Optimal Storage and Solar Capacity of a Residential Household Under Net Metering and Time-of-Use Pricing

Incentive programs and ongoing reduction in costs are driving joint installation of solar PV panels and storage systems in residential households. There is a need for optimal investment decisions to reduce the electricity consumption costs of the households further. In this letter, we first develop analytical expression of storage investment decision and then of solar investment decision for a household which is under net metering billing mechanism with time of use pricing condition. Using real data of a residential household in Austin, TX, USA, we study how the investment decisions would provide benefit for a period of one year. Results show significant profit when using storage devices and solar panels optimally for the system. It is important to note that though our approach can help significantly to take investment decisions, the solution will still be sub-optimal for somebody who needs optimal investment jointly on both storage and solar systems.