The effects of distributed generation and energy storage for peak demand, costs, and energy equity

Electrification is a key approach for reducing greenhouse gas emissions but will increase peak demand, challenging electricity systems. Distributed generation (DG) from solar photovoltaic (PV) panels and battery storage are often offered as potential solutions. This study uses a previously validated agent-based model of residential electricity demand to assess the impact of solar DG on peak electricity demand, system costs, and consumer electricity costs in eight neighbourhoods with different incomes and across different locations in Aotearoa New Zealand. Increasing solar PV capacity reduces grid energy use and peak demand, as expected. Peak demand reductions increase with battery storage, up to 0.17 kW (6%) per household. Average consumer electricity costs reduce between 25.20 NZD/month to 184.00 NZD/month. Highest savings of 1,364.00 NZD/year (net savings) are achieved with 10 kW PV panels, while greatest costs of -577.00 NZD/year (net cost) are incurred by 1 kW PV panels with 10 kWh battery. Greatest changes are in wealthier neighbourhoods in colder climates. These results highlight the trade-off between seeking reductions in consumer costs and peak demand. A key finding is the suboptimality of battery storage for consumer cost reductions, suggesting incentives for battery storage, or reductions in cost, may be required to reduce peak demand. Incentives should consider uptake by lower-income households, which would reduce energy poverty without sacrificing energy system benefits.