Why are we seeing a trend of hybrid projects, and can they replace conventional peakers?
As grid-scale storage continues to grow, most installations are not standalone, but instead are coupled with an adjacent renewable project like solar PV. The wave of hybrid projects is taking the industry by storm - it seems like every week there is a new announcement.
However, power grids in most regions have ample room on the grid for more solar, and the price differential between peak evening hours and mid-day hours is not enough to justify storage additions. Only in the most saturated grids (California and Hawaii) is there a risk of overproduction and solar curtailment. Even there, standalone storage (not coupled with a PV project), could alleviate this problem as well as hybrid projects.
So what explains the push for hybridization? While standalone storage can provide many, if not more, services than hybrid projects, there are several other reasons for this trend. Here are just a few:
Investment Tax Credit: As long as the storage is charged from renewable energy (at least 75%) it qualifies for the ITC, which can offset 30% of the initial capital cost investment as well as accelerated 5-year depreciation.
Shared infrastructure: Hybrid projects utilize the same transmission infrastructure and share the interconnection costs.
Simplified procurement: Storage can provide many different services, but let’s face it, they can be hard to value and monetize independently. Hybrid projects allow utilities to bundle the procurement into a single PPA and purchase the solar and storage services on a simple $/MWh bases, streamlining the regulatory approval process.
Solar clipping losses: PV panels are getting cheaper, and the industry is oversizing the number of panels relative to the ratings of the AC inverters and interconnection. For example, a 100 MWac PV plant, may have 140MWdc of solar panels behind it. This increases the total energy output, but at peak solar production some of this power is “clipped” behind the inverter. DC coupled storage, which shares the same inverter as the solar, can capture this energy and use it later.
More than just energy: adding storage allows the solar plant to provide essential reliability services, such as firm capacity, regulation reserves, fast frequency response (i.e. fast “spinning” reserves), and voltage regulation. This allows the plant to capture more revenue streams and the grid operator to replace aging conventional generation.
This last point warrants further discussion. Whether for firm capacity (having the energy when you need it most) or ancillary services, utilities and grid operators are increasingly looking to hybrid solar+storage projects to replace conventional generation, typically gas peakers.
How well storage can replace gas peakers is a heated debate in PJM, NYISO, and across the industry right now. This is true for standalone storage, which I wrote about last year, and gets even more nuanced for hybrid projects. Because the ITC subsidy requires the storage to be charged by renewable energy, there may not be sufficient state of charge during sustained low solar periods and the solar may be contractually prohibited to charge from the grid. Competing objectives from other grid service needs, forecasting, and unexpected outages make this even more complex.
The same is true for providing operating reserves and other grid services. As an energy limited resource, solar+storage projects may not be able to provide reserves or firm capacity at all times. Some in the industry argue that because of these constraints, solar+storage projects can’t replace gas peakers or be comparable to standalone grid-charged storage.
I agree that solar+storage projects can’t provide capacity and reserves at all times and with perfect certainty. But I don’t think we should expect them to and it doesn’t mean we have to replace all gas peakers. We shouldn’t conform state-of-the-art technology to decades-old norms. The rules governing capacity and reserves were established in a different time. Just because it worked then, doesn’t mean we can’t change them for a future grid.
Our goal should not be to have solar+storage projects exactly substitute a gas peaker. Instead our goal is a reliable, clean, and economic power grid. This will take a mix of technologies and resources, each with their own limitations. By combining solar+storage, standalone storage, demand response, and other technologies, we can ensure reliability for a 21st century grid.