Batteries help solar connect, prices stay high – pv magazine USA


NREL has modeled solar storage more as a mitigation tool to limit grid upgrade costs, and finds that for now, it’s still a better investment to build stand-alone solar. However, the costs are close.

If you follow the solar, you know that interconnectioncosts. Deadlines and viability are the main challenges in project development.

Government researchers studying the costs of adding batteries to save power grid upgrades when installing solar power have published data suggesting that in today’s wholesale market, small-scale solar storage scale cannot financially compete with stand-alone solar. However, when only a few hundred thousand dollars of interconnect costs are introduced, viability begins to lean towards batteries.

The document – produced by the US Department of Energy’s National Renewable Energy Laboratory (NREL) – Use of operating and energy storage contracts to reduce photovoltaic interconnection costsoffers policy makers the ability to financially model the cost of incentives when deploying solar plus storage at the distribution level.

To reach this conclusion, NREL started with a 3.3 MWdc solar plant with interconnection costs of up to $650,000. The report also considered a 1.3 MWdp solar project as an example of an alternative installation that would not require interconnection upgrades. Energy storage and load shedding were also put in place, to determine the project with the best financial viability.

The financial model includes the use of the federal investment tax credit.

The analysis determines that even when interconnection costs are removed and when operating in wholesale markets, the net present value of a project that adds batteries is lower than that of smaller systems, without batteries , with no upgrade costs and no exit rules.

This result is not surprising to anyone dealing with these markets, as solar-plus-energy storage projects at the distribution level in the wholesale market are virtually unheard of.

Research for the paper was published in two companion publications. The first is a Technical and economic analysisand the second is a Conceptual frame.

The objective of the techno-economic analysis is to:

  • Identify potential grid violations that would be induced by a PV system requiring interconnection to a distribution circuit
  • Identify several technically viable options to mitigate potential breaches, including infrastructure upgrades, downsizing the PV system, downscaling PV, and adding energy storage batteries
  • Define the required technical operating parameters of the system to mitigate any potential breaches (the “Operating Envelope”)
  • Compare the economics of each option, from the perspective of the PV developer.

Two requirements of the study are that there should be no annual power generation violation (i.e. more local solar energy than local demand) and that the analysis should use the currently available technology.

An example of a violation that could produce more electricity from the local solar + battery array load at noon. In the case of the solar plus storage system, the battery would absorb daytime solar power and pump it out later to avoid breaches.

NREL modeled a 3.3 MWdc project and, based on meeting the technical requirements, offered four options to adjust the solar power project:

  • The developer initially proposed a 3.3 MW PV system, but to avoid grid violations, the PV system is scaled down to 1.32 MW.
  • 3.3 MW PV with infrastructure upgrade costs: the developer installs the originally proposed 3.3 MW PV system and pays the infrastructure upgrade costs to mitigate grid violations associated with the PV system.
  • 3.3 MW PV reduced to meet operating envelope: Developer installs the originally proposed 3.3 MW PV system and agrees to meet the operating envelope, reducing the PV.
  • 3.3 MW PV, using battery and reduction to meet operating envelope: Developer installs 3.3 MW PV originally proposed and agrees to meet operating envelope, charging battery and/or reducing PV during hours when PV system generation is above specified limits. Different battery sizes are explored.
  • The 3.3 MW battery system was modeled with two battery sizes – 0.4 MW and 2.4 MW, both with four hours of storage.

Revenues for these four designs were projected as follows:

The capital costs of these five systems have been suggested to be between $980,000 and $2.82 million, after taking into account the US Federal Investment Tax Credit.

The analysis concludes that with certain combinations of falling battery prices or increasing interconnection costs, small-scale solar storage could be competitive in the wholesale energy market. In most markets, however, assets at the distribution level do not compete in wholesale markets – they are usually connected directly to existing buildings or sold under special programs (such as community solar) .

Undoubtedly, integrating storage into distribution channels and providing even minimal financial support would reduce network upgrades and greatly increase highly distributed strength, which might be just enough to make this market viable.

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