Over Half of California Solar Buyers Now Adding Batteries, Says EIA

alifornia continues to dominate the rankings as the number one solar market in the country, and now it's taking its expertise even further and breaking new grounds. Recently, there's been a distinctive rise in the installation of residential solar installations integrated with battery storage systems. The latest data from the Energy Information Administration (EIA) show us that over half of the new homeowners investing in solar in the state are also opting for battery storage to complement their setups. This trend indicates a dramatic change in the solar power landscape, motivated by regulatory shifts, dropping battery prices, and growing interest in self-reliance when it comes to power resources. But what does that surge really mean for the market and for those using solar? Let's take a closer look.

The Rise of Solar-Battery Pairing

As revealed in the EIA’s report, there has been a significant surge in the number of new residential solar PV systems being complemented with batteries. In October 2023, barely more than 20% of new setups incorporated battery storage. However, fast-forward to April 2024, and this number had impressively shot up beyond 50%. This mounting wave emphasizes a wider shift towards making solar power systems more efficient and dependable.

Source: U.S. Energy Information Administration (EIA)

Impact of the Net Billing Tariff (NBT)

California's booming interest in battery storage is largely the result of the Net Billing Tariff (NBT) introduced in April 2023. This new policy took the place of the former Net Energy Metering (NEM) 2.0 program. As per the NBT model, also known as NEM 3.0, individuals using solar energy are rewarded with flexible payments for any surplus power they send back to the grid, with compensation rates based on when the energy is produced during the day. This strategy promotes the utilization of batteries to hold on to solar power for usage during times of high electricity demand, which quite often falls in the evenings.

The launch of net billing has completely transformed the scene for domestic solar installations in California. Before this, under NEM 2.0, homeowners were given a fixed retail rate for the electricity they returned to the power grid. While this was profitable for solar users, it sparked worries about fairness and the cost of maintaining the grid. The NBT model attempts to tackle these problems by offering reduced compensation rates that are dependent on time.

Adjusting to Market Transformations

Even though the shift in policy has somewhat lessened the financial appeal of standalone solar systems, it has indeed sparked more interest in battery storage. Despite the initial high expenses, a lot of people in California are seeing the bigger picture - the enduring financial and functional benefits of solar-plus-storage installations make them worth the investment. As per the info from the EIA, California welcomed more than 40,000 new solar-battery systems in the period from October 2023 to April 2024, making a significant addition of 232 megawatts (MW) to the new battery storage capacity.

Source: U.S. Energy Information Administration (EIA)

When first introduced, the new net billing structure came under fire from some industry stakeholders, and the higher upfront cost of photovoltaic panels with batteries became a point of contention. Critics argued that the reduced pay rates resulted in an uptick in the total cost of setting up solar systems, potentially stunting solar energy's growth in California. For instance, the California Solar & Storage Association (CALSSA) has openly opposed NBT, saying that decreased monetary rewards might deter potential new installations of solar systems.

However, the data seems to indicate that the industry is adjusting well to the new regulations. The third quarter of 2023 added 83,376 new residential net metering PV systems, compared to the same quarter in 2022, which added 70,152 systems under the NEM 2.0 rule. Another 46,631 were then added in the first quarter of 2024. Since January 2022, the average number of solar systems being added per month stands at around 21,000, which makes for strong residential solar market growth.

Wider Market Shifts

EIA data supports the data from an analysis previously published by the Lawrence Berkeley National Laboratory, which also highlighted impacts of net billing on the California solar market. The study highlighted several key trends, including the sharp increase in battery installation rates, which jumped from roughly 10% under NEM to around 60% under NBT. This shift underscores the growing importance of energy storage in the residential solar market.

However, LBNL's study showed a surprising decline in the average size of solar systems under net billing, perhaps as a result of a less profitable return on grid exports. Moreover, there's a noticeable rise in third-party ownership. This suggests a recent emergence in new constructions and an uptake by households of lower income.

Beyond Policies: What Else is Driving Battery Adoption?

Regulatory changes aren't the only reason why homeowners are installing more battery storage systems in their homes. Recent breakthroughs in storage technology and manufacturing have slashed costs, making it much easier for homeowners to afford the best batteries for solar system. Californians are also worried about the reliability of power supply and are using battery storage to ensure they always have electricity—come rain or shine. Plus, by cutting dependence on fossil fuels, solar-plus-battery systems carry environmental perks.

The Rise of Solar-Battery Pairing

As revealed in the EIA’s report, there has been a significant surge in the number of new residential solar PV systems being complemented with batteries. In October 2023, barely more than 20% of new setups incorporated battery storage. However, fast-forward to April 2024, and this number had impressively shot up beyond 50%.

This mounting wave emphasizes a wider shift towards making solar power systems more efficient and dependable. This trend is driven by the new Net Billing Tariff (NBT) introduced in April 2023, which incentivizes battery storage by offering variable compensation rates based on the time of day when energy is produced and used.

Adjusting to Market Transformations

Even though the shift in policy has somewhat lessened the financial appeal of standalone solar systems, it has indeed sparked more interest in battery storage. Despite the initial high expenses, a lot of people in California are seeing the bigger picture—the enduring financial and functional benefits of solar-plus-storage installations make them worth the investment.

As per the info from the EIA, California welcomed more than 40,000 new solar-battery systems in the period from October 2023 to April 2024, making a significant addition of 232 megawatts (MW) to the new battery storage capacity. This trend underscores the growing importance of energy storage in the residential solar market, with solar-battery systems now making up about 9% of all installed residential net metering capacity in California.

California’s Solar Battery Scene: What’s Ahead

California continues to be a pacesetter in solar energy use, and it seems the trend of combining the most efficient home solar panels with battery storage is set to increase. This trend is largely driven by the state's shifting rules and the increasing affordability of storage solutions. The Golden State is actively taking steps to align solar energy generation with the needs of the grid, setting the stage for an very resilient and potent electric infrastructure.

As we move forward, it's crucial for the solar sector to adjust to evolving circumstances and come up with plans that render solar-storage solutions more convenient and affordable for an extensive array of consumers. Ongoing improvements in battery tech, backed by beneficial regulations and incentives, are key to hitting this target. Although navigating the intricate landscape of the new net billing rules presents its own set of challenges, it's clear that the current embracement of battery storage will play a big role in molding California's renewable energy scenario.

Sources:

https://calssa.org/press-releases/2022/12/16/calssa-statement-on-cpucs-vote-to-slash-solar-net-metering