Economic Performance of Using Batteries in European Residential Microgrids under the Net-Metering Scheme

Abstract

Decentralized energy production offers an increased share of renewable energy and autonomy compared to the conventional, grid-only solution. However, under the net-metering scheme, the energy losses in batteries translate into financial losses to an investor seeking to move away from grid-only electricity and set up a residential PV+Battery microgrid. Our paper examines a hypothetical support scheme for such a project, designed to balance the economic disadvantage through partially supporting the acquisition of batteries, and thus ensure that the microgrid solution is more attractive than no investment. For this we develop four case studies based on experiments carried out in Greece, Italy, Denmark and Finland. Using the minimization of the Net Present Cost for each project, we compare the PV+Battery solution to the grid-only scenario over 25 years, for a range of electricity prices. The results illustrate first how the success of this project depends on the price of electricity. Second, we find that under current conditions in the respective countries the need for battery support varies between zero in Denmark and 86% in Italy, which reflects how the disadvantages of net metering can only be counterbalanced by either very high electricity price or very high solar resource. Our paper contributes thus to the discussion about the favourable environment for batteries in residential microgrids.