T.J.,
I'm sorry, I forgot that Roles is vCenter server component. On your standalone esxi host, especially when using the user root that is of no concern. You can't have any more privileges than root on a standalone esxi host.
Just to try something else: Reading the documentation of the backup command I saw that you can specify local storage on the esxi host as well:
Local storage for backup files is safe because vMA is stored in the /vmfs/volumes/<datastore> directory, which is separate from the ESXi image and configuration files. (vSphere 6.0 Documentation Center ) (or VMware vSphere 5.1 but it's the same)
nevermind, it's talking about the vMA ^^ (it's quite early in my timezone)
Anyways. I never backup esxi hosts because I use a kickstart script with all the configuration of the esxi host in place. If you're interested I can send you the kickstart script I use. But on the other hand I've never had an issue when doing an in-place upgrade of esxi either. So if you want to upgrade I'd do it without backing up the esxi host.
One more thing to try tough.. Which windows version are you using? I remember from similar scripting topics that even tough a user is in the local administrator group it sometimes doesn't get full admin privileges. can you try to run your shell with "run as administrator"? Other than that I think we'll have to find out if there is a log of your vCLI that logs some more information where this "permission denied" is coming from.