Solar power is one of the most common forms of renewable energy that we find in homes today. Due to the affordable technology and the government’s push, there has been a big jump in the number of homes that are installing solar energy systems in their homes. Currently, solar power accounts for around 3% of all energy produced in the US, and it is predicted to go up in the coming years.
Solar panels and energy storage equipment being more affordable than ever has played a big role in this increase in popularity. For a residential setup, the average cost of installation of a solar system has fallen by over 60% during the period from 2010 to 2020. This along with other federal and state schemes for tax credits and other incentives has resulted in increased traction for solar energy.
There are of course other benefits to consider here. Increased energy costs have been hampering daily life with low-income households having to reduce their consumption. With incomes already hampered by the pandemic, it is natural that power costs will be a worry for most households. Solar power is affordable and it can take your household virtually off-grid. It is also clean energy and hence sustainable. If we are to talk about the benefits of solar energy, there’s enough to fill pages. But this blog has a different purpose.
As more homeowners like you consider solar installations in your homes, there is a real opportunity for some revenue too. Solar arbitrage is what this opportunity is called. With a home battery storage system and some smart planning, you can not just reduce your electric bills. You can get some money back too. Here’s how solar arbitrage can help you.
What’s Solar Arbitrage?
In simple terms, it’s taking advantage of the difference between peak and off-peak rates in electricity and also selling the energy you produce and store via solar into the grid. This may sound pretty complex but let us explain.
The peak tariffs for electricity usually kick in between 4 pm and 9 pm when there is a huge electricity demand. the time from 9 pm to 8 am and 8 am to 4 pm are usually off-peak hours. If you have solar, the difference is that you can get your solar batteries charged between the 8 am to 4 pm slot and use this at a later time.
If you are in California, the Net Metering (NEM 2.0) plan allows you to get credit for the electricity that you are feeding back into the grid at the same retail rates as you are purchasing it. This means that if you can store solar energy in your energy storage system during the day and send it into the grid during peak hours, you can earn peak hour tariffs. You can then use the grid power at off-peak rates to recharge the home energy storage and also for other usages.
For further clarity, here’s how it can work.
The Summer peak electricity rates for weekdays fall between 4 pm and 9 pm and cost about 53 cents per Kilowatt-hours (KWh) (Rates for SCE). The off-peak rates are at 33 cents. If you have a solar battery storage system, the batteries can be fully charged during the day using solar and this energy can be sold back into the system at 53 cents during peak hours. Post the peak hours, you can use the nighttime rates to either charge the batteries again or to use this for your home needs such as running appliances that consume a lot of electricity.
What Do You Need for Solar Arbitrage to Work?
Getting solar arbitrage to work involves understanding your energy needs, energy use patterns, and of course some infrastructure requirements that make this possible. Here are some important things you need.
- A battery storage system
- A TOU plan
- Proper planned usage
Let us look at these things in detail.
A home Solar Power Battery Storage System
The purpose of this is quite understandable. A lot of homeowners tend to install solar panels and no energy storage facility. This would mean that whatever solar power is being produced needs to be consumed and the leftover power will be fed into the electric grid.
But a battery backup system helps utilize this energy at a later time. Battery storage systems are also improving with advancements in battery technology. Today there are different types of batteries available for use and most of these help a great deal in storing and using the energy produced from the solar panel system. While lead-acid batteries are quite popular, lithium-ion batteries are the most popular. Lead-acid batteries are of course cheaper but they have shorter lifespans. The battery capacities are also improving allowing buyers to invest less and store more energy.
The storage capacity of the battery system you need depends on the amount of power you need to power the whole home and also the capacity of the installed rooftop solar panels. If you also need your air conditioning and heating systems to work on backup power during blackouts or power outages, you may need larger capacities of batteries that can store a lot more power
It is also important to have the batteries grid-tied so that the system can be charged either via solar power or via grid power depending on what your preferences are.
There are other forms of energy storage also available in the market apart from batteries but most of these forms cost a lot more and often the amount of stored energy is lower than battery systems.
Planned Usage of Electricity
If you are to take proper advantage of the solar arbitrage, you also need to get a good hang of the amount of electricity you use and when you use it. An energy audit will give you a good idea as to how much power you consume and what appliances or activities consume the most power. This will also help you identify and cut down on power consumption and also fix issues with the electrical systems in your home.
Once you know how and when you consume power, the next step is to plan the usage for solar arbitrage. This would essentially involve trying to move most of the high-consumption activities to off-peak times. Say washing machines or dishwashers can consume a lot of electricity and using these appliances exclusively during off-peak hours will help you save on power.
Time of Use Plan
A time of use plan is critical for this to work. Mostly a flat tariff rate works for you if you are using power off the grid only. If you have alternate sources of power, having a TOU plan may help.
If you do not plan properly, a TOU plan may end up costing you more. However, if you can monitor and regulate your power usage, you will be able to save a lot more and even earn some money by selling electricity into the grid.
Closing Thoughts
Getting solar arbitrage to work for you is not easy. There are of course some level of investments involved and you would also need to be careful with your usage patterns. But at the end of the day, if you can manage this well, you are well on your way to energy independence.
A word of caution is also necessary here. The prospect of earning revenues is dependent on the policies that the local utility provider gives you. California has some of the most attractive policies when it comes to solar power and renewable power due to NEM 1.0 and NEM 2.0. The catch is that the California Public Utilities Commission (CPUC) is currently working on NEM 3,0 which would reduce the amount of credit you can earn from selling into the grid by 40-80%.
Solar arbitrage is a wonderful idea in more ways than one. You move closer to recovering the cost of installation, you save on electricity bills and of course, you contribute to a greener planet by reducing the dependence on non-renewable energy sources.
If you are looking for a solar power system that can take care of all your home electricity needs, you need help from the experts. Enlightened Solar is led by veterans with 20+ years of experience in solar installations. With warranties up to 25 years, we provide you with all the tools to be energy independent. Talk to us today to get a quote.
