Pairing solar and storage challenges gas peakers

May 30th, 2019, Published in Articles: Energize

Gas peakers have been around even before the recent rise of renewables made them even more indispensible. How else could grid operators fill in the void created by the vanishing solar generation when the sun sets at the end of the day or when wind stops spinning the wind turbines’ blades? And with natural gas plentiful and cheap – especially in the US – their place in the energy mix appeared safe. Rapid advances in energy storage technologies and equally rapid fall in prices, however, are beginning to change the economics of natural gas peakers.

Batteries can firm variable renewable generation, making it so much more valuable. While evidence to date is anecdotal and details tend to be sketchy, two recent trends stand out:

  • Renewables, solar in particular but also wind, are increasingly paired and co-located with on-site storage.
  • The cost of storage, especially batteries, is plummeting while their performance continues to improve.

This has prompted a number of utilities in the US and elsewhere to invest in ever-larger solar plus storage projects co-located and paired to optimise their synergies. Batteries, while still expensive, are reportedly performing much better than gas-fired peakers by following critical ramping and frequency requirements coveted by grid operators much more accurately and instantaneously. This means that, everything else being equal, they are increasingly preferred by the grid operators.

Fig. 1: Tesla’s battery storage unit near a wind farm in Australia.

In early April 2019, Florida Power & Light (FPL), a utility owned by NextEra Energy, announced plans to build the world’s largest solar plus battery storage project, with a battery reportedly 4 times larger than anything currently in operation. FPL said the new solar plus storage plant is intended to accelerate the retirement and replacement of two ageing natural gas peakers.

The new Manatee Energy Storage Centre, which will be co-located at an existing FPL solar plant in southwest Florida, will have 409 MW of storage capacity and able to provide 900 MWh of electricity – enough to serve over 300 000 homes for up to two hours.

In all such paired applications, storage essentially “firms” or “smooths” the otherwise variable output of solar or wind generation – making the renewable output so much more valuable. Assuming that such paired and co-located schemes perform as expected and can be economically scaled up, they stand to challenge the traditional role of gas peakers, which historically provided rapid ramping, frequency and similar critical services.

The future prospects for solar or wind + storage will be further strengthened as the performance of batteries improve while their cost continues to plummet as supported by the cost reduction projections of Bloomberg New Energy Finance (BNEF) and others. BNEF’s latest figures for the levelised cost of electricity (LCOE) for lithium-ion batteries dropped 35% in 2018 to $187/MWh.

BNEF, like others, is convinced that as battery costs decline, more renewable energy projects will be paired and co-located to smooth electricity output and provide grid stability services. FPL’s recent announcement is likely to be one among many in the coming months and years.

The trend towards pairing is most noticeable in places with high renewable penetration such as Hawaii, aiming to become 100% renewable. In early April, Hawaii’s Public Utilities Commission (HPUC) approved funding for 6 grid-scale solar and battery storage projects – three on the island of Oahu, one on Maui, and two on the big island of Hawaii. Together, they will amount to 247 MW of solar capacity and roughly 1 GWh of battery storage – and eliminating over 190-million litres of imported fossil fuels annually.

Fig. 2: Aloha State: Going from 100% diesel to 100% renewable by 2045.

According to the HPUC, the cost will be “significantly” lower than the cost of fossil fuel generation in the mainland US, which is around US$0,015/kWh. Retail prices in Hawaii are among the highest in the US, averaging around US$0,40 to UD$0,50/kWh, depending on the island. Hawaii, which used to be nearly 100% dependent on imported diesel fuel is rapidly progressing towards a 100% renewable future.

One wonders why it took the Hawaiian politicians so long to arrive at a sensible solution considering the abundance of domestic renewable energy – the sun, the wind, geothermal, tidal, biomass and hydro.

In announcing the project, Eric Silagy, CEO of FPL said, “Replacing a large, ageing fossil fuel plant with a mega battery that’s adjacent to a large solar plant is another world-first accomplishment and while I’m very pleased of that fact, what I’m most proud of is that our team remained committed to developing this clean energy breakthrough while saving customers money and keeping their bills among the lowest in the nation.”

FPL believes the project will save customers over US$100-million and eliminate more than 1-million t of CO2 emissions.

Los Angeles to replace ageing plants with a virtual one

The combination of solar plus batteries is gaining ground. When Mayor of Los Angeles, Eric Garcetti, vowed not to repower three ageing and polluting natural gas fired plants if given a cleaner alternative, SunRun, a company which serves 250 000 customers with rooftop solar panels, saw an opportunity.

The company offered to replace the physical plants with a virtual power plant (VPP) consisting of 150 000 homes and 500 apartment buildings with rooftop solar panels plus storage. To make the scheme practical when sun goes down, SunRun is offering to pay each homeowner US$4000 to install a battery in their home provided they agree to allow its capacity to be dispatched at critical periods. According the SunRun’s CEO, Lynn Jurich, the combination of rooftop solar plus storage could successfully replace the retiring gas plants and be cheaper. Similar schemes are being tested around the world with promising results.

Acknowledgement

This article was published in the June 2019 edition of EEnergy Informer and is republished here with permission.

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