Quantifying the impact of policy on the investment case for residential electricity storage in the UK

•Residential battery storage could be revolutionary, but is commercially unviable.•Expert interviews are used to identify the most promising policies.•We model the quantitative impact of six policies to incentivise storage.•Policies that enable storage to monetise multiple services outperform subsidies.•The right policy mix could bring residential storage viability forwards by a decade. Electrical energy storage has a critical role in future energy systems, but deployment is constrained by high costs and barriers to ‘stacking’ multiple revenue streams. We analyse the effects of different policy measures and revenue stacking on the economics of residential electricity storage in the UK. We identify six policy interventions through industry interviews and quantify their impact using a techno-economic model of a 4 kWh battery paired with a 4 kW solar system. Without policy intervention, residential batteries are not currently financially viable in the UK. Policies that enable access to multiple revenue streams, rather than just maximising PV self-consumption, improve this proposition. Demand Load-Shifting and Peak Shaving respectively increase the net present value per unit of investment cost (NPV/Capex) by 30 and 9 percentage points respectively. Given projected reductions in storage costs, stacking these services brings forward the break-even date for residential batteries by 9 years to 2024, and increases the effectiveness of policies that reduce upfront costs, suggesting that current policy is correctly focused on enabling revenue stacking. However, additional support is needed to accelerate deployment in the near term. Combining revenue stacking with a subsidy of £250 per kWh or zero-interest loans could make residential storage profitable by 2020.