Why asset owners should now consider Solar + Storage

Many utilities and IPPs are now considering Solar + Storage for upcoming projects in their development pipeline. As lithium-ion battery prices decrease and storage technology becomes more affordable and reliable, many projects are cropping up around the world. For instance, Duke Energy is investing $6 billion in a 700 MW PV plant plus 50 MW for storage to replace its Levy Nuclear Project. Tucson Electric got a $0.045/kWh PPA for solar + storage from NextEra Energy for a 100 MW solar array and a 30 MW, 120 MWh energy storage facility. In this article we discuss the value of Solar + Storage, price drops and the significant growth in the market place.

1: Value Stacking

The term value stacking or revenue stacking refers to the fundamental service that storage can provide to different stakeholders. Here are three examples of how storage can add value to producers and consumers:

Peak shaving: Utilizing storage to reduce power consumption during peak times to avoid peak demand charges.

Load shifting: Storage can be used to shift high power loads to a different time when time-of-use charges are lower (usually at night).

Frequency regulation: Helping grid operators keep the supply and demand of AC power balanced so that the frequency remains with its limits. This is typically ± 0.5 Hz of 60 Hz in North America.

According RMI here is the full value across all stakeholders

Image source: https://d231jw5ce53gcq.cloudfront.net/wp-content/uploads/2017/05/TheEconomicsOfBatteryEnergyStorage-ExecutiveSummary.pdf

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2: Storage Cost

The cost of Lithium-ion has decreased significantly over the past few years. In 2014 IRENA reported the cost of utility-scale storage was $550/kWh while GTM Research expects average Lithium-ion battery costs to hit $217/kWh by 2020. Some analysts believe that the Tesla-Panasonic partnership may have already be beating that price at about $150-$200/kWh. In many cases, storage is now cost effective to deploy.

3: Utility scale growth

According to the market research firm IHS, the energy storage market is set to “explode” to an annual installation size of 6 gigawatts (GW) in 2017 and over 40 GW by 2022 — from an initial base of only 0.34 GW installed in 2012 and 2013. In the US, front-of-the-meter, utility-scale deployments grew to 234 MWh in Q1 2017. The many IPPs and utilities implementing storage have proven that the technology is cost-effective and can be used in a viable business model.

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Image source: https://www.greentechmedia.com/articles/read/us-energy-storage-market-experiences-largest-quarter-ever

Author:
Farid Najafi is the president of Arbox Renewable Energy. Arbox is a clean-tech company that helps asset managers do more with less, maximizing their bottom line through software. Arbox’s flagship product Hap® is an asset management software for solar and wind IPPs and asset managers.

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