Closing The California Clean Energy Divide
Reducing Electric Bills in Affordable Multifamily Rental Housing with Solar+Storage
BATTERY STORAGE IS EMERGING AS AN effective new strategy for reducing electricity costs for affordable multifamily rental housing in California. Battery storage systems not only provide economic returns today, they can also preserve the value of solar in an evolving policy and regulatory environment. Because batteries empower owners of solar photovoltaic (PV) systems to take control of the energy they produce and when they consume it, storage can deliver deeper cost reductions that can be shared among affordable housing owners, developers, and tenants.
California has installed numerous integrated solar and battery storage projects; however, few have served low-income tenants or owners of affordable rental housing. This disparity is due to many factors, including a lack of information about the economics of these systems in multifamily housing. To provide that needed information, Clean Energy Group, California Housing Partnership, and Center for Sustainable Energy, with analytical support from Geli, are embarking on a series of reports on solar and storage in California affordable multifamily rental housing.
This first report examines the utility bill impacts of adding battery storage to stand-alone solar in affordable rental housing facilities in California’s three investor-owned utility service territories, each with different rate structures. It is the first such report ever completed on these technologies in this sector in California.
The report reaches several key conclusions:
- Under current utility rate tariffs, the combination of solar and storage technologies could virtually eliminate electric bills for many owners of affordable housing properties. Unlike stand-alone solar, which reduces energy consumption expenses but does little to offset demand related charges, a properly sized solar and battery storage system can eliminate nearly all elec-tricity expenses, resulting in an annual electric utility bill of less than a few hundred dollars in some cases.
- It makes good economic sense today for solar and battery storage to be installed in affordable multifamily rental housing in California. The addition of battery storage to solar improves the economics of each property analyzed across all utility territories, reducing project payback by over three years in some cases.
- The addition of storage technologies has the potential to nearly double stand-alone solar electricity bill savings at about a third of the cost of solar. For example, the addition of a $112,100 battery storage system to a $385,000 solar installation increased savings from $15,000 per year to $27,900, an 85 percent increase in savings for only a 29 percent increase in cost.
These findings are particularly important because of the passage of California Assembly Bill 693, the Multifamily Affordable Housing Solar Roofs (Solar Roofs) program. This recently enacted legislation provides up to $1 billion in funding for deployment of solar system technologies in affordable multifamily rental housing over the next ten years. The Solar Roofs program, which is the largest program of its type in the country, offers an opportunity to scale integrated energy solutions for approximately one-third of the existing affordable multifamily rental properties in the state.
The findings detailed in this report present a compelling case to include battery storage in the implementation of the Solar Roofs program, to enhance the investment value of public funding and to improve the resiliency and long-term financial stability of affordable housing assets in California. The deployment of combined solar and storage technologies under this program will help enhance the state’s transition to a smarter and more sustainable clean energy grid and extend the benefits of new clean energy solutions to underserved populations.
Additionally, uncertainty about the future direction of California’s solar regulatory environment raises the issue of whether economically vulnerable affordable housing residents should be exposed to the future financial risks of stand-alone solar systems and how they should be assisted in mitigating such risks with the immediate consideration of energy storage systems. While the analysis found that, under current market conditions, the direct economic benefits from the addition of battery storage will be realized primarily by affordable housing property owners, with no direct impact on tenant bills savings at this time, it would be shortsighted to subsidize the installation of clean energy in affordable rental housing using only yesterday’s technologies, whose economic benefits may be diminished by the time they are installed.
Exactly how the additional cost savings achieved through deployment of battery storage technologies can be passed on to tenants has yet to be determined. Possible scenarios include a greater share of solar generation being allocated to offset tenant electricity usage, a shared savings model where tenants are allocated a portion of demand charge savings, or applying some of the expected savings to cover the additional cost of making a building more power resilient during power outages. This is a challenge that still needs to be overcome and is beyond the scope of this report.
This report, the first of three, examines the role of battery storage integrated with solar PV in achieving meaningful, long-term electricity bill reductions in the affordable multifamily rental housing sector, describes the scope of this study, and details plans to conduct additional studies to explore the implications of this work for the imple-mentation of the Solar Roofs program in California.
Following the report, three appendices detail the assumptions used in the analysis, the results for each building scenario analyzed, and a graphical illustration of the analysis for one building showing the impact of solar and storage on electricity consumption and demand.
The findings detailed in this report present a compelling case to include battery storage in the implementation of the Solar Roofs program, to enhance the investment value of public funding and to improve the resiliency and long-term financial stability of affordable housing assets in California.
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