Falling costs and rising solar penetration could see the economics of PV plus storage projects in the USA overtake stand-alone PV in the coming years as the demand for solar 'peak shifting' and frequency response grows, a new study says.
By 2020, the business case for coupled PV with energy storage in California could be more favourable than stand-alone PV, according to a new report by the U.S. National Renewable Energy Laboratory (NREL).
This expectation has been given some weight by the International Renewable Energy Agency (IRENA) forecasts 80-90 GW/year solar installations for next five years, a figure significantly higher than the 73 GW per year recently forecast by the International Energy Agency (IEA).
California’s installed solar capacity rose from less than 1 GW in 2007 to over 17 GW by the end of 2016, increasing the demand for storage capacity to provide power outside daytime hours. California hosts over 4 GW of energy storage capacity, most of which is pumped hydroelectric power. Directives from California's Public Utilities Commission (CPUC) require utilities to procure a total of 1.8 GW of energy storage capacity by 2024.
The coupling of energy storage can impact solar project economics in a number of ways. Coupling PV and storage can increase the revenue by utilising otherwise clipped energy, and reduce costs by sharing components. However, it can also decrease revenue by restricting storage operation during periods of high solar output due to shared inverter systems.
Under current market prices, stand-alone PV provides the highest benefit to cost ratio, but by 2020 it could be overtaken by PV coupled with storage as costs fall and PV penetration rises, NREL said in its report. Higher penetration levels will significantly favor PV with storage projects over stand-alone plants.
California utilities such as Southern California Edison (SCE), Pacific Gas and Electric (PG&E) and San Diego Gas and Electric (SDG&E) have been key proponents of storage growth, but other states are also embracing new storage projects amid rising renewable energy capacity.
Arizona’s Tucson Electric Power (TEP) is seeking up to 100 MW of storage capacity. In May, the company announced it had agreed to offtake power from a new 100 MW solar array with 30 MW energy storage project being developed by NextEra.