SAN FRANCISCO, Dec. 5, 2019 /PRNewswire/ --In a regulatory order issued on December 4, 2019, the Public Utilities Commission of Nevada ("Commission") approved three "solar-plus-storage" purchase power agreements (PPAs), including one that will be the world's largest battery project with a capacity of 380 MW/1,416 MWh. The Commission's approval relied in part on analyses from experts at The Brattle Group, which included an October 2018study on the economic potential for energy storage in Nevada, as well as expert testimony before the Commission by Principal Ryan Hledik.
In conjunction with the Commission's announcement, Brattle economists have released a new study that examines the market for solar-plus-storage resources. The study notes that co-located solar-plus-storage deployments are expected to increase dramatically in the next couple of years. According to the study, solar-plus-storage already accounts for over 40% of all capacity in the California ISO interconnection queue, and is experiencing sizeable growth in the PJM queue as well.
The favorable economics and policies that have driven this trend toward co-locating energy storage with solar PV include:
Demand for firmed solar generation as a capacity resource (and growing reluctance to contract for new gas capacity) is evidenced by recent utility procurements.
Efficiencies of co-location reduce costs and increase revenues of solar-plus-storage investments.
Declining costs of both solar and storage make the hybrid resources increasingly competitive with other resources.
The Federal Investment Tax Credit (ITC) provides up to a 30% reduction in storage costs, if paired with solar.
State solar and storage mandates prioritize deployment of those resources, reflecting priorities of policymakers and regulators.
"We expect that the continued need for firm capacity, flexibility, and clean energy, in conjunction with co-location benefits, will allow solar-plus-storage projects to remain competitive with other resources despite ITC uncertainty," noted Mr. Hledik. "However, improved solar-plus-storage sizing and dispatch strategies will be needed as standalone storage becomes more competitive with hybrid projects."
The study also provides several recommendations for utilities, developers, and regulators when evaluating solar-plus-storage development:
Comprehensively evaluate the benefits of solar-plus-storage, not just the costs, because a focus on only the levelized cost of energy overlooks the added value that storage provides.
Optimize the sizing and dispatch of solar-plus-storage projects, particularly as the federal tax incentives decline.
Evaluate the relative economics of hybrid projects against standalone projects, as each deployment option has unique advantages.
Consider "virtual" solar-plus-storage projects, which could include bids of solar and storage projects that are in optimized but different locations.
About the Brattle Group: The Brattle Group analyzes complex economic, finance, and regulatory questions for corporations, law firms, and governments around the world. We are distinguished by the clarity of our insights and the credibility of our experts, which include leading international academics and industry specialists. For more information, please visit brattle.com.