Is It Better to Save Your Solar, or Sell It?

The early adopters of DIY solar had to pay a premium to put panels on their rooftops, sure — but at least they had a simple way to recoup that investment. Every kilowatt of self-generated sun power was one they didn’t have to buy from the power company. And for houses with big solar setups, so big they could satisfy their own needs and then some, selling their excess electricity back onto the grid could even be lucrative.

This strategy, called net metering, turned lots of homeowners and businesses into little power plants. These days, though, utilities are pushing back. New rules and laws in states such as Indiana, North Carolina, and even sun-drenched Arizona and California have throttled back on how much they’ll pay individual solar generators. Some mandated a lower price be paid to homeowners, making it less worthwhile to get a large home solar setup in the first place.

That presents a dilemma for homeowners generating more solar power than they can use: Where does it all go? The answer, it turns out, is more complicated than simply selling excess kilowatts back to the power company.

Arguments against the old-school way of net metering, where people essentially earn back the full price of energy they sell, lean on economic fairness. People who don’t pay for electricity or even make money back via their solar panels don’t pay for the grid maintenance that’s built into the price of electricity, and therefore pass it on to everyone else (although the size of this effect is in dispute). There’s also a design question: Grid systems were built to direct electricity from the power company to homeowners. When energy starts to flow in both directions, things can get unstable.

Whether rooftop solar is even good for the climate, actually, remains a confounding question. The counter-argument, as expounded by Jesse Jenkins on a recent episode of Heatmap’s Shift Key podcast, is that rooftop solar replaces utility-scale solar capacity that could’ve been built at lower cost, thus slowing down the clean energy transition.

Nevertheless, homes are installing solar, and their excess energy has to go somewhere, lest those kilowatt-hours be wasted. But if not onto the grid, then where? That’s the question I asked Steven Low, a professor and clean energy expert at the California Institute of Technology. (Disclosure: My full time job is as a communications editor at Caltech.)

“If you have significant feedback from [photovoltaic solar panels] to the grid then you may trigger protections, and that will screw up the operation of the grid,” he said. If only a few homes have solar, “that is probably not a big issue. But if you have more and more such PVs generating power that will affect the grid, then this will be a problem.”

For now at least, the best solution can be summed up in a single word: batteries. Low and his colleagues are collaborating with the power department in Pasadena, California to test batteries that can store and release excess power automatically to stop voltage from becoming unstable. In Hawaii, which has a high percentage of households with solar, Hawaiian Electric has a program to pay customers who put in a home battery system alongside their solar setup. The logic is twofold: First, a stash of backup power makes homes more resilient in case of a blackout, and storing solar power in a big battery is climate-friendlier than firing up a diesel generator. Second, from the utilities’ point of view, more storage means less uncertainty on the grid.

A problem, of course, is that batteries aren’t cheap — and they’re in high demand. “The battery at this point, especially since EV is taking off, is still usually much more valuable for transportation than for electricity service,” Low told me. Home batteries don’t need to be as big because appliances don’t use as much energy as a car flying down the freeway. Tesla’s powerwall has a capacity of 13.5 kWh, for example, less than a quarter as much as the battery in a standard-range Tesla Model Y. Multiple batteries can be stacked in a group, but the cost adds up quickly. Low speculated that perhaps used EV batteries will find a second life as home backup batteries once their capacity falls so far that they’re no longer useful for road trips.

Helpfully, a grid-connected home battery can move energy in multiple ways. A solar home could stash extra clean energy during the day to use in the dark of night. People who live under a virtual power plant can engage in “energy arbitrage” — the buy low, sell high practice of storing energy when it’s cheap and selling it back onto the grid when it’s expensive. (Technically, you don’t even need the solar panels to do this, although the emissions reduction would be far smaller.)

The idea of electricity moving in every direction — not just from the electric company to you — leads to the promise of the microgrid, the energy-sharing gold standard where neighbors can share power. The school district in Santa Barbara, California, for example, is developing a solar-powered microgrid to reinforce the resilience of an area that’s particularly vulnerable to earthquakes and other grid disruptions. If the grid goes down, a neighborhood, company, or organization with a microgrid that can “island” itself is able to keep the lights, on as homes and businesses that can make or store extra energy sell it to their neighbors.

Before any of that can happen, though, “there needs to be some incentive structure for me to provide power to my neighbor, also using the grid that belongs to the utility,” Low said. That last part is the trickiest. It’s not just the technical and financial infrastructure needed to share electricity across the cul-de-sac. The utility must agree to let energy flows in this way over infrastructure that it owns. And somebody has to oversee such a complex energy web.

“Let's say you have a lot of households and businesses install PV,” Low said. “They have their storage, and they want arbitrage because they can be profitable selling waste.” But you also want to make sure people are maximizing their own storage for stability’s sake. “Who's going to do that coordination? A natural way is for utilities to do that, but then that will require the utility to either control or at least communicate with each household,” which would in turn require complex data-sharing infrastructure.

As Tim Hale of Scaled Microgrids told me, it’s not easy for people to decide whether all that trouble is worthwhile because there’s no simple way to put a price tag on making a company or a community more resilient against power disruptions.

“It's a very complex thought exercise for people to go through,” he said “Generally speaking, there are companies and entities and people that value resilience and there are people that don't. Right? And the people who value resilience are the people that build microgrids.”