United States

United States

WindPlus: US solar-storage price drops likely to slow

Windpower Monthly's brand new section takes a closer look at some of the latest developments in wind, solar and storage hybrids.

The US has far more solar-plus-storage than wind-hybrid capacity
The US has far more solar-plus-storage than wind-hybrid capacity
Falling costs of solar and batteries have been key drivers to unlocking US demand for these technologies, but there are signs that the price reductions seen in recent years are levelling off.

In its Utility-scale Solar study, published in December 2019, the Lawrence Berkeley National Laboratory (LBNL) found that as the cost of adding medium-duration (2-5 hours) battery storage to utility-scale solar PV projects has continued to fall, interest among utility offtakers has grown.

Many now encourage PV proposals to include a storage option.  

The US had 55GW of PV hybrid capacity with interconnection at the end of 2018, compared with just 5GW of wind hybrid capacity, LBNL calculated.

Recent data gathered by consultancy Brattle Group showed that 40% of all capacity in the interconnection queue of California’s independent system operator consists of solar plus storage, followed by standalone storage projects, then solar, while wind and wind-storage projects each made up around 8% of the total.

NV Energy has awarded six 25-year solar-storage contracts in Nevada with commissioning dates in 2021 to 2023.

Adjusted for inflation, these deals are worth $22-26/MWh, according to LBNL.

The three most recently signed of the these — Arrow Canyon, Southern Bighorn and Gemini, developed by EDF Renewable Energy, 8Minute Solar and Quinbrook/Arevia respectively — have a higher battery-to-PV ratio, while PPA prices have plateaued.

Despite recent record-low contract prices, LBNL expects solar to face "stiff competition" from both wind and gas in the coming years.

With the full 30% investment tax credit (ITC), solar-storage PPAs in the $30/MWh range are cheaper than new conventional generation sources, but without the ITC, the margin is slim.

Applying analysis to figures from BloombergNEF for installed battery costs and figures from LBNL for utility-scale solar PPAs, Brattle shows that from around 2020, the level of reduction in prices will not be as steep as before (see chart, below).

The ITC is currently scheduled to be cut in stages from this year and will be down to 10% by 2022.

For Brattle, this means projects qualifying for the 10% rate would need more than a decade of continued technology-cost declines to ensure project economics stay at current levels.

According to analysts, focusing exclusively on the levelised cost of a solar-storage project overlooks the added value storage provides.

Co-locating a greenfield solar-storage project can achieve up to 8% cost savings, according to NREL, in relation to land acquisition, installation labour, hardware, interconnection and other factors.

However, as the ITC diminishes, developers will need to account for all possible value streams when devising projects, Brattle says. Design, sizing and dispatch will all require consideration on a project-by-project basis to extract maximum value.

US wind-storage installations total around 74MW/82MWh. As with hybrid solar-storage plants, wind-storage installations yield cost savings through shared interconnections and site preparation.

While these savings alone are not currently enough to make these pairings profitable, this may soon change. States are starting to implement so-called clean peak standards or rules.

Although NV Energy’s solicitation for solar capacity was designed specifically to attract solar-storage projects, it is instructive.

The power purchase agreement (PPA) structure pays 6.5 times more for power generation during system peak hours — than during the rest of the day. Projects provide capacity value in addition to energy value.

Clean peak standard

Massachusetts will be the first state to implement a clean peak standard (CPS). This market mechanism is designed to shift renewable energy (including wind and solar) to peak times and help reduce demand, cut emissions and costs.

The CPS will include new renewables, existing renewables that pair with new energy storage, new energy storage that charges primarily from renewables, and demand-response resources.

These facilities will generate clean peak energy certificates that can be sold to retail electricity suppliers, which are required to purchase a certain amount each year to meet the minimum standard obligation.

Wood Mackenzie modelled wind-battery installations in a CPS scenario. During a four-hour peak, capacity from wind available during these peak hours, plus the electricity stored in the battery, provides enough clean energy.

The system can meet the peak if the sum of the previous 20 hours exceeds the system deficit during peak hours. In WoodMac’s example, the deficit is 31.6MWh, while the wind farm generated 48.9MWh in the preceding 20 hours.

How many peaks can be successfully covered depends on the durations of each one.

WoodMac found that one-hour peaks could be met by wind plus storage across most of the US, while windier states, such as Oklahoma, could address four-hour peaks.

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