatic conditions
are represented by a TMY file for the selected location.
The home’s energy demands – as calculated by BEopt – are dis-
aggregated into cooling load, domestic hot water load, and all other
electrical load. Hot water draw profiles in BEopt are based on the do-
mestic hot water event schedule generator [32]. The disaggregation of
AC and hot water loads allows REopt to dispatch the smart AC or water
heater to meet thermal loads while also shifting the electrical demand
to different periods within the day to increase PV self-use or perform
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grid arbitrage.
3.2. Air conditioner model
Two components are added to REopt to model the smart AC unit: a
simplified AC model and an energy storage component. The simplified
AC model is based on the direct expansion model in EnergyPlus, which
uses performance curves to capture capacity and efficiency impacts of
operation at off-rated conditions. The impacts of varying outdoor dry-
bulb (subscript odb) temperature and entering wetbulb (subscript ewb)
temperature are captured by the bi-quadratic curve shown in Eq. (1),
where y is a scaling factor on the rated performance of the system, T
denotes temperature, and constants a through f are based on manu-
facturer performance data. Two of these curves are implemented in the
model—one for capacity impacts and one for efficiency im-
pacts—enabling accurate calculation of capacity and power consump-
tion at every timestep in the model. Curve coefficients are taken from
[33]. Rated system capacity and efficiency were taken from BEopt. The
available system capacity and associated efficiency are pre-processed
according to the TMY file assuming the indoor setpoint is maintained.
These are subsequently passed to the optimization model, thus cap-
turing the impact of ambient conditions on AC performance.
2 2
y = a + bTewb + cTewb + dTodb + eTodb + fTewb Todb (1)
The remaining performance curves from the full EnergyPlus model
(flow fraction and part load fraction) are not implemented for this
analysis. An additional constraint is added to REopt to ensure that the
cooling load is met in all timesteps:
q
Xtĥ fthp + Xhc ̂ = δ c ∀h (2)
q
where Xtĥ is the decision variable for rated production of a given
technology t in timestep h, fthp is the production factor in each timestep
for technology t (scaling the rated capacity of the AC unit, based on Eq.
(1)), Xhc ̂ is the energy delivered from the energy storage capacity of the
house, and δ c is the cooling load determined by BEopt.
The presence of the AC unit in the model enables REopt to optimally
dispatch the unit to meet the cooling load, yet without an energy sto-
rage element there would be zero degrees of freedom in the constraint
shown in (2), and the AC unit would be dispatched to meet the load in
all timesteps. In order to capture the flexibility of a smart AC unit, we
incorporated an energy storage model to allow the smart AC unit to
store energy through a 19 °C to 23 °C drift (see Fig. 4). The energy
storage model is modeled as a “reservoir” type model where energy can
be stored during one timestep and removed during subsequent time-
steps. Losses for the energy storage are handled by forcing the model to
maintain setpoint, such that the state of charge (SOC) of the energy
storage unit is maintained. Due to the cooling load being calculated at a
constant 21 °C, there may be some additional losses when the energy
storage is at full SOC (e.g. 19 °C), and reduced losses when the SOC is at
minimum (e.g. 23 °C), but these were not accounted for in the model.
Due to the capacity and efficiency adjustments from (1) being calcu-
lated considering a fixed indoor setpoint of 21 °C (e.g., no feedback loop
from thermal storage SOC to the AC performance), there may be ad-
ditional AC performance impacts that are not fully captured when SOC
is high or low. This simplification retains a mixed integer linear pro-
gram formulation, while still capturing the impact of air temperature on
AC performance.
We used a resistance–capacitance (R-C) model [34] to quantify the
energy required to lower the house temperature from 23 °C down to
19 °C and to estimate the drift duration from 19 °C up to 23 °C. To
isolate the home’s inherent thermal storage capacity, we calculated the
energy required to move from 23 °C to 19 °C when the outdoor air
temperature is at 21 °C. This removes most external loads on the system,
as the outdoor temperature is already within the deadband of the
thermostat. Some ambient temperature impacts remain when the
E. O'Shaughnessy et al.
system is at high/low SOC, yet these impacts are in opposite directions
and are expected in large part to offset each other. The energy required
to cross that deadband is calculated at 14.3 kWh-thermal, and defines
the capacity of the energy storage system. The max rate of charge is set
by the capacity of the AC unit. The max rate of discharge is determined
by outdoor conditions, therefore we use the R-C model to estimate the
time to cross the deadband at 37 °C as an upper thermal threshold. This
time is 2.38 h or 5.97 kW-thermal (converted into power units given the
14.3 kWh-thermal of stored energy). These values are inserted into Eqs.
(3) and (4) to control the charge and discharge of the energy storage
system, where Xhč and Xhc ̂ are decision variables for charge and dis-
charge of the energy storage system and bč and b c ̂ are the max charge
(13.8 kW-thermal) and discharge (5.97 kW-thermal) parameters:
Xhc ̂ ⩽ b c ̂ ∀h (3)
Xhcˇ ⩽ bcˇ ∀h (4)
The cost of installing the smart AC unit is included in the objective
function by multiplying the cost of the improved controls by a binary
variable (Z c ) that determines if the smart controls are installed. Any
increase/decrease in operational costs for the adjusted AC operation
(e.g., pre-cooling and drift) are captured in the energy required to op-
erate the unit, calculated according to the AC model outlined herein.
The determination of the binary costing variable is shown in Eq. (5),
where W c is the decision variable determining the energy capacity of
the energy storage and w c is the maximum capacity of the system
(14.3 kWh-thermal in this analysis):
W cZ c ⩽ w c (5)
3.3. Domestic water heater model
The water heater is modeled in REopt as an energy storage system.
Similar to the energy storage system described above, the total capa-
city, maximum charge, and maximum discharge parameters were de-
fined for this model. It is assumed that the water heater has an 189L
tank and a 4.5 kW element. A tank temperature range of 49–82 °C is
assumed. The installed cost of the smart water heater includes a mixing
valve to avoid scalding and controls to enable water temperature con-
trol. The tank size and temperature range result in a total capacity of
7.32 kWh. The maximum charge is limited to the heating element in the
tank (4.5 kW) and the maximum discharge is assumed to be unlimited
(e.g., able to drain the whole energy storage system within a single
timestep) to account for large hot water draws such as a bath or mul-
tiple showers. Eqs. (3) and (4) must hold for the water heater for these
input parameters.
Additionally, a losses parameter is added to capture tank jacket
losses. Eq. (6) incorporates that parameter to enforce that energy dis-
̂
charged from the system ( Xhd ) plus tank losses in every timestep ( Xhd )
are always less than the stored energy in the previous timestep ( Xhd− 1).
̂ based on representative U.S. rate structures.
Xhd + f d Xhd ⩽ Xhd− 1 ∀h (6)
The losses parameter, f d,
was calculated assuming a heat loss
coefficient for the tank of 0.916 W/m2-C [35] and an indoor tempera-
ture of 21 °C. This parameter ranges from 1.44%/hr at 82 °C to 2.76%/
hr at 49 °C (note that the higher percentage per hour value at lower
temperatures is due to the low stored energy at the lower temperature).
Given the mixed integer linear formulation of the problem, a fixed
value of 2%/hr is assumed for this analysis.
The smart hot water heater is included in the objective function by
multiplying the cost of the improved controls by a binary variable (Z d )
that determines if the smart water heater is deployed. The smart water
heater enables the model to choose when to charge the storage (and
provide more capacity) versus the standard water heater that must
charge exactly to meet the load. This is reflected in the constraint
shown in Eq. (7):
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Applied Energy 213 (2018) 11–21
tdhw (1−Z d ) ⩽ Xhď (7)
where tdhw is the exact charging profile as dictated by the BEopt si-
mulation, Z d is the binary that determines whether the smart domestic
hot water heater is deployed, and Xhď is the decision variable de-
termining charging of the domestic water heater system. Therefore if
the model wants to avoid charging exactly to meet the load (i.e., shift
electrical load incurred to meet the hot water demand), then Z d must
resolve to 1, such that the capital cost of the smart water heater is in-
cluded in the objective function. It can be noted that this constraint
would not restrict a water heater from overcharging in the presence of
an incentive to consume excess energy (e.g., negative electricity pri-
cing). This type of pricing was not present in our analysis and therefore
did not affect model performance.
3.4. Financial assumptions
System net present values (NPV) are calculated relative to the cus-
tomer’s electricity costs without any PV system. System NPV represents
the full discounted lifetime value of all electricity cost savings accrued
from the standalone solar or solar plus system less the customer’s in-
vestment costs in PV and solar plus technologies. A discount rate of
6.2% is assumed [36], and electricity costs are escalated based on Na-
tional Institute of Standards and Technology utility cost escalators [37].
The value of solar plus is determined by the difference in NPV between
the standalone and solar plus scenarios, as estimated by REopt. The
NPV incorporates the capital cost of all system components, the present
value of operation and maintenance costs ($20/kW/year for PV system)
[38], and present value of grid purchases. Of the three candidate solar
plus technologies, batteries are the most versatile but also the most
costly option. Modeled battery installed costs are $1060/kWh for the
battery pack and $1271/kW-alternating current for the balance of
system based on benchmarked costs from [39]. The smart domestic
water heater upgrade is assumed to cost $250, and the smart AC unit
upgrade is assumed to cost $200 [40]. These assumed costs affect RE-
opt’s selection of batteries versus load control technologies in our
analysis. These financial assumptions are based on the best available
estimates of current technology costs. Battery costs, in particular, are
projected to decline over time [41,42]. The implications of falling
battery costs are discussed in further depth in Section 5.
We use REopt to analyze the economics of solar plus under three
rate structures that are less favorable to stand-alone PV: lower grid
export rates, non-coincident TOU peak rate periods, and demand
charges. In each analysis, we allow a single rate parameter to vary
while holding all other factors constant. This approach allows us to
isolate the effects of different parameters on the economics of solar
plus, as determined by the differential value between the standalone
and solar plus approaches. All analyses use a customer load profile
based on a home in Las Vegas, NV U.S.A unless otherwise noted (see
Section 4.1). Our rate assumptions reflect realistic ranges of parameters
4. Results
Most major PV markets have proposed or implemented reductions
to grid export compensation rates. Lower grid export rates reduce the
value of residential PV systems and incentivize customers to increase
PV self-use. In the United States, grid export is compensated through
net metering, where customers receive utility bill credits for each kWh
of excess PV output delivered to the grid. Fig. 6 illustrates how the
economics of solar plus compare with the economics of standalone solar
at different net metering rates. REopt deploys the smart domestic water
heater and smart AC unit at every net metering rate under the solar plus
approach, but does not deploy a battery at any net metering rate. The
solar plus approach reduces grid exports and increases PV self-use re-
lative to standalone solar at all net metering rates. The incentive to
E. O'Shaughnessy et al.
increase PV self-use is greater at lower net metering rates. As a result,
the incremental value of solar plus is higher at lower net metering rates.
In this case, solar plus system NPV is about 3% greater than standalone
solar NPV at a net metering rate of $0.22/kWh but about 53% greater at
a net metering rate of $0.02/kWh. This result indicates that solar plus
mitigates the impacts of lower grid export rates on residential PV
economics.
In TOU rate structures, customers pay higher volumetric ($/kWh)
rates during peak periods and lower rates during off-peak periods.
Residential peak load typically occurs in the late afternoon when cus-
tomers return home from work and engage in domestic evening activ-
ities. Residential TOU rate structures are often designed to reduce peak
residential electricity use by applying peak rates in the late afternoon.
This type of TOU rate structure reduces the value of standalone PV
systems, as PV output mostly coincides with lower-value off-peak
electricity rates. Fig. 7 compares the economics of solar plus to stan-
dalone solar for different TOU periods. Here we analyze a range of 5-h
peak periods, with each period starting at a different time on the hour
from 9 a.m. to 5 p.m. For instance, the point at 9 a.m. corresponds to a
peak period of 9 a.m.–2 p.m. REopt deploys the smart domestic water
heater and smart AC unit at all time periods, but does not deploy a
battery under any scenario. System values under both approaches are
highest when the TOU peak period coincides with midday PV output.
System values decline for later peak periods, as standalone solar
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Fig. 6. Solar plus economics under different
net metering rates. Figure assumes a flat vo-
lumetric electricity rate of $0.22/kWh.
systems are ineffective at reducing on-peak electricity use for late
afternoon peak periods. Solar plus systems allow customers to shift on-
peak load to coincide with PV output, thus reducing on-peak grid
electricity use even with non-coincident peak periods. For this reason,
the incremental value of solar plus is generally higher for customers
with non-coincident peak periods. In this case, solar plus system NPV is
about 28% greater than standalone solar system NPV for a 9 a.m.–2
p.m. peak period, but nearly six times greater for a 5 p.m.–10 p.m. peak
period. This result indicates that solar plus mitigates some of the ne-
gative impacts of non-coincident TOU peak rate periods on residential
PV economics.
Demand charges are a final class of residential rate reforms that can
undermine the economics of residential PV. In a demand charge rate
structure, customers pay a fee based on their peak power (kW) usage
over some defined time period. Demand charge customers generally
pay lower volumetric ($/kWh) rates. PV systems are relatively in-
effective at reducing customer demand charges when peak power use
does not coincide with peak PV output. At the same time, the value of
PV self-use is diminished due to low volumetric rates. As a result, de-
mand charge rate structures can significantly reduce the value of re-
sidential PV systems. Fig. 8 compares system values under both ap-
proaches at different demand charges. REopt does not deploy a
standalone solar PV system under any demand charge scenario, illus-
trating the potentially significant implications of demand charges for
Fig. 7. Solar plus economics under different peak
and off-peak periods. Figure assumes off-peak rate
is $0.08/kWh, peak rate is $0.22/kWh, and net
metering rate is $0.03/kWh.
E. O'Shaughnessy et al.
residential PV deployment. REopt deploys a PV system paired with a
battery at demand charges greater than $16/kW, and deploys the smart
domestic water heater and smart AC unit at every demand charge. The
solar plus approach uses load shifting to more effectively reduce cus-
tomer demand charges than the standalone solar approach. Therefore
the incremental value of the solar plus approach increases as customer
demand charges increase.
To summarize, the REopt analysis shows that the solar plus ap-
proach mitigates the negative economic impacts of three types of rate
reforms on residential PV. First, solar plus increases system value for
customers with low grid export rates by increasing PV self-use. Second,
solar plus increases system value for customers with non-coincident
TOU peak periods through load shifting. Third, solar plus increases
system value for customers with demand charges by using load shifting
and batteries to more effectively shave customer peak demand.
4.1. Solar plus case studies
We further explore the potential benefits of the solar plus approach
in four real world applications. We concentrate on a case study of
Hawaii, where a recent rate structure reform exemplifies the evolving
PV rate environment in the United States and internationally.
In late 2015, the Hawaiian Public Utilities Commission (PUC) ef-
fectively ended net metering in Hawaii. The new self-supply rate pro-
hibits PV customers from exporting excess PV output to the grid.
Following the reform, SolarCity (the largest U.S. residential PV in-
staller) began offering a bundled PV package in Hawaii that includes
PV, battery storage, a smart electric water heater, and a smart ther-
mostat. The Hawaiian solar plus market may gain additional support
from proposed state incentives [43]. Further, in late 2016, the PUC
approved an optional TOU rate with an evening (5 p.m.–10 p.m.) peak
period. The TOU rate is lowest during the midday (9 a.m.–5 p.m.) to
encourage electricity customers to use more electricity during peak PV
output hours.
We used REopt to design an optimized solar plus system for a cus-
tomer in Honolulu, HI U.S.A. under the self-supply tariff and TOU rate.
Table 1 compares the system specifications and economics of the two
approaches for the Hawaiian customer. REopt deploys a 4.6-kW PV
array for standalone solar and an 8-kW PV array (maximum size based
on roof space available) coupled with a 7.8-kWh battery, smart AC unit,
and smart domestic water heater for solar plus. Fig. 9 compares cus-
tomer load profiles in the two approaches. The bottom pane of Fig. 9
depicts clear load shifting from the peak periods under the PV output
curve through battery storage, home pre-cooling, and hot water pre-
heating. The solar plus approach significantly reduces grid electricity
18
Applied Energy 213 (2018) 11–21
Fig. 8. Solar plus economics under different de-
mand charges ($/kW). Figure assumes flat volu-
metric rate of $0.06/kWh, and net metering rate
of $0.03/kWh.
Table 1
REopt results: Hawaii self-supply rate case study.
Standalone solar Solar plus
PV system size (kW) 4.6 8.0
Battery size (kWh/kW) – 7.8/1.3
Smart water heater – Deployed
Smart AC – Deployed
PV generation (kWh/yr.) 6247 11,663
Electricity savings ($/yr.) $957 $2690
System cost ($) $5933 $16,598
NPV $5684 $16,851
use, particularly during the peak period, relative to the standalone solar
approach. Reduced grid electricity use and TOU period arbitrage gen-
erate additional customer savings under the solar plus approach: solar
plus increases system NPV by about a factor of three relative to stan-
dalone solar.
Fig. 10 provides a closer view of a single day (Thursday) from the
full week dispatch shown in Fig. 9. The standalone solar case shows PV
output covering midday load, however additional potential output is
curtailed due to the prohibition on grid exports in the self-supply rate
scenario. The solar plus case clearly demonstrates a shift of late after-
noon AC load back into peak PV output hours, as well as the elimination
of sporadic domestic hot water draws into a consolidated midday water
heater operation. The remaining excess PV is then placed into the
battery, which is discharged during peak pricing (battery discharge not
shown, only demand presented for clarity) to reduce the remaining AC
and miscellaneous loads to zero as the PV output tails off in the late
afternoon/evening.
While the impact of climate on the optimal selection, sizing, and
dispatch of solar plus technologies was not central to this analysis
(focus was on tariff impacts), the modeling approach enables efficient
analysis of other locations/climates. Re-location is achieved by running
the BEopt model with the TMY file for the desired location, passing
those modified loads to REopt, and updating the solar resource in REopt
for the new location. This approach was utilized to enable analysis of
emerging rates in three additional case studies, located in Arizona,
California, and Nevada (see Table 2). In addition to these case studies,
the inputs for the Hawaii scenario were run in the colder climate of
Albany, NY. Consistent with results from [24], we find the reduced
customer load (lower AC demand) in the cold climate reduces optimal
PV and battery system size but does not otherwise change the outcome.
In other words, the rate structure in the self-supply rate scenario pro-
vides substantial incentives for investments in solar plus technologies,
E. O'Shaughnessy et al.
with small changes in optimal system size correlated to specific cus-
tomer load.
Table 2 summarizes the results of three additional U.S. case studies
exploring how the solar plus approach can alleviate the economic im-
pacts of certain rate reforms in real world applications. The three ad-
ditional case studies correspond to three challenging rate environments:
lower net metering rates (falling grid export rate), TOU rates (non-co-
incident “super” peak), and a residential demand charge. Consistent
with the other analyses presented in this section, REopt deploys the
smart domestic water heater and smart AC unit in all three scenarios
but only deploys a battery in the demand charge reduction. The relative
impact of solar plus on system NPV is higher in the Hawaii case study
than in the low net metering and TOU cases in Table 2. This outcome is
consistent with the results depicted in Fig. 6, where the value of solar
19
Applied Energy 213 (2018) 11–21
Fig. 9. Hawaii case study PV and customer load
profiles under standalone solar and solar plus sce-
narios. Pink regions depict peak rate periods,
BESS = battery energy storage system. (For inter-
pretation of the references to color in this figure le-
gend, the reader is referred to the web version of this
article.)
plus is higher for customers facing lower grid export rates. The rela-
tively significant value of solar plus in the demand charge scenario is
consistent with the results depicted in Fig. 8.
5. Discussion and conclusion
Evolving rate environments in major PV markets around the world
are changing and, in some cases, undermining the economics of re-
sidential PV. The reliance of standalone solar PV systems on favorable
grid export rates may no longer be a tenable model for future wide-scale
residential PV deployment. Solar plus offers an alternative approach to
sustain the economic case for residential PV in these evolving rate en-
vironments. Using an NREL optimization model we show that solar plus
increases customer system value under a variety of rate structures. The
Fig. 10. Detail of Hawaii dispatch, showing operation for
Thursday of example week, pink region depicts peak rate
period. (For interpretation of the references to color in this
figure legend, the reader is referred to the web version of
this article.)
E. O'Shaughnessy et al. Applied Energy 213 (2018) 11–21

Table 2
Case study results.

Case study Assumptions REopt results

Falling grid export rate: In 2015 the Public Utilities
Commission of Nevada approved a new rate structure
with declining net metering payments, falling
volumetric rates, and increasing basic service charges
Non-coincident “super” peak: The Arizona “super peak” tariff
is designed to incentivize customers to reduce
electricity use during peak hours of the summer months
Residential demand charge: The Arizona demand tariff
includes a monthly demand charge based on the
customer’s maximum demand during peak hours
(weekdays 12 pm–7 pm)
Volumetric rate: $0.106/kWh; service charge: $29.23/
month; net metering: $0.055/kWh. Load profile based on
a home in Las Vegas, NV
Peak period: 12 pm-7 pm; off-peak rate: $0.06/kWh;
winter (May-Oct) peak rate: $0.20/kWh; summer peak
rate: $0.24/kWh; super peak (3pm-6 pm, Jun-Aug):
$0.47/kWh; net metering: $0.03/kWh
Peak period: 12 pm-7 pm; off-peak rate: $0.04/kWh,
winter (May-Oct) peak rate: $0.06/kWh; summer peak
rate: $0.09/kWh; winter demand charge: $9.3/kW;
summer demand charge: $13.5/kW; net metering:
$0.03/kWh
REopt deploys the smart AC unit and a smart domestic
water heater (but no battery) for solar plus. Solar plus
increases system NPV by about 80% by increasing PV
self-use
REopt deploys the smart AC unit and a smart domestic
water heater (but no battery) for solar plus. Solar plus
increases NPV by about 60% by increasing PV self-use
and performing grid arbitrage
REopt deploys a smart AC unit, a 0.3-kWh battery, and
smart domestic water heater for solar plus. Solar plus
increases system NPV by about a factor of 8, primarily
through demand charge reduction

incremental value of solar plus is highest in some of the most challen-
ging PV rate environments, including lower grid export rates, non-co-
incident TOU peak periods, and demand charge structures.
Our optimization model deployed the smart domestic water heater
and smart AC unit under all rate structure scenarios and in all case
studies. In contrast, the model only deployed batteries in certain con-
texts with either relatively high demand charges or high retail rates
coupled with no grid export compensation (Hawaii case study). These
results are consistent with previous studies [14,16,24,25,44], in which
lower-cost load-control devices are deployed first and more often than
batteries. Lithium-ion batteries remain a relatively costly technology.
Our analysis assumes battery costs of $1060/kWh, equating to over
$3000 for 3 kWh of storage capacity. In contrast, the smart domestic
water heater and smart AC upgrades together cost $450, though these
devices are much less flexible in terms of load shifting than batteries.
The REopt analysis indicates that low-cost upgrades to existing home
technologies may take primacy over batteries in near-term solar plus
systems. However falling battery costs and supportive state and na-
tional policies may ensure a more prominent role for batteries in future
solar plus applications [7,41–43,45].
Our analysis may under-state the value of solar plus due to the focus
of our study on the value of solar plus from electricity cost reduction.
Particularly in the case of batteries, PV customers may derive additional
benefits such as backup power. Further, solar plus technologies can
provide myriad grid-level benefits as well. By aggregating solar plus
homes, grid operators can perform more effective demand side man-
agement and use solar plus technologies to provide grid-level ancillary
services [7,46]. The solar plus approach may therefore facilitate large-
scale PV deployment by mitigating grid integration issues. At the same
time, our analysis may over-state the value of solar plus for at least two
reasons. First, the REopt model optimally dispatches all technologies
with perfect foresight of climatic conditions, a condition that is clearly
untenable for applied technologies. Second, some customers may be
unwilling to change energy use patterns in order to maximize the value
of solar plus systems. For instance, customers that are typically at home
during peak PV hours may be less willing to use the pre-cooling capa-
city of smart AC units, which would reduce the potential value of the
smart AC unit for PV system optimization. Therefore the value of solar
plus varies by customer according to the degree to which customers are
willing and able to shift load profiles.
To conclude, we find that solar plus – a more integrated approach to
PV optimization using batteries and load control devices – improves
customer economics relative to standalone solar. We build on a growing
body of literature by showing that the economics of solar plus depend
on grid export rates as well as other rate structure components. We find
that the solar plus approach is well suited to address some of the rate
structure challenges facing future PV deployment. We provide a new
method for evaluating, selecting, and sizing solar plus technologies,
allowing our model to choose amongst a suite of candidate technologies
and then deploy them at optimal capacities. We find that load control,
rather than battery storage, provides a more cost-effective approach for
near term solar plus applications. However, falling battery costs and
supportive policies may ensure a growing role for batteries in solar plus
systems. Our results suggest that the solar plus and other creative ap-
proaches to PV optimization could support the residential PV value
proposition in evolving rate environments.
Acknowledgements
This work was supported by the U.S. Department of Energy grant
number DE-AC36-08GO28308.
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