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What is the strategy for solar + storage hybrid project developers entering the interconnection queues?

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Interconnection queues like in PJM have started reporting on solar + storage projects.

Who is developing these projects and entering the queues? Is it just utilities building these projects with their own development teams or are there developers entering the queues with a different strategy?

My understanding is that most of the hybrid projects being developed are in response to utility RFPs, but I'm curious if anyone in the network has some other perspectives. It seems as though a developer would be taking a big risk pursuing such a project given the current state of the market.

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It is evident ever since the pandemic that renewables would gain greater momentum in future.  While solar and wind have dominated the pre pandemic era, the two seem to be combining to provide better options - Individual identities are being shed as they become clean energy.   This seems to attract not only countries which opted for renewables but, even other countries.

With renewable industry of US taking interest in barriers – interconnection, dispatch and compensation challenges, it is a clear indication despite no full-scale hybrid projects and a few online around the world.  It is indeed a strong conviction that Hybrid projects are the future although storm is brewing and has not merged yet.

Wind and solar generation increases with on-site batteries creating ‘Hybrid’ power plants as the battery prices continue to fall. The challenge ahead therefore, is to risk through differentiated design and control strategies to mitigate weather risks and reap attractive rewards.

In fact, India’s commitment of 450 GW of renewables indicates reliance on wind or solar. Additionally, wind-solar hybrid is projected to soar from the current 148 MW to almost 11.7 GW by 2023 according to a report in October 2020. The reason for this confidence is based on several advantages – project cost would reduce by 7-8%; reduced overheads in terms of land, grid connection and hardware. Because of peak operating times being different, dependable power that meets the demand seems attractive.  It is also considered that the clean power is more competitive against traditional power plants.

Projected tariff trends for a 250 MW wind-solar hybrid shows that a blend of 80:20 provides a levelized tariff of US$0.0332/kWh which goes slightly higher at 50:50 at US$0.0343.  With additional two hour battery storage, the tariff raises substantially to US$0.0612/kWh.  Battery storage at this point seems be a less preferred option until the battery prices fall rapidly.

Coherent policy addressing land constraints, integration challenges, system sizing and experience would perhaps ease the option.  Gujarat, Andhra Pradesh and Rajasthan have initiated wind-solar hybrid policies in alignment with National Wind-Solar hybrid policy and more states may follow this example sooner or later.  Hybrid and energy storage (HES) launched in 2018 is keenly looking for EPC tenders in Leh, Chattishgarh, Lakshadweep from SECL, NTPC.

India seems to be leading in the worldwide interest on Hybrids with solicitation of Andhra Pradesh in procuring 5,000 MW of wind-solar hybrids through 2023 with a rider that resources must "be configured to operate at the same point of grid connection."  When resource intensity is complimentary, it has provided encouraging results of co-located wind and solar.  However, it may not become market reality until we overcome regulatory and policy barriers.

The interest in hybrid projects is such that utilities would go to places that would never be expected to be in solar-storage hybrids.  The hybrid promotion is likely to pick pace with the cost of solar dropping and there are a number of them under development for 2020-2023.  With all installed solar retrofitting with storage, some call it ‘solar after sunset’.

Batteries may become cost competitive with traditional thermal sources in future, with low technology cost and high renewable development. Countries with less technically advanced systems seem to lead the charge on hybrids as they not only can meet their growing demand but even steadier delivery.

With all the technical advancements in hybrid power, larger hope is on ironing out some of the policy and regulatory issues for hybrid generation to gain desired momentum.

The worldwide conversion to 100% renewable energy that has begun will be dependent on effective energy storage technology, especially when dealing with the intermittent nature of solar and wind source energy.  Any responsible utility company and renewable energy developer needs to present and engage in project opportunities that feature not only a renewable technology but appropriately sized energy storage technology that would allow the project to function as a baseline dispatchable power participant.  Adequate energy storage to allow for multiple days of clouds or calm should be planned into any utility scale renewable energy project going forward.

No renewable energy developer in their right mind would engage in development of an energy project without an offtaker identified from the get go.  Similarly, it would be highly unusual to find a financing entity that would provide the necessary major investment without the assurance of a credit worthy offtaker already signed up.  This is why a major attraction of a utility-sponsored RFP is the inbuilt off take, their credit quality, and assistance with the interconnection process.

Given the current pricing that is being seen in the marketplace for renewable energy, and the vast amount of capital looking for investment into reliable high return projects, all utility companies and all high volumer energy users would be foolish to to move forward aggressively with the conversion to 100% renewable energy now.  The excuse of stranded assets can be dealt with by the very large gap in current cost of fuel and production, when compared to the very low cost of reliable renewable energy.

For those less interested in the utility scale marketplace for renewable energy, my advice to our clients is to do it behind the meter.  Do not deal with the pain of regulation and interconnection and general bureaucratic delays. It is possible to create a reliable microgrid at the building level, at the campus level, the neighborhood level and beyond with adequate planning and the correct choice of technologies, of which there are now many, and more coming to market. Instant shutoff avoids the problem of backfilling the power lines in an unexpected manner.  The resulting cost of energy in this situation for most of the United States will be less than your friendly neighborhood utility company needs to charge. 

Kudos to those utility companies who clearly see the future and the potential that it holds.  Shame on those who have constructed a box that they can not find a way out of.

Hope this helps your thinking on the issue of the interconnection queue and the reason that we need to see more projects lining up that offer a renewable energy plus storage solution.

It depends on the scale....if deployed at scale with the levelized cost of solar energy being competitive to bid for energy and by coupling storage (again at scale) one can stack revenues for capacity and frequency response products to improve business case.

Focus on locations where transmission and distribution constraints can be alleviated and create compelling partnerships to accentuate the project.

I completed a deep dive on photovoltaic plus storage for Energy Central last year that may provide some useful insights for you—you can find Part I here and Part II here.

The PJM market has a capacity component that could contribute to the need for storage.  Here in ERCOT, there is also tremendous solar PV development, most without storage, but some with it.  Recent article, see linke, lists many of the mega scale projects.  You will see that most are mainly selling into the market with some bilateral municipal and corporate PPA's.  Pricing is reported to be sub-$30/MWH some even closer to $20/MWH.  

 

Storage developers are at the same point that solar and wind developers were 10-15 years ago trying to set the stage for when their technology is economical and readily accepted. The transmission and interconnect queues take a year or more and for the relative low cost to apply and reapply it makes sense to check that box in parallel to refining cost for project. 

Jonathan Rich's picture
Jonathan Rich on Nov 11, 2020

Does the developer already have an offtaker identified before entering these queues? Or is the utility the one developing the project and entering the queues?

David Rogers's picture
David Rogers on Nov 17, 2020

Typicallly developers apply for transmission early in the development stage to get a better estimate of the upgrades and interconnection costs associated with the project. With that information the project's proforma is more realistic and potential offtakers and investors are more confident in the project's viability.

Solar and storage facilities compliment each other nicely. When the solar energy is exhausted, the batteries can engage and extend the injection of MW to the grid (and during the daylight hours, the solar excess can charge the battery, or other source may do it). It is similar in concept to hydro + wind generation in Northern European countries.
As for the "who" in the question, renewable energy companies who have the means to build this type of dual site will likely build more. The industry has been waiting on battery storage technology to advance to a point that makes this type of project feasible. I recently worked with a company that has broken ground on a solar/battery storage facility and I expect to see more.

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