Category: Products, services, and tools

A virtual power plant (VPP) is another manifestation of the sharing economy. It’s your neighborhood energy pool.

Virtual power plants are a set of software and agreements that create a network of digitally connected distributed energy resources (DERs), like solar panels, home batteries, and renewable microgrids, to pool their excess electricity production and power storage.

The VPP optimizes the pooled resources to ensure that its members – the owners of the DERS – have more reliable electricity and can sell their extra resources at a great price.

How does a virtual power plant work?

Virtual power plants’ software leverages a power grid‘s existing network of physical wires, poles, and substations to connect and coordinate the use of many individual homes, businesses, and facilities’ solar panels, windmills, hydro turbines, heat pumps, fuel cells, electric vehicles (EVs) batteries, and/or renewable microgrids. The VPP adds the available electricity generation and energy storage from each of its members’ DERs to a shared energy resource pool.

The virtual power plant’s members tell the VPP how much of their electricity production or battery storage it can use. The VPP monitors the DERs and determines how to use each member’s resource.

Virtual Power Plants use the pool of resources to enhance the entire network’s resiliency, and economies of scale enable its members to earn more from electricity and storage sales than they could on their own.

VPPs are often set up by a utility or DER company or through a public-private partnership.

Power plant vs. virtual power plant

It’s a virtual power plant because it generates electricity like a traditional power plant, but the VPP’s electricity generation comes from virtually connecting DERs that are physically spread across a geographic area instead of coming from a centralized plant.

If power plants were computers, a traditional power plant would be a large centralized data center, and a virtual power plant would be a network of many internet-connected personal computers and phones. 

VPPs can be small or large, depending on their purpose, which is in contrast to conventional power plants’ extensive facilities…

Virtual power plants can consist of just several homes’ solar microgrids — or hundreds of thousands of people connecting a wide variety of DERs. Regardless of the VPP’s size, each has an aggregator – a company or organization – that manages its data and energy flow.

Traditional and virtual power plants also create electricity with different energy sources. Power plants typically burn fossil fuels, like coal or natural gas, while VPPs’ DERs tend to be powered by clean, renewable energy sources, like the sun and wind.

What happens when you join a VPP?

Joining a VPP generates serious benefits for you and your neighbors.

Behind the scenes, the grid constantly does the delicate dance of ensuring it has enough electricity to fully meet the demand without overproducing and unnecessarily raising costs.

When the grid misses a step, electricity prices are driven up, or people’s lights start going out.

During times of lower demand, virtual power plants often use their batteries to store excess electricity from intermittent sources, like wind and solar. The VPP then makes that stored energy available when there’s high demand. Doing so helps give VPP members, utility companies, the grid, and the local community a better ability to match electricity demand and supply.

Having a VPP in your area prevents blackouts and saves you money on energy.

Optimizing for the duck curve

What do you do when you wake up in the morning?

In addition to trading in your pajamas for clothes and, hopefully, bathing, you likely turn on a lot of electronics – lights, coffee makers and kettles, stoves, radios, TVs, and computers. By mid-morning, most of us have left the house for work, classes, meetings, errands, exercise, etc. As the sun sets, people start coming home and turning on their devices again, typically using them longer than in the morning.

This behavior pattern causes electricity demand to surge in the morning, lull in the middle of the day, and peak in the evening.

Solar panels start producing electricity when the sun rises. Production peaks around midday and then falls off as the sun sets…and people come home. Causing a significant mismatch in the timing of electricity production and usage. This intraday fluctuation in demand and production is called the duck curve.

Virtual power plants enable us to store the excess solar energy being soaked up by the solar panels in their batteries.

Then, make that power available to the grid’s managers when demand increases. Enhancing their capability to meet our energy needs with a clean, low-cost supply.

This capability significantly benefits everyone connected to the grid, even if they aren’t a VPP member.

How virtual power plants help your neighbors

Even if your neighbors aren’t VPP members, they benefit when you become one. 

Fewer blackouts

By adding your DERs to a grid-connected VPP, you’re helping the neighborhood avoid power outages. There are up to 3 ways it can happen…

1. Connect a battery. You’re creating a deeper reserve of energy from which the grid can draw when its current electricity generation can’t keep up with demand.
2. Connect a generator. Adding your solar panels, wind turbines, or heat pumps to the grid provides greater capacity to generate electricity, making it less likely for demand to surpass supply.
3. Disconnect from the grid. If you island your home from the grid at times of peak demand, it assures that you’re not adding additional demand for the limited supply.

The VPP constantly monitors their members and third parties’ energy demand, then adjusts participation in the grid’s supply and demand to optimize for preventing outages and generating revenue.

If the grid has a blackout in your neighborhood, and your home is powered with a renewable microgrid, you can keep your lights on and invite neighbors over to enjoy the comfort of your home.

Cheaper energy

Increasing demand for the grid’s electricity is often accompanied by higher prices for the utility company’s customers.

The price increase is at least partly due to the grid’s need to get electricity from more expensive sources to meet the larger demand. By design, the utility company generates electricity from the least expensive sources capable of meeting the current demand.

So when electricity demand surges, the utility company must increase output from its generators and turn on new generation sources. By design, providing these additional electrons comes at a higher cost to the utility company than what it costs them to meet the lower demand threshold.

When utility companies can tap into a virtual power plant’s energy pools, they can access electrons at a lower cost and pass those savings on to customers.

How VPPs help their members

The pooling of electricity allows VPP members to coordinate electricity generation and energy storage. Enabling them to use and trade energy more effectively. The bigger your pool, the more excess electricity and storage you have, and the more money you can make from selling it.

Gaining more resiliency

You experience fewer outages as a VPP member.

The enhanced resiliency derives from the ability to use the other VPP members’ available electricity if your DER hasn’t produced or stored enough to meet your current needs. 

You also have a much larger reserve of backup power than just what can be produced and stored on your own. The VPP’s software manages the collective energy pool, allowing members to access needed electrons.

When winter storm Uri knocked out much of Texas’ grid for over a week, DER owners and VPP members kept their lights on while avoiding astronomical energy bills.

Making more money

Pooling the energy means VPPs can trade power with favorable economies of scale. Allowing its members to secure more lucrative payment terms than they could on their own.

 As a VPP member, you make money by selling the excess electricity you produce or your available energy storage capacity to external users, like utility companies and the grid. You can also arbitrage rates, allowing you to save money and sell electricity at higher prices.

Enabling powerful rate arbitrage

Rate arbitrage is taking financial advantage of the frequent changes in the grid’s electricity prices. This enables you to avoid paying too much for electricity from the grid as well as sell your energy resources when prices rise due to high demand on the grid.

By joining a virtual power plant, you can arbitrage rates more effectively due to its larger pool of electricity production and energy storage.

You save money on energy bills by switching off your grid electricity when utility companies charge high prices. Inversely, the VPP can turn on grid energy when prices drop. Depending on where you live, those prices can change daily, hourly, or even by the second.

The VPP can monitor the market’s price changes and automate your selling, storing, and islanding at the times that maximize your financial return.

VPPs’ arbitraging of rates is so powerful that SunPower, a leading provider of solar microgrids, estimates that their customers will save at least $100 and up to $1000 per year by participating in its VPPs.

General Electric expects its VPP members in Portland, OR, to earn $20-40/month by selling their available battery storage.

In Australia, the utility company AGL pays homeowners $100 when they enroll their battery in its VPP and then makes quarterly payments of $45. 

The money you’re paid usually originates from the utility company operating the grid. Although you may be paid by the VPP instead of directly from the utility company. This payment structure varies quite a bit from VPP to VPP, as they have different aggregators and stakeholders.  

Where can you find virtual power plants?

In 1997, Dr. Shimon Awerbuch published the book “Virtual Utility: Description, Technology, and Competitiveness of Emerging Industries .” It was the first time the virtual power plant concept was shared with the general public. 

VPPs became of practical interest in Europe post-2010, partly due to Germany’s commitment to close its nuclear power plants paired with their catalyzation of the solar industry the decade before.

Europe’s first VPP kicked off in 2012 when the Nordic energy company Statkraft implemented one in Germany that generated electricity equivalent to 10 nuclear reactors.

Today, Virtual Power Plants have spread to a handful of countries, and they’re expected to continue spreading quickly as producing your own electricity is being adopted globally.

Here’s where you can find Virtual Power Plants today:

VPPs in the United States

11 US states offer virtual power plant memberships to DER owners:

1. Hawaii
2. Oregon
3. California
4. Texas
5. Maryland
6. Delaware
7. Rhode Island
8. New Jersey
9. New York
10. Connecticut
11. Massachusetts
12. New Hampshire

In partnership with the local utility companies, one or all of the major brands offering solar microgrids, SunPower, Sunrun, Tesla, Sunverge, Generac, and Enel X, offer their customers VPP membership in these states. On top of these solar brands, VPP companies Swell and Ohm Connect have programs in many of these states. 

VPPs in Japan

Japan is still looking for ways to increase its energy production capacity since a massive earthquake destroyed the Fukushima nuclear power plant in 2011. A Californian company, Autogrid, and the storied Japanese conglomerate Toshiba are developing VPPs in the country. 

VPPs in Taiwan

Enel X runs a virtual power plant in Taiwan that recently allowed its members to begin receiving regular payments by selling their available storage to Taipower. 

VPPs in Australia

Australia has one of the most publicized VPPs. Managed by Tesla, it’s one of the country’s largest. Tesla made a big splash in 2019 by being the most well-known international brand to offer VPP members to thousands of homeowners. In April 2022, Tesla announced the expansion of its VPP to provide membership to 50,000 Australian homes with Powerwalls. Because the Australian government has invested in smart meters, Tesla knows when there’s extra capacity available from local customers’ solar systems and batteries.

Utility companies AGL and Evo Power also offer VPP membership to Australians with a wide range of battery brands. AGL’s VPP is available to homeowners, whereas Evo Power’s is designed for commercial and industrial clients. 

VPPs in the European Union

Next Kraftwerke, based in Cologne, Germany, operates one of Europe’s largest virtual power plants. The Next Pool VPP is a network of over 13,000 decentralized power generators and consumers. With such a large VPP, they can optimize networked customers’ electricity production and consumption 24/7 based on price signals and trade their electricity on various European exchanges (e.g., EPEX and EEX).

VPPs in the United Kingdom

In 2017, UK Power Networks embarked on the kingdom’s first “virtual power station,” as the company called it. The initial trial included 45 homes with batteries in the London area. VPPs’ momentum has been building here ever since.

Octopus Energy operates a VPP in conjunction with Tesla. Offering membership to UK homeowners with Powerwalls. Interestingly, in February 2022, Ev.energy received £295,000 in funding to build out the UK’s first VPP with only electric vehicles (EVs) as the DERs.

Where your DER’s type, size, and location dictate which VPPs you can become a member of.

Who uses virtual power plants?

So, who are the people actually becoming VPP members? 

There’s a broad range, from massive industrial facilities to individual households. Some members own just one DER, like an electric vehicle, while others have many solar systems, wind turbines, smart meters, and batteries. Members joined their VPP through their power utility, DER provider, or a company specializing in VPP services. 

Let’s meet a few of today’s VPP members.

Finn Peacock in Australia made this enlightening video about the benefits and drawbacks of being a member of his local VPP for the past 4 years. 

In Houston, Texas, a project called TexFlex has recently enabled 14 apartment renters in the Montrose neighborhood to get the SolarEdge Energy Bank and become members of PearlX’s VPP. In doing so, these Houstonites get cleaner and cheaper electricity.

I’ve also joined a VPP, even though our building doesn’t have DERs. OhmConnect’s unique VPP allows you to become a member by adding your DERs, smart thermostats, or smart outlets. So that I could join and add to their energy pool, OhmConnect sent me 2 free smart outlets after telling them that I’d like to be a member.

Now, OhmConnect updates me about upcoming energy shortages on the grid and pays me if I decrease my power use during that time, which I almost always do. It’s so easy – their app enables me to remotely turn on and off the smart outlets.

Becoming a VPP member

Many people don’t fully appreciate the power that comes from generating and storing our own electricity. But you’re not like most people. 

A solar system, electric vehicle, and home battery make sense because it sucks relying on costly fossil fuels that pollute and frequently cause blackouts. Once you begin powering life with these DERs, you can also use them to join a virtual power plant. 

We’re leaders who’ve recognized that cutting pollution is excellent for the bottom line and creates more resilient lives. And now, by joining a virtual power plant, you can grow the return on investment for your solar system, home battery, and electric vehicle while bolstering your resiliency. So how do you become a VPP member?

How to join your local virtual power plant

Contacting your utility energy company is usually the quickest way to determine if a grid-connected virtual power plant is in your area. Companies or organizations in your area offering solar panels, batteries, windmills, hydro turbines, fuel cells, heat pumps, or EVs should also know if there’s a local virtual power plant that you can join with one of these technologies.

What if there isn’t a VPP in my area today?

It’s shocking to see how quickly VPPs have spread across the globe in less than 10 years, but your location and DER type still dictate your access.

Frankly, the speed that VPPs proliferate is largely dependent on the VPP aggregators. While working for SunPower, I helped plan VPP expansion into the Midwest and experienced how challenging it can be for stakeholders (utilities, hardware providers, renewable microgrid platform operators, local associations) to decide who’s responsible for the VPP’s’ monitoring, payment, and upkeep. 

But I’ve also seen how much effort some of the world’s largest clean energy companies and utilities are investing in growing VPPs and creating shared rules of the road. So even if there isn’t a VPP in your area today, they’re likely will be one before 2030.

“2030! That’s too long!!!” You say. I agree. Here’s a few ways to speed up the process…

How to get a VPP in your area

1. Request your utility company to offer a VPP. And encourage neighbors to do the same. 
2. Request that local DER companies and organizations create a VPP. And encourage other DER owners to do the same.
3. Join the Electric Islands mailing list to get updated on VPP developments, and share them with your community so that neighbors become aware of the benefits they can reap by having a VPP locally.

Powering your household with a solar microgrid makes it more resilient, reliable, and sustainable because you’re using a renewable source to produce your own electricity 24/7. But are people also saving money on energy bills by getting solar microgrids?

Yes. And many more of us should be.

Millions of people in the US and billions worldwide could cut costs by powering their homes and businesses with solar microgrids.

In most places, it’s cheaper to produce electricity by collecting sunlight instead of digging up and burning fossil fuels. That’s why we keep seeing more people cover their roofs with solar panels.

And recently, storing large amounts of energy in lithium-ion batteries became affordable and practical for home and business owners.

By charging these batteries with solar panels, we create a solar microgrid. With a solar microgrid, we can use solar power at night, escape power outages, avoid spikes in energy prices, generate free electricity, and even sell our excess power and battery space.

So, can you do it?

Well, before rushing out to buy a solar microgrid, follow the steps below to discover if you’ll save money on energy bills and, if so, how much.

Calculating your solar microgrid’s energy bills savings

When your solar microgrid starts producing electricity, you’ll likely start saving money on energy bills.

Once those savings add up to more than the price of buying and upkeeping your solar microgrid, the microgrid has paid for itself and begins paying you.

Typically, a home’s or business’ solar microgrid takes at least a few years to pay for itself. That payback period may be even shorter if you use little electricity or live where energy is expensive.

Payback period = solar microgrid price / annual savings on energy bills

Once you know the payback period, compare it to the length of the solar microgrid’s warranty(s) to see if it is guaranteed to pay for itself.

Guaranteed savings = payback period > length of the warranty

That’s how to calculate if you’ll save money by getting a solar microgrid.

Need help assessing (1) your solar microgrid’s price, (2) how much it’ll save you annually, and (3) the length of its warranty? Then follow these 7 steps:

1. How much do you spend on energy bills today?

To determine if you’ll save money on energy bills with a solar microgrid, you first need to know how much it currently costs to power your household.

If you buy energy from a utility company, look at your bill and find a breakout of the energy prices they charge and how much you spend on gas and electricity.

If your home is already fully electric or you plan to upgrade all your appliances to electric once you have a solar microgrid, then look at the bill’s total amount.

If you’re still going to use some gas to power your home even after having a solar microgrid, then just look at what you’ve been spending on electricity.

Living off-grid or getting energy in addition to what you buy from a utility company? Then you add up the cost of buying wood, charcoal, kerosene, gas, diesel, and electricity.

Once you have the total annual cost of the energy you’re planning to offset with the solar microgrid, you’re ready for Step 2.

$1,950 = Annual electric bill

*Average household in Hawaii

2. How much electricity do you use every day?

You need to know how much electricity you use annually to determine if a solar microgrid will collect enough energy to meet your daily needs.

Calculating your energy consumption (in kilowatt-hours kWh) over the past 12 months ensures you get a solar microgrid that’s powerful enough to meet your needs year-round. Our energy needs vary daily and seasonally due to weather, hosting guests, vacations, new appliances, etc.

If you have a utility company, they have a breakdown of your monthly consumption.

If you live off-grid, manually calculate how much you spend on energy each year.

Once again, if you’re still going to use some gas or other fuel to power your home after getting a solar microgrid, then just look at what you’ve been spending on electricity.

For a more accurate estimate of your usage, take the annual average for the past couple of years. *This assumes you haven’t had major changes in lifestyle/energy use during that period. If you have, then just use the 12-month period(s) that best reflect your usage going forward.

Once you have your annual electricity usage, divide it by the number of days in the year to estimate your daily consumption, then you’re ready for Step 3.

6,444 kWh = Annual electricity usage

*Average household in Hawaii

17.65 kWH =  6,444 / 365 = Daily electricity usage

*Average household in Hawaii

3. How much sunlight does your home get?

How much sunlight your solar panels can soak up plays a significant role in determining if a solar microgrid will generate enough electricity to meet your needs. It also determines if saving money on energy bills is possible with a solar microgrid or if another type of renewable microgrid is a better option.

Look up the annual average of peak sunlight hours you receive each day.

The National Renewable Energy Laboratory mapped most of North and South America’s annual average daily hours of peak sunlight.

Once you have the number of peak sunlight hours your home receives in a day, then you’re ready for Step 4.

6 hours = Daily peak sunlight

*State of Hawaii

4. How much electricity can solar microgrids produce where you live?

Now let’s figure out how much energy your solar microgrid needs to collect and store to offset your current annual usage. That way, you know if a solar microgrid works as your household’s primary energy source and if you’ll save money on energy bills.

We measure solar panels’ power output in kilowatts (kW).

We measure batteries’ energy storage capacity in kilowatt-hours (kWh) – the same metric we’ll use to measure our energy use.

How big a solar system do you need?

It’s a simple formula to determine the solar system size needed to cover your annual electricity usage.

1. Take the average daily kWh of electricity you use, and divide it by the average daily hours of peak sunlight you receive.

2.95 kW = 17.7 kWh / 6 hours

2. Divide the result by 80% to account for the electricity lost when converted from the direct current (DC) solar panels produce to the alternating current (AC) your home uses.

3.7 kW = 2.95 kW / 80% 

3.7 kW = Solar system size needed to cover annual electricity usage.
 
*Average household in Hawaii

You want a solar system that’s a bit larger than what the calculation says. That way, you won’t worry about producing enough power when the weather is terrible or you just want some extra juice.

So for our ‘average household in Hawaii’ example, I’d get a solar system of around 4 kW.

How much battery storage do you need?

The average kWh you use daily is the energy storage capacity needed to fully power your household for 24 hours.

17.7 kWh = Battery capacity needed to provide 24 hours of elecricity usage.

*Average household in Hawaii

During the day, your microgrid’s solar panels will recharge the battery and power your home. So, you likely don’t need a battery that can power your household for 24 hours. Although, having one that size will give you plenty of extra battery storage and the ability to sell more electricity and storage space.

For most people, a battery that stores 12 hours’ worth of energy is enough to ensure you don’t run out of power.

8.9 kWh = Battery capacity needed to provide 12 hours of elecricity usage. 

*Average household in Hawaii

As with the solar system, you likely want batteries with enough capacity to provide backup power for more than just the average day.

When calculating the size and price of your battery, you need to decide how many kWh of stored energy match your lifestyle, resiliency, and financial goals.

Once you know how the size of the solar system and battery you want, then you’re ready for Step 5.

5. What’s the total price of your solar microgrid?

Add your payments for components, services, and installation

To calculate if you’re saving money on monthly energy bills and the solar microgrid’s overall return on investment (ROI), first add up what you’re paying for the microgrid’s solar panels, battery, installation, and services.

The 3 factors most closely tied to solar microgrid prices are:

1. Where you live
2. The quality of its components
3. The amount of energy it collects and stores

In the U.S., EnergySage, Solar Reviews, and Clean Energy Reviews share the average prices for buying and installing home solar systems and batteries. Their websites also enable you to request competing quotes from local solar microgrid providers.

$11,640 = 4 kW solar system

*Average price in Hawaii

$5,940 = 9 kWhs of lithium-ion battery storage 

*Average price in the Hawaii

$17,580 = $11,640 + $5,940

*The price of a solar microgrid that produces enough electricity to power the average household in Hawaii for 24 hours and stores enough energy for 12 hours of usage.

Remember that having someone install or interconnect your solar microgrid may incur additional costs.

Also, many solar microgrids companies offer free monitoring software that tracks electricity production, usage, and storage. But if you purchase the solar system and batteries from different companies or install them on your own, then you may need to buy separate monitoring software.

Talk to the professionals who sell and install solar systems, batteries, and solar microgrids in your area to assess the additional costs. It’s likely worth speaking to a couple of companies to compare their prices and service levels.

Subtract the value of available incentives

Apply the value of available incentives to the total price of the solar microgrid’s components, installation, and services.

Tax breaks, tax credits, rebates, and discounts are frequently available from governments and non-profits that want to promote resiliency and sustainability.

In the US, you can apply the Federal Investment Tax Credit to the total price of solar panels, batteries, and installation.

$13,009 = $17,580 x 74% 

*The price of the average household in Hawaii's solar microgrid after applying the 26% Federal Investment Tax Credit.

Once you’ve calculated the solar microgrid’s price and subtracted the incentives’ value, you’ll know how much is needed to buy it, then you’re ready for Step 6.

6. How quickly will your solar microgrid pay for itself?

Now the moment of truth…how quickly will you start saving money by switching to a solar microgrid?

As we discussed, it’s likely as soon as your solar microgrid starts producing electricity. But we want to know if our investment in a solar microgrid will pay for itself, paying you back for your initial investment in the equipment and installation and then paying you extra moving forward.

So we need to calculate how quickly your savings on energy bills equals the price of the solar microgrid = the payback period.

If the solar microgrid fully offsets your current electricity usage, your current annual electricity costs become your savings.

6.7 years = $13,009 / $1,951 per year 

*Payback period for a solar microgrid that produces enough electricity to power the average household in Hawaii for 24 hours and stores enough energy for 12 hours of usage.

After your savings on energy bills equal the price of the solar microgrid, the solar microgrid starts paying you.

Once you know your payback period, you’re ready for Step 7. Our final step!

7. How long is your warranty?

Knowing how long it takes for the solar microgrid to pay for itself could be the last step in deciding if you will save money on energy bills. But we want to see if it’ll pay for itself with the money saved on energy bills while it’s still under warranty. If it does, then your solar microgrid has a fantastic ROI and you’re guaranteed to pay yourself back for the initial investment in the equipment.

So the final step is comparing the length of the solar microgrid’s payback period with the component of the solar microgrid with the shortest warranty.

High-quality solar panels have 20-25 year warranties, although some solar panels’ warranties are as short as 5 years. Well-made lithium-ion batteries, with at least 1 kW of storage capacity, typically come with a 10-year warranty.

3.3 years = 10-year battery warranty - 6.7 years

*The minimum time that the average household in Hawaii will get free electricity from their solar microgrid. An amazing return on investment!

$643.5 = (3.3 years x $1,950)/10 years

*Annual savings on energy bills for average household in Hawaii after switching to getting their electricty from a solar microgrid.

Saving money on energy bills? Consider this…

For over a decade, the solar industry has measured its customers’ payback period and ROI by comparing the price of the solar purchase or lease to the savings on energy bills. That’s essentially the same thing we do here with a solar microgrid.

Unsurprisingly, Hawaii’s solar microgrids have the quickest payback of all 50 states (see chart below). Hawaii has the most expensive grid electricity.

It also isn’t surprising that the average U.S. household’s payback period is longer than 10 years. Lithium-ion home battery prices keep falling, but they only became cost-effective for some homeowners in the past 2 years.

As previously noted, solar microgrids tend to pay for themselves quickly if you don’t use much energy, especially if most of the household’s power comes from burning charcoal, firewood, or kerosene.

Regardless of how much energy we use today, most of us desire to sustainably use and afford more power…not less. Here are a few tips for increasing how much money a solar microgrid saves and makes you.

Tips for saving more money with a solar microgrid

Lower the price of the battery

Lithium-ion batteries account for a big part of a solar microgrid’s price. Using a battery with less energy storage capacity or with lead-acid instead of lithium-ion chemistry can drastically reduce costs.

Your home can stay powered for the same amount of time with a smaller, and therefore less expensive, solar microgrid and battery if you’re willing to run fewer appliances on it. Considering what’s critical vs. ideal to keep powered during a grid blackout or when the sun isn’t out, you may realize you can reduce the battery size.

Ultimately, the battery size that’s the right fit for you depends on how much backup power you need to achieve peace of mind.

Lithium-ion batteries have become very popular in solar microgrids because they’re longer-lasting, lighter, and store more energy than lead-acid batteries. However, lead-acid batteries are much less expensive.

Many renewable microgrids use lead-acid batteries for energy storage. Lead-acid can be a great option if you have lots of space to store batteries and a tighter budget.

Install the solar microgrid yourself

A solar microgrid is like most things. You’ll save money if you install everything yourself, as long as you do it correctly and efficiently. Your effort and time can turn into savings of 30-50% on the price of the solar microgrid.

Many people have done it. But don’t be fooled. It’s hard work.

If you install the solar microgrid, it’s crucial to your safety to have an experienced electrician review your work before you start generating power.

Factor in the cost of a power outage

We didn’t factor it into our calculation, but there’s financial value in never experiencing a power outage. The impact of avoiding a blackout is different for each of us.

How much is it worth to you to never again experience spoiled food, lost business, or health risks from not having electricity?

Buy a solar microgrid when the price comes down

Still can’t figure out a way to make the finances work today? Just keep these energy price trends in mind…

• Every year, the prices of solar panels and batteries come down.
• Every year in the U.S., the cost of electricity from the grid goes up about 2%.

For those two reasons, in almost every state, solar microgrids are paying for themselves quicker in 2022 than in 2021.

Make money with your solar microgrid

Arbitrage energy prices from your utility company

Depending on your utility company, their energy prices often change as frequently as every hour, minute, or even by second.

We can equip solar microgrids with software that takes advantage of these price changes, automatically allowing you to switch to the lowest-cost electricity source.

With the software set up, the solar microgrid sells your excess electricity when prices on the grid are highest, then switches you to grid electricity when prices are low.

Join your local virtual power plant

Becoming a virtual power plant (VPP) member networks your solar microgrid with other microgrids, pooling excess electricity production and energy storage. The VPP monitors its members’ available resources and sells them to utility companies so the grid can use them. In doing so, you can make hundreds to thousands of dollars annually and shorten your solar microgrid’s payback period.

Calculating precisely how much money you’ll save on energy bills.

The methodology outlined above is an excellent way to estimate your payback period and savings on energy bills. But, to get a precise calculation, you also need to consider these factors:

• How much solar power generation and storage do you need?
• How much sunlight reaches the panels’ exact location annually?
• What are the solar panels’: model, degradation rate, and warranty length?
• What are the battery’s: model, degradation rate, and warranty length?
• How is the solar microgrid going to be installed?
• How is the solar microgrid going to be interconnected?

You can calculate the exact payback period by determining these factors on your own, but it’ll likely be easier to consult a solar microgrid provider. Reputable solar microgrid providers offer free consultations where they calculate these factors and then provide a microgrid design and price quote.

Energy Sage allows you to request and compare competing quotes from national and local microgrid installers in North America.

More resources for saving money on energy bills

Savings money on energy bills is a popular Electric Islands theme, and there are even more techniques and technologies you can use.

To learn about more money-making and saving opportunities, check out these blog posts…

• Bill-crunchers and Money-makers in Who uses renewable microgrids? Should you?
• Protect yourself from unpredictable energy prices. Democracy thanks you.
• What is a virtual power plant? Your neighborhood’s energy pool.