Category: Blogs

All signs point to energy storage’s rapid growth beyond 2020

In 2019, the multi-year pattern of record-breaking deployments of utility-scale and behind-the-meter (BTM) energy storage in the US continued. According to Navigant Research’s latest Energy Storage Tracker 4Q19, annual deployments of energy storage resources in the United States have increased from nearly 350 MW in 2018 to approximately 774 MW in 2019, with pipeline estimates indicating annual additions of approximately 1,400MW in 2020 and more than 4,000MW by 2023. Such volumes, while still speculative, are suggestive of developers’ convictions and are in line with the US energy storage industry’s target of adding 35GW of new capacity by 2025.

Driven by cost and performance improvements, an uptick in renewable generation capacity, grid-modernisation plans, improved opportunities for wholesale market participation, national and local government financial incentives and deployment mandates, phase-outs of feed-in tarffs (FITs) or net metering, and a desire for self-sufficiency and improved resiliency—2019 proved transformational for the energy storage industry.

As we move into a new decade, the question is whether the burgeoning energy storage industry will be able to maintain its current path of rapid growth. All signs suggest that it will – and utility-scale energy storage procurements are a major reason why.

2020 and Beyond

This year brings considerable opportunities for the power and utilities industry to spearhead the economy-wide transition to clean energy. As local governments, capital markets, and other stakeholders organise around climate change, many power and utility companies are establishing their own clean energy goals.

In 2019, nearly 50 US electric power companies committed to significant carbon reduction goals including Duke Energy, Xcel Energy, and Arizona’s Arizona Public Service (APS). To achieve these goals, power companies and utilities will increasingly rely on energy storage to assuage volatility in wholesale markets as well as support additional renewables on the grid.

In the near-term, a review of several utility Integrated Resource Plans (IRPs) and Independent System Operator (ISO) interconnection queues underscores the rapid pace with which energy storage deployments are set to grow. Favourable economics and policies are driving the trend towards co-locating utility-scale energy storage with solar PV. For instance, in the PJM interconnection queue there are 398MW of utility-scale solar-plus storage projects and 699 MW of utility-scale stand-alone energy storage capacity poised to connect to the grid in 2020. Longer-term, there are 6,160MW of utility-scale stand-alone storage and 9,881MW of utility-scale solar-plus-storage listed. Moreover, solar-plus-storage projects account for over 43% of all capacity in the CAISO interconnection queue.

While it is important to note that not all proposed projects in ISO interconnection queues are built, for example close to 70% of proposed new MW in the New England ISO (NE-ISO) queue are withdrawn, the data provides important insight into the use-cases for storage that developers believe are needed and bankable. One prominent application for utility-scale solar-plus-storage is the provision of peak capacity. Although fossil fuels, namely natural gas, have historically been the primary choice for peaker-plants, there are an increasing number of cases across the US in which utility-scale renewables-plus-storage can compete directly on price.

For example, in early 2019 AES Distributed Energy, a subsidiary of The AES Corp., and Kauai Island Utility Cooperative (KIUC) announced the operation of the Lawa‘i Solar and Energy Storage facility on Kaua‘i’s south shore. The facility consists of a 28 MW solar PV and a 100MWh five-hour duration energy storage system. The new facility is intended to be used as a peaker plant and projected to deliver roughly 11% of Kaua‘i’s power, making the island more than 50% powered by renewables.

At US$0.11 per kWh, the utility-scale solar-plus-storage system provides energy significantly below the cost of diesel on the island and is projected to eliminate the use of 3.7 million gallons of diesel fuel each year. Despite the technology’s potential, market participation models for utility scale solar-plus-storage are not yet fully designed in most locales, limiting its potential contribution to reducing carbon emissions and costs. Fortunately, ISO’s around the country are working to address this obstacle.

NYISO initiates Hybrid Storage market participation project

At the start of 2020, the New York Independent System Operator (NYISO), initiated an effort to design a model for allowing large utility-scale energy resources paired with renewable generation to participate in its markets. The Hybrid Storage Model project will assess the viability of permitting co-located resources to receive a single dispatch schedule. Although the NYISO sees developers increasingly co-locating renewable generation with storage, its market rules do not include a participation model for such systems.

Co-located resources are currently required to be separately metered and have their own point identifier. While not yet finalised, it is likely the market design will be multifaceted, with some aspects of the design being implemented sooner than others. The elements include participation in NYISO’s energy, ancillary, and capacity markets; a settlement process; modelling for interconnection, planning and operations; and metering requirements. 

The path forward

The trend of large solar plus storage projects driving growth in the utility-scale energy storage market is not expected to change any time soon. Stakeholders in the industry must recognise this trend and be prepared with dedicated offerings.

Energy storage vendors should design their products for seamless integration with solar PV plants, which are often connected with a DC-coupled architecture for maximum efficiency. Systems integrators and project developers should look to partner with solar PV providers early on to evaluate the potential to add storage to any existing or newly planned projects.

Utilities should lead the industry in providing answers through continued development of integrated resource planning frameworks that reflect accurate technology cost and resource operating characteristics at sufficient spatial-temporal granularity to examine operation for a range of grid services.

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Industrial energy storage in 2020: Fuelling job creation and the clean energy transition

As readers of are no doubt well aware, the United States energy storage market is achieving rapid growth.

As analysts project a thirteen-fold increase for the category over the next six years reaching 158 gigawatt-hours by 2024, there is now significant demand for battery manufacturing capacity in the U.S. This is true for the entire category, but especially so for industrial scale applications, as evidenced by utility-scale storage representing the largest market segment in 2018 at 394.8MWh, and experiencing double-digit growth of 11.3% year-over-year.

Many expect there to be continued growth and viability of industrial-scale batteries that are capable of powering energy storage systems. These solutions include those that sit predominantly in front of the meter, supporting utility-scale electricity generation, transmission and storage.

This technology can replace fossil fuel peaker plants, enhance wind and solar plus storage projects, optimise microgrids, improve the utility’s ability to meet fluctuating demand, manage power disruptions – and be deployed in commercial, industrial, mining and military projects.

It is a common misconception that “the technology isn’t there yet,” as most industry insiders will tell you that many of the hurdles to mass adoption of industrial energy storage relate to a lack of supply. Across the current landscape, many energy storage supply chains are bottle necked and wracked with costly inefficiencies that delay the process of production to delivery. While there are a number of international companies shipping product that has helped spur this sector’s growth, domestic manufacturing would help the U.S. meet battery demand with batteries made in the U.S.

Supporting job creation across the United States

There is another obvious, very positive outcome related to domestic manufacturing: the construction and subsequent operation of domestic manufacturing facilities will stimulate economic growth and create numerous jobs. Better yet, these jobs are suitable for professionals possessing varying skill levels and experience, ranging from entry-level to highly specialised.

There are other byproducts of the continued growth of the industrial energy storage category: 

We expect the production at industrial battery storage manufacturing facilities to accelerate the transition of energy supply from predominantly fossil fuel-based systems, to cleaner sources of energy. In part, we anticipate this because state and federal governments are seriously motivated to make this shift.

There are currently twenty-nine states, including the District of Columbia, that have a Renewable Portfolio Standard (RPS) in place – these are regulations that require states or districts to gradually shift their production of energy from fossil fuels to renewable energy sources.

States including California, Washington and Colorado have adopted targets whereby 100% of their energy must come from renewable sources by 2045. Colorado is already detailing how two of its municipalities, Aspen and Glenwood City, are 100% powered by renewable energy technologies such as solar, wind and landfill gas. At present, 35 states operate utility systems with industrial-scale energy storage components, and 47 in total are at various stages of implementing systems that rely on energy storage!

‘A vision for a cleaner future’

KORE Power shares a vision for a cleaner future and job creation and is committed to doing its part to spur this trend to fruition. We are currently reviewing potential sites in a handful of states within the U.S. as part of a process to select the best location for the construction of our manufacturing plant. The new facility is expected to domestically produce systems that power the growing industrial storage sector, and will also stimulate economic growth by creating 2,000 US-based manufacturing jobs.

The proposed one million square-foot facility will produce KORE’s trademarked Mark 1 Energy Storage System using state-of-the-art, fully automated battery assembly lines and processes. The plant is designed to meet market demand for battery energy storage systems, and once completed, will possess 10GWh of highly scalable manufacturing capacity.

The role that energy storage systems play in creating energy supply from clean sources, coupled with rising demand and increasing bipartisan legislative support, clearly demonstrate the market opportunity for battery storage systems and domestic manufacturing.

Cover Image: KORE Power’s planned manufacturing facility in the US, which would host 10GWh of manufacturing capacity. 

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States can’t wait: Leadership on energy storage doesn’t only come from Washington

With US$5.4B projected for U.S. storage investments by 2024 — a 12-fold increase in annual growth in less than five years — the trajectory for energy storage is clear. What’s also clear is that policymakers across the country see the value of encouraging this striking market growth with policies that enable expansion. What’s less clear is whether states or the federal government will take the lead in encouraging the integration of storage into the electric grid.

Energy storage is an increasingly important technology that serves myriad retail and wholesale services, and with robust economic, grid reliability, and climate benefits. So, is it at the state level where homes and businesses might need these resources to ensure resilient and clean power? Or is it at the Federal level where developers and utilities can reinforce the reliability and efficiency of electric wholesale services?

I posit that enabling policies are needed at both the Federal and the State level. But challenges loom large at the Federal level this year.

#StorageITC is a missed opportunity, but not gone

The Federal Energy Regulatory Commission (FERC) has been integral in pushing for the adoption of energy storage deployment with Order 841, and just a few weeks ago the Department of Energy issued the Energy Storage Grand Challenge. But Congress missed a big opportunity this past December. Despite broad, bipartisan and bicameral support, federal lawmakers ultimately took a pass on legislation to clarify that the Investment Tax Credit (ITC) should include stand-alone energy storage.

Even with the challenges of an election coming up in November, we will keep fighting to make sure this common sense, jobs- and economic growth-enabling energy policy ultimately prevails this year. A number of additional technology innovation bills that encourage storage are also working their way through Congress, and we look forward to doing what we can to help make them into law. But even though energy storage policy enjoys bipartisan support, there are obvious challenges associated in an election year in a deeply divided congress.

On the other hand, there are plenty of reasons to be optimistic about the policy landscape this year for energy storage in the U.S. That’s in part thanks to the activity in the states and regions, whose governors, lawmakers and regulators understand that sitting back and waiting for cues from Congress isn’t an option. Nine states have integrated resource plans with formal energy storage components: Arizona, California, Colorado, Michigan, Minnesota, New Mexico, Nevada, Oregon and Washington. Many others offer incentives or have initiated studies and pilot programs intended to expand energy storage deployments.

New Jersey will soon issue detailed rules on its own 2 gigawatt goal, and  Massachusetts is set to release details on a first-of-its-kind Clean Peak Standard to shift toward storage and away from peaking plants to provide clean energy where it’s needed exactly when it’s needed. States like Michigan, Connecticut, Colorado and Arkansas all have proceedings or are actively considering how to incorporate energy storage into electric systems for the benefit of ratepayers.

Planning ahead and jumpstarting vital dialogue

Utilities aren’t waiting either; in 2019, more than 14 utilities filed Integrated Resource Portfolio (IRP) plans with energy storage investments or issued all-source Request for Proposals (RFPs) including storage. This doesn’t even count all the new state resilience planning, where distributed storage can have retail and wholesale benefits beyond the emergency resilience need.

Meanwhile, two Regional Transmission Organisations (CAISO and MISO) have moved ahead with stakeholder processes to update their rules for storage-plus-generation “hybrid” resource interconnection and market participation. And Texas grid operator ERCOT has established a Battery Energy Storage Task Force to begin its market planning.

The longer Washington waits, the harder it may be to provide clear signals for investment at the federal and wholesale level, and to ensure these local and regional decisions complement national policies. Passage of a federal tax credit is a start – it will expand the reach of local ratepayer-funded storage programmess and incentivise vast new aggregated resources – just as it did with distributed solar generation.

To help jumpstart this 2020 dialogue, the U.S. Energy Storage Association on Feb. 12 is hosting its annual Policy Forum, in Washington, D.C. featuring Congressional, FERC, RTO, and state leaders to focus on these ramifications and the appropriate roles for each. Those in the energy storage business know the import of policy certainty and consistency. The future of storage is valuable – to the grid and to the economy. But with properly aligned federal, regional and state policies, its future can be even brighter.

Read the entire story’ Top 10 blogs of 2019

The 10 most popular blogs on during 2019 offer a fairly strong indication of the overall topics leading industry thinking during the year – so without further ado, here they are:

Of course, throughout 2020 – and beyond – we’ll be tackling all of these as well as other crucial, controversial and / or intriguing topics. We’re expecting to see more of a focus on the supply chain and manufacturing in 2020, both for lithium and non-lithium technologies. Safety and regulation topics including grid integration with electric vehicle (EV) infrastructure, as well as the related areas of finance and business model innovation are likely to also feature heavily.

Meanwhile here at Solar Media, we’re running with #SmartSolarStorage2020, a hashtag that can be used on social media to create and curate conversations throughout the year.

The Top Three

‘Leapfrogging’ the grid: Hybrid lithium-flow in action at a remote Thai village microgrid

We talk a lot about the existing prominence of lithium-ion. There’s also been an increasing amount of discussion of flow batteries as a long duration counterpart to lithium, evidenced by the popularity of our November news story on Lockheed Martin’s forthcoming flow energy storage battery launch (see our Top five news stories for the year here).

I was both surprised and enthused to see a guest blog on a project combining both technologies, lithium-ion batteries with zinc bromine flow batteries, at a remote Thai village, take the number one spot for this year.

Ben Shepherd, chief commercial officer at Australian company Redflow, talked about the advantages, challenges and execution of a project that promises to prove “an excellent demonstration of the benefits of energy storage systems in developing nations”. 

(Cover image to this article shows an aerial view of the village, Ban Pha Dan. Credit: Redflow).

A flow battery ‘competitive with the LG Chems and Samsungs of this world’

Ditto the second entry in our list: the proposed merger between flow energy storage providers Avalon Battery and redT was discussed in detail with Avalon and redT leadership, alongside NEXTracker’s CTO, Alex Au.

NEXTracker has deployed Avalon’s batteries in the field already in its innovative solar-plus-storage power plants. Some deep insights as well as attention-grabbing soundbites from the bullish trio propelled this one into the upper echelons of our Top 10 blogs of the year.

Every charge cycle counts when it comes to battery degradation

Despite the propulsion of flow batteries to the top of our charts, for most of our readers, the energy storage industry in the 21st Century still means lithium-ion.

Smart strategies for monitoring, managing and controlling lithium-ion batteries as they store or dispatch renewable or other energies, deliver ancillary services or otherwise participate in energy market opportunities, are vital to the lifetime, economic value and safe operation of energy storage systems.

This blog we published in September, from Paul Soskin, operations system analyst at Kiwi Power, looks at how the “serious economic problem” presented by battery degradation can be mitigated. Along with 2018’s technical paper from the US Electric Power Research Institute’s (EPRI) Ben Kaun and Andres Cortes on similar themes, it proved popular with our readers.

2019: The final countdown

Why Shell bought Sonnen: Value is in behind-the-meter potential 

Having followed Sonnen’s from start-up to dominant player in Germany with its combination of grey, somewhat Apple design-looking lithium iron phosphate (LFP) battery energy storage systems and business models for ‘community’ energy trading and grid services, it was fascinating to speak to Sonnen CEO Christoph Ostermann to get the inside scoop on Shell’s acquisition of the company.

Batteries and the blackout: How energy storage saved the UK’s grid

More a feature article than a blog, this beast from Solar Media Editor-in-Chief Liam Stoker looked at the August 2019 blackout that affected more than a million people in Britain. Lightning struck twice, quite literally, and battery energy storage was on hand to help deal with the impact of the country’s first major blackout in more than a decade.

After lithium… more lithium? Inside 24M’s semi-solid battery play

It’s not just flow batteries that are being considered the next big leap forward for batteries. Our profile article in the latest PV Tech Power looks at flow batteries and other technologies (battery and non-battery) that offer promise in the long duration space. Meanwhile, the likes of 24M, one of a number of MIT start-ups in the advanced energy space, are refining or reinventing the lithium wheel. I spoke with Rick Feldt, 24M president and CEO, Rich Chelbowski, CFO, and senior director of products Joe Adiletta in March this year.

2019: Where can energy storage go this year?

Read it and weep, Nostradamus. Last year we spoke to a number of industry experts and commentators for a three-part blog series to welcome in the New Year. Perhaps our respondents were clever enough to not put too many numbers in their predictions, somewhat reducing the margin of error for looking silly, but in terms of the trends and topics, they were broadly on the money.

(see also: ‘2019: Beyond electric dreams’ and ‘2019: The next episode’ for the rest of that trio of blogs). 

Open season: the next steps for energy storage

We looked again at the state of the energy storage market in some detail in the third quarter of 2019, in a feature article that led our Energy Storage Special Report 2019. The theme of the article, and indeed the loose thematic thread of the entire report, is that we can’t get too caught up in the excitement of the industry’s rapid growth without taking a look at some of the challenges and possible industry dynamics that lie ahead.

Three things the energy storage industry should know about end of life

The end of life management, recycling and other circular economy issues are big topics, dynamics, challenges, call them what you like, because they’re all of those things, in the lithium battery storage industry. But lithium recycling also presents a massive opportunity. Hans Eric Melin at consultancy Circular Energy Storage travelled far and wide and trawled through waves of data to do some myth-busting and number touting that says so.

Market and technology development of stationary battery storage systems in Europe

Dr Kai-Philipp Kairies, head of technical consulting at RWTH Aachen University contributed a technical paper on the business models and technologies underpinning the development of stationary energy storage markets, beginning with findings from Germany, Europe’s leader thus far in both deployment and enthusiastic embrace of energy storage. Although watch this space, the likes of Spain, Italy and Portugal are likely to start taking bigger and bigger market shares this year, linked to both grid stability issues and the growth in subsidy-free solar-plus-storage.

Thanks everyone! 


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Encouraging signs: interconnection rules in the age of distributed energy storage

As US states work to address and enable the swift growth of distributed energy resources (DERs), including solar and energy storage, the issues surrounding their interconnection to the electric grid require close attention. 

Not only to maintain safety and reliability as new technologies connect to the grid, but also to provide a clear, transparent and efficient process for customers, developers and utilities

Interconnection procedures are the rules of the road for the grid. Without common rules and predictable processes, gridlock and costly projects can result. Alternatively, the adoption of statewide interconnection standards (i.e., rules that apply to all regulated utilities) that reflect well-vetted best practices can provide greater consistency across utilities and help streamline the grid connection process for all involved stakeholders. Interconnection rules are designed to handle current and anticipated growth of DERs, while also enabling more cost-effective and efficient clean energy projects.

In particular, interconnection standards can help states address the integration of newer technologies that are transforming the energy system, i.e., energy storage, solar-plus-storage, and smart inverters. Energy storage in particular requires more explicit provisions to address its unique flexibility and ability to operate differently based on different applications.

What’s so special about energy storage?

So, for example, energy storage is controllable in a way not typically seen with distributed generation, such as rooftop solar. Many energy storage systems can be designed with the capability to limit or prevent export onto the grid, which impacts how the system should be studied and interconnected to the grid.

In IREC’s recently released 2019 Model Interconnection Procedures, we take the first steps toward defining a clear interconnection process for energy storage systems to provide a useful starting point for states navigating these issues. By addressing the unique qualities of energy storage, the 2019 procedures create an initial framework for reviewing energy storage and verifying energy storage system capabilities.

IREC’s model procedures have been around since 2005 (with updates made in 2009 and 2013) and have served as a template for nearly all states that have adopted statewide interconnection standards. In addition to addressing energy storage, the 2019 edition provides other needed updates to reflect new best practices for interconnection.

However, the model procedures do not yet resolve every question around energy storage.

For example, they do not address how to screen those energy storage systems that may have some “inadvertent export” for a very short duration in response to sudden customer load fluctuations. But as the interconnection of energy storage evolves in the coming years, best practices for how best to analyse their grid impacts will continue to emerge.

Leading and lagging states alike may recognise that interconnection standards are a linchpin to the advent of a more modern grid, but they need assistance as they work toward the adoption of next generation best practices, especially to address the uniquely flexible and controllable nature of energy storage.

A growing number of states (such as Maryland and Nevada, most recently) are updating their outdated interconnection standards to more proactively address energy storage, which is creating a clearer path for this game-changing resource to play a bigger role going forward. Other states that have never had statewide standards are now beginning to examine and adopt interconnection rules. Arizona is one example of a state that had no statewide standards but in November adopted comprehensive interconnection rules that address energy storage.

Key questions for statewide interconnection procedures to address

Ideally, to clarify the process for all involved stakeholders, the questions below should be clearly addressed in statewide interconnection procedures:


  • Does the state have interconnection standards that apply uniformly to all utilitieswithin the state’s jurisdiction?
  • Are the interconnection standards applicable to all projects or are there size or design limitations that may prevent state jurisdictional projects from having a clear path to interconnection?
  • What DERs are covered by the interconnection standards?
  • Is energy storage explicitly addressed, defined, and given a clear path to proceed through the interconnection review process?


  • What are the size limits for the different levels of review?
  • Is there an option to have expedited review process for small, inverter-based systems unlikely to trigger adverse system impacts? (e.g., under 25 kW)
  • Is there an option for a Fast Track review process for larger DERs (e.g., up to 5 MW) that utilises a set of technical screens to determine whether projects are unlikely to require system upgrades and/or negatively impact the safety and reliability of the grid?
  • What technical screens are applied for the Fast Track review process?
  • Is there a transparent Supplemental Review Process for interconnection applications that fail the Fast Track screens?


  • Are both the utility and the interconnection customer meeting established timelines?
  • What methods, approaches and tools are in place to improve the timeliness of the interconnection process (e.g., electronic application submittal, tracking and
  • signatures)?
  • Is there an explicit process to clear projects from the interconnection queue if they do not progress?
  • Are there clear timelines for construction of upgrades or meter installs?


  • Is there a clear, efficient and fair dispute resolution process?


  • Is there a Pre-Application report that allows DER customers to obtain (for a reasonable fee) basic information about their proposed point of interconnection prior to submitting a full interconnection application?
  • Is there a transparent reporting process and publication of the interconnection queue to allow customers and regulators to see how projects in the queue are progressing?

Let’s get on the right road!

As if all of these issues aren’t enough to consider, there are a number of interconnection related questions that states and utilities will need to address as a result of the adoption of the IEEE Standard 1547 TM -2018 for Interconnection and Interoperability of Distributed Energy Resources with Associated Electric Power Systems Interfaces. This voluntary, nationally applicable Standard by the Institute of Electrical and Electronics Engineers (IEEE) will transform how DERs interact with and function on the grid.

More specifically, the Standard requires DERs to be capable of providing specific grid support functionalities relating to voltage, frequency, communications and controls. Once widely utilised, these functionalities will enable higher penetration of DERs on the grid, while maintaining grid safety and reliability and providing new grid and consumer benefits.

Clearly defining DER settings in statewide interconnection rules will help increase efficiency, minimise confusion, and reduce costs.

States or utilities which have not yet adopted interconnection rules could begin the process today with IREC’s Model Interconnection Procedures in hand as a useful starting point that reflects best practices that will help ensure a more efficient and affordable process for all involved stakeholders, including customers adopting clean energy technologies.

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Renewable, unstoppable: What we learned at #SPIcon 2019

Ok, my colleagues and family are bored of hearing how great Solar Power International / Energy Storage International was in Utah last week and indeed, of how welcoming Salt Lake City was to the 12,000+ renewable energy industry professionals and interested parties that attended. Below are the leading themes from the show in order of narrative, if not in order of importance: 

1. The capacity factory – how and why tomorrow’s solar-plus-storage can be an equal on the grid to today’s fossil fuels 

2. LFP vs NMC – reaction to safety fears provokes new turn in the discussion 

3. Energy storage-as-infrastructure – creating an asset class for the ‘workhorse’ of the grid 

4. #StorageITC – a market accelerator, not a market saviour 

5. Is software actually the single most important ‘component’?

6. Renewable, unstoppable: Why solar’s journey to the core of the US energy system matters

7. Bifacial – The strengths and shortcomings of the emerging technology after its import tariff exemption

You can read the takeaways for each theme here, as originally published on

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Renewable, unstoppable: Five (and a bit) things we learned at #SPIcon 2019

Ok, my colleagues and family are bored of hearing how great Solar Power International / Energy Storage International was in Utah last week and indeed, of how welcoming Salt Lake City was to the 12,000+ renewable energy industry professionals and interested parties that attended. Here are my top takeaways from the show in order of narrative, if not in order of importance: 

1. The capacity factory – how and why tomorrow’s solar-plus-storage can be an equal on the grid to today’s fossil fuels 

Of the dozens of panel discussions taking place, perhaps the most animated involved some shouting and finger-pointing that occurred apparently almost as soon as this reporter left the room for another meeting.

In short, Alex Au, CTO of NEXTracker, came out fighting passionately for solar to find its rightful place on the grid. We caught up with Alex afterwards and he told us that, despite the huge success enjoyed by the industry, a solar power plant still isn’t considered the equal of a thermal generator by the utilities. PV plants, using technical solutions that rely on smarter system architecture and energy storage, could help solve the issue of curtailment that looms larger as shares of renewable energy on the grid increase rapidly.

Solar is still “just one small part of generation” that nonetheless gives the grid operators a headache in integrating, Au argues. Back in 2016, NEXTracker’s famous request for proposal “Decapitating the duck” looked at how to best use renewable energy to flatten the peaks of grid energy demand versus supply. It’s a problem the industry had seen for a long time coming before that too, Au told us. 

“It’s now almost 2020 and we have not done anything to build our plants differently to allow modification and future proofing of our power plants to meet and address constantly changing utility market needs,” Au said.

2. LFP vs NMC – reaction to safety fears provokes new turn in the discussion 

Well, it’s not a debate over which is better, so much as deciding which of the two main lithium-ion sub-chemistries is more suitable for your application, when it comes to lithium iron phosphate (LFP) batteries ‘versus’ nickel manganese cobalt (NMC).

That’s what we heard from a range of manufacturers: first-time exhibitors at the show included the likes of KORE Power, a US start-up which tapped a major Chinese 631 ratio NMC high power cell producer Duo-Flouride Chemicals, which had previously never exported before, to create large commercial and utility energy storage racks with 110.7kWh capacity in a standard 19” rack.

Conversely, another first-time SPI / ESI exhibitor was China’s CATL (Contemporary Amperex Technology Limited), which again, despite major status and high volume sales in China – primarily to the EV market – has not targeted the US or Europe markets heavily, until an industry show debut at Intersolar Europe in Munich this year.

CATL is a major player in e-mobility, but has now developed an LFP battery energy storage range of products that it plans to deploy at scale. We heard at the show that some utility requests for proposals (RFPs) in the US are appearing to stipulate the use of LFP rather than NMC or other cells, due to a perceived concern over the safety of deploying the latter in large systems. The company is set to go up against the likes of Eon Battery and SimpliPhi, two well-known domestic providers of LFP-based energy storage batteries and systems.

3. Energy storage-as-infrastructure – creating an asset class for the ‘workhorse’ of the grid 

We’ve heard all about energy storage as-a-service, primarily in the commercial space, where batteries are used to help business customers cut their running costs, or to enable more renewable energy use onsite.

For the really big stuff, it doesn’t make sense to work on merchant opportunities, or multiple contracted revenues: echoing the thoughts of many that we heard from at the Solar & Storage Live show in Birmingham, England last week, better recognition of the role energy storage could play as an infrastructure asset could be key to unlocking not just the whole benefit and usefulness of energy storage, but also unlock investment in the technology as an asset class.

Andy Tang at Wartsila told at the Salt lake City show that the key to doing that in the US is to encourage and enable more and more utilities to consider energy storage in their long-term resource planning. That’s already starting to happen, but as we heard on a panel hosted by NREL, transparency, quality of data and proactive planning to capitalise on the benefits of distributed energy resources (DER) are also vital assistance that the industry can bring to the table.

Longer-term planning also potentially means more long-duration energy storage projects could be invested in. Proponents of vanadium flow batteries, for example, would argue that without degradation in the battery stack after even decades of use, it will be easier for investments to be justified to ratepayers and financiers alike, while the show was awash with numerous long-duration storage providers. In terms of which chemistries folks pointed out as promising, most said just one word: zinc.

4. #StorageITC – a market accelerator, not a market saviour 

An ITC (investment tax credit) for energy storage. I went along expecting this to be a real bone of contention, but it goes to show that you can’t really ever tell what you’ll find until you arrive.

The industry has advocated it for some time, because at present, energy storage equipment purchases can only qualify for the 30% tax credit if installed simultaneously with a solar system i.e. not even a retrofitted battery at an existing solar site would qualify and a standalone battery, no chance.

I get the sense, as an outsider looking into America, that the industry doesn’t want to ‘rock the boat’ by making aggressive demands for what could still – rightly or wrongly – be perceived as a handout or a major subsidy. So, I agreed to keep comments off the record, but in short, between five and 10 company representatives spoken to all said that they were supportive of an ITC for storage, that it would make sense and would be a fair way to help accelerate the industry in a manner analogous to how the ITC has supported solar.

However, and this is perhaps the most encouraging thing, no respondent said the ITC is in their view essential to the successful deployment of energy storage in the US, although desirable. That said, its establishment – which currently enjoys bi-partisan political support – could send positive signals to investors and create better certainty over the business case for storage in an increased number of applications and jurisdictions, while the likes of the US Energy Storage Association would perhaps argue that it could also help create domestic jobs and a sustainable industry ecosystem. 

5. Is software actually the single most important ‘component’?

There was a lot technology on show as usual and I’ve written about and tweeted a good few photos of interesting things we saw and heard about. The increased number of DC-coupled solutions promising to dramatically increase efficiency of solar-plus-storage would probably be the headline.

In a more general sense, however, there’s a real recognition of the role software has to play in the wider energy industry, as well as in specific energy storage-related applications. For instance, Pason Power, a previous E-S.n guest blog contributor, was there with its modelling software for project outcomes and contracts.

Meanwhile, Homer Energy, perhaps best known for its work with the micro- and off-grid space, demonstrated to us a software package that incorporates dozens of US utility rate tariffs, market and local data and then uses that to calculate how much individual businesses can save from peak shaving.

If it works effectively, software solutions like these have the potential to greatly reduce the risk perceived by investors, giving much greater transparency to all stakeholders. However, as we’ve seen in solar, the software and modelling will only be as good as the data available, and often it can take a while for that accuracy to filter into modelling.

Going forward, one company with a ‘corporate PPA matching solution’ software platform, LevelTen Energy, touted the use of its services to help corporate customers work with developers and offtakers to create ‘blended’ portfolios of PPAs. Company representatives told that this has not impacted on the energy storage space yet, but could well do in the near future. 

…and finally:

Renewable, unstoppable

The SEIA produced a roadmap for solar PV to become 20% of US generation by 2030, which would’ve sounded like crazy science fiction not long ago, but certainly seems a darn sight more feasible today. Especially when you look at how the trade group has carefully broken down the milestones and markers to that goal.

As I mentioned on the latest edition of the Solar Media podcast, perhaps we were in a little bit of an industry bubble at the show itself, but we did not meet any people outside the show that expressed antipathy towards renewable energy, nor scepticism of climate change.

Indeed, one local that we met said that members of friends’ families have died from ‘black lung’ as a result of years working in coal mines and that this was not an uncommon story. Conversely, another local told us his friend had launched a solar developer business and was now able to support his extended family comfortably. For these people, the energy transition can’t come soon enough and it occurred to us that actually, for all the high-level pro-nuclear advocates and coal revivalists quoted in newspapers, there’s a huge base of ordinary people and workers around both industries keen to see what cleaner and safer alternatives might look like. While not many are prepared to put names to comments, we’ve also heard that many workers in the UK and all over the world would much rather figure out how to be a part of the new world being created before our very eyes than continue to watch their industries flail endlessly to keep nuclear and fossil fuels economically afloat. 

We also visited Soleil Lofts, a housing development not far from Utah’s ‘Silicon Slopes’, the metropolitan area around Salt Lake City that has attracted a growing number of tech workers in recent years. The project includes 17.1kWh of battery energy storage in each household, adding up to 12.6MWh in total, all supplied and fitted by Sonnen, alongside rooftop solar generation. As well as offering backup power, and allowing local utility Rocky Mountain Power to use the batteries as a virtual power plant (VPP) to balance the grid.

The whole community is therefore going to be electrified, with residents already moved in to some of the apartments. What I hadn’t realised before going there is that Salt Lake City sits in a huge bowl surrounded by mountains, meaning that despite the beautiful weather, air quality can be really bad. So the project’s apartments don’t just have an emotional or ‘eco’ appeal to customers, they also appeal to their general sense of well-being, offering a potential pathway to dramatically improving the quality of the air residents of Utah breathe every day. 

Bonus point:

Bifacial modules 

There was definitely a lot going under the ‘business as usual’ column for the solar folks at the show. While I was almost permanently called away on energy storage business, I did manage to speak afterwards with PV Tech’s founder, senior news editor Mark Osborne.

Mark told me that with at least 5% expected gains in the amount of power a ground-mounted solar farm can generate annually, bifacial PV modules (front and rear-side generation) is now a “no-brainer” for US utility-scale projects.

As we mentioned on this week’s podcast, there’s still a lot of discussion about what bifacial modules and their extra generation are worth, as – again – data from the field is still only just beginning to emerge.

The exclusion of bifacial modules from import tariffs has undoubtedly created a boom in demand in the US, Osborne said, although increasing panel sizes and weight, partly due to modules being mounted between panes of glass, mean that bifacial modules may not yet be optimum for use with many types of tracker, with the likes of LONGi’s HI-MO 4 modules utilising 166mm wafer / cell sizes.

However, according to the ‘Osborne Oracle’, shortages of glass from China at the required 2.5mm thickness could mean that bifacial cells with transparent backsheets could also gain in popularity of use.

This article has been amended from its original form to accurately reflect that NEXTracker’s ‘Decapitating the duck’ RFP came out in 2016, not 2012. 

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Open season: the next steps for energy storage

This article serves as an introduction to our Special Report on energy storage</a>; included as the cover feature of this quarter's PV Tech Power, the articles referenced by page below can be found in full in the journal, available as a free download now from Solar Media. 

The world has watched on as some of its leading regional markets, China, South Korea, Australia, Japan, parts of the US, the UK, and many parts of Europe have raced ahead in deploying energy storage in the last five years, mostly, but not only, lithium-ion batteries. IHS Markit says that the US in 2019 will deploy around 712MW, becoming the world’s largest market for grid-connected batteries this year, while another research firm, Wood Mackenzie Power & Renewables, has predicted that 4.3GW could be installed worldwide during 2019.

Record-breaking figures have been reported in the US and other territories such as the UK, year-on-year. Yet from other territories reports come in of interminable delays, of hotly contested jurisdictional rights, the difficulty in overhauling not only the technical design of the grid but the ways in which we think about energy markets too. Everyone seems certain energy storage is a key part of the decarbonised energy system, but no one seems certain when we will be able to breathe a sigh of relief that that place is assured. And of course, there’s the question of whether success in these leading markets can be replicated all over the world.

In those leading regions, the rapid rise is happening both in front of and behind the meter, with economic cases that are finally starting to make sense and often – but not always – with specific policy support. And while solar industry investor and commentator Jigar Shah predicted confidently that utilities would try to take ownership of energy storage as much as they could themselves at the beginning of 2018, it seems as though 2019 was the year that this really took shape. 

A quick case study of a utility in one of those ‘leading regions’ is municipal power provider LADWP in California, which over the next few years will deploy enough batteries to cover more storage output and capacity than its existing 1.5GW pumped hydro plant. We also asked Janice Lin and Jack Chang at consultancy Strategen, itself based in California, to write about the ‘challenges in the sun’ California faces and some of the initiatives, both private and public, that are seeking to overcome them (see p.32 of PV Tech Power Vol.20 and on this site here).

Meanwhile in Australia, major utility AGL is now offering rebates of up to AU$7,000 (US$4,811) off the cost of residential ESS purchases, as well as a virtual power plant programme which benefits homeowners in some states to the tune of AU$280 credit for a year for enrolling.

They and others are pushing ahead in areas where there may be high electricity prices and high grid congestion, falling feed-in tariffs and favourable tax regimes. Whatever the reason, circumstances have come together to reduce the risk and improve the return of procuring, owning and operating energy storage in some territories.

Fear of missing out

Other utilities in other territories face totally different circumstances, such as Xcel Energy, which operates as a near- monopoly in Colorado, USA. Holding an all-resource, all-technology bid for new capacity a couple of years ago, in addition to picking out wind power projects, the utility also selected three solar-plus- storage projects, Alex Eller, analyst with Navigant Research says.

The utility hasn’t done much in the way of standalone storage, because Xcel hasn’t yet found “other use cases where storage was economical for distribution upgrade deferral and things like that”, Eller says, and so in Colorado, where land is fairly cheap and so is electricity, it’s the competitive economics of solar – now dispatchable with the addition of storage – that appeals, rather than storage in its own right. Being a vertically integrated utility, Xcel could later use the batteries at its solar-storage plants, each of which will have in the region of 50MW of batteries, for frequency regulation and other balancing services, but the main impetus is the deployment of renewables to replace fossil fuels.

It is an interesting snapshot of the wider picture across much of the US, Eller says. Many utilities now procure storage alongside solar as a low-cost generation source. Backed with PPAs, they offer the most certainty of use cases for energy storage on the US grid so far. Elsewhere, some standalone storage is deployed increasingly by municipal utilities, which have a certain degree of autonomy – in other US regions such as New England, where the regional Independent System Operator (New England ISO) has also opened up some of its markets to energy storage.

So, even with this seemingly positive picture, where in some areas electric system stakeholders of various kinds and local and even national governments are getting behind energy storage in a big way and in other regions solar-plus- storage makes sense, will it be enough? And if, as we suspect, it might not be, what are the challenges and barriers in the road ahead?

More to cost reduction than batteries themselves

A lot of emphasis has been placed on the cost of the batteries, which as we all know continue to enjoy a decline. Navigant’s Eller has previously predicted a fall to around US$76 per kWh by 2030, rival analyst Logan Goldie-Scott at BloombergNEF conversely says that an “average” lithium-ion battery pack could cost as low as US$62 per kWh by that year.

Beyond the cost of the battery as well, power electronics components could still enjoy improvements in design and lowering of costs, Eller says, with much of that to centre around the standardisation of battery inverters, which the analyst says were “pretty customised” in the past.

One area Eller highlights is the growing interest in DC-coupled storage, explored in more detail in Sara Verbruggen’s piece on storage system architecture later in this special report (see p.29). “[That] reduces the cost…because the DC converters are much cheaper than full grid-tied inverters are. So I think that certainly helps bring prices down,” Eller says. 

On the system side, there’s also the reduction in cost of software, but much of this has already been squeezed out, Eller says. Still, software is key in another vital way – the role it plays in complete system integration.

This year, product launches on the global market have included a 2.5MWh containerised solution from Saft and later a 3MWh ‘Megapack’ from Tesla. Offering more fully integrated, modular, all-in-one units that include the battery management system (BMS) and safety and protection features delivered in a single container from a single vendor can lower costs significantly, Eller says, noting that NEC’s Energy Solutions division and Fluence are also now marketing “specific, defined products” to the market. Standardisation within individual vendor’s offerings is certainly encouraging, the Navigant analyst says.

In the long term, Eller says storage companies should aim to offer more “plug-and-play” products to utilities, that will be “faster and easier to deploy” than more specialised equipment.

The edge of profitability

Stationary energy storage systems are on the “edge of profitability in many market segments today”, we hear in this special edition of the journal from Dr. Kai-Philipp Kairies, Jan Figgener and David Haberschusz of RWTH Aachen University (see p.24).

Yet markets that reward the benefits of energy storage are drastically underdeveloped. Many in the US are looking to the bipartisan ruling FERC Order 841 from the Federal Energy Regulatory Commission, which instructs regional grid operators to open up wholesale markets to the participation of energy storage and is intended to be a game changer for the industry.

Many of the regional ISOs of the US have already responded by drafting their initial plans to comply with the Order. However, says Jennifer L. Key, a FERC lawyer with law firm Steptoe & Johnson LLP, there have been “somewhat surprising legal challenges…from both the state and public power and even parts of the utility industry dealing with jurisdictional fights over storage, between FERC and the states”.

A “uniquely American problem”, Key says, of dual state and federal regulation, is holding up FERC Order 841 before the details are even put on the table for discussion. A lot of the disagreement essentially stems from “whether FERC or the state should have control over all things wholesale going on on the distribution system because a lot of storage is being connected to the distribution system – as opposed to the transmission system”, Key says. “A large swathe” of distribution system companies and state commissions have “filed for an appeal of Order 841 on jurisdictional grounds”.

“What’s interesting is that you have some states that are fully supportive of storage, that don’t mind at all that FERC is taking a lead and you have utilities and distribution system owners who don’t care who has jurisdiction; the storage that’s coming in, they’re dealing with it, they’re doing the right thing to get the storage interconnected.

“[Then] you have this whole entire pushback and it’s unclear if that’s because the states want to control the entry and use of storage,” Key says. Whether that is because individual state commissioners believe they could do it better than FERC perhaps, or believe that distributed storage could interfere with operations of their electric system somehow is also unclear, Key adds.

Regulation, regulation, regulations

Jennifer Key and others argue that when FERC Order 841 does come to pass, it really will be a game changer partly because “it is compelling the organised markets in the US to develop and make sure that their systems whether it’s their software, or their market systems, have a place for energy storage which compensates”.

“One of the issues [Order 481] is raising is: can storage obtain enough compensa- tion in the market, especially in markets where it’s hard for storage unless paired with something else (such as solar PV) to provide a capacity product?

“But it’s opening up, setting the rules of the organised market so that they can make accommodations as needed for storage and also the clarity of permitting storage devices to charge at wholesale [prices].”

On the subject of clarity, while the FERC Order 841 saga and in particular the recent pushback continue, in Europe, in both the UK and mainland Europe, a more basic regulatory issue continues to play out. As we hear from the continental European Association for the Storage of Energy (EASE) in this special report, so-called ‘double-charging’ remains a huge, huge stumbling block for grid-connected energy storage (see p.38).

In the UK, too, a regulatory definition for energy storage has only just been proposed by the regulator, Ofgem. At present, energy storage is quite often still categorised as generation, Kirsti Massie, a UK-based lawyer with White & Case, says. Not having a dedicated definition or even a licence for energy storage, has “implica- tions across a number of pieces.”

“If you have a generation licence it means in the UK certainly, as a transmission system operator or distribution network operator, you’re not also going to be able to own and operate storage facilities because they can’t become part of the grid because the way their licensing is structured,” Massie says.

“As a generator you’re often looking to smooth out intermittency to renewables. That’s fine but storage can do a lot more than that and it can provide grid services – it’s not just an add-on to generation. Grid services are hugely important and become increasingly important as more renewables come on the wires,” Massie says, while, as with mainland Europe, double-charging still exists.

“Also as a generator you will pay system charges when you’re charging up your battery but you’ll also pay when you’re actually discharging the power from the battery. You’re getting hit both times.”

Grid service markets are not often enough structured in such a way to take advantage of the fast-responding, low carbon generation-enabling qualities of energy storage. As a lawyer, Massie says she looks closely at developments in the UK, Europe, the Middle East and Africa, but also works closely with colleagues in the US and Australia.

“What I’ve found very interesting is that the issues that we are talking about and that the industry and the regulator is trying to get their heads around in the UK are the same issues that you see in various markets in the US and in Australia. We’ve got a commonality of issues, in terms of questions people are trying to answer.”

The customer will always come first

Deployed energy storage capacity around the world largely remains pumped hydro while lithium-ion is the current flavour of choice. Coming in all shapes and stackable up to hundreds of megawatts, the advantages of lithium-ion battery systems include how quickly they can be deployed and their rapidly falling cost. One of the challenges from a big picture perspective is going to be figuring out how much energy storage capacity is needed in front of the meter, providing services to the grid and capacity to utili- ties, and how much of it goes behind the meter, at customer sites.

These behind-the-meter sites are increasingly being aggregated to create energy trading opportunities and virtual power plants (VPPs). In much of the US, however, residential net metering for solar obviates much of the financial case for batteries in the home while in other territories, feed-in tariffs still reward customers well for energy delivered to the grid.

“It (net metering) effectively pays the homeowner the fully delivered cost of power. So I don’t think you’re going to get this notion of all these distributed residential resources getting together to sell power because they’d have to give up the benefits of net metering,” Jennifer Key says, with some 40 US states still running net metering programmes.

So again, there will be some specific parts of the US adopting VPP programmes earlier than others: reported on a 12.6MWh VPP in Utah from Sonnen and utility Rocky Mountain Power across 600 apartments as this edition went to press, for example. In other global markets however such as Japan, Australia, the UK and Europe including Germany, the cutting of feed-in tariff support is inspiring homeowners with solar to ‘go battery storage’ too.

A recent blackout in the UK which affected one million electricity customers was responded to by frequency response assets including 6MW of aggregated residential storage, acting as a VPP, from independent utility Social Energy. To be able to do this on a grand scale and as the norm, using both large and small ESS assets, will not only require more simplified and readily accessible revenue streams for grid services, it will also require coordination of effort and engagement with the end customer.

“Decentralisation, decarbonisation is the right thing to do, but we can’t forget the consumer in all of this because the consumer is fundamental,” says Faisal Hussein of UK industry body Flexi ORB (Flexible Energy Oversight Registration Body).

“In our focus on decentralisation and decarbonisation, we’ve got to be careful that we don’t leave the consumer behind.”

If the industry is ok, is that enough?

Despite some significant challenges, the adoption of energy storage as both an essential companion for renewables and as a flexibility resource for the grid in its own right appears healthy enough to suggest that in key markets adoption will only increase. Elsewhere, off grid, the economics are even better, and recent interest in microgrid companies active in emerging markets from major energy companies means that energy storage for energy access is also a reality.

At Solar Media and in particular through, we’ll be looking at some of these challenges in the coming months, as well as others we have barely mentioned, including the supply chain and end of life management (although you can read about the efforts of one company, Li-Cycle in Canada, to create an effective system for battery recycling on p.45). There’s also the integration of data and fire safety, the choice of technologies, whether batteries, lithium batteries, or otherwise.

We’re certainly encouraged to see so much proactive discussion of how many of these problems can be solved, and for many of our readers coming from a renewable energy background, a difficult challenge is nothing new. In regulation and many other areas however, “we’ve got away with a sticking plaster approach sofar”,Kirsti Massie of White & Case says, but the existing frameworks in the UK and many other regions still need to catch up to the progress – and promise – of energy storage technology.

“Trying to shove it in an existing framework, I think, limits the value [of energy storage],” Massie says. “You’re not going to be able to take full advantage of the flexibility that storage can offer, if you’re constraining it within a regulatory framework that dates way back before some of these technologies were even thought of.”

As Massie says, there’s been a huge amount of progress and it’s certainly not a negative picture out there today for the energy storage industry. If we are to meet policy goals in reducing carbon emissions and transitioning to renewable energy, however, “energy storage inevitably is going to have to play a bigger role”, Massie says.

“In order to play a bigger role, you need people who are willing to invest and to invest and develop at scale. One of the key things that then will arise, is, how are you going to finance this? If you’re not able to really leverage off all of the benefits that storage can bring, the full flexibility of the storage offering, you’re kind of limiting your revenue stream and that makes it more tricky and difficult to attract financing and I think will get in the way of the real, scale deployment of storage that is going to be key.”

This article first appeared in PV Tech Power, Vol20, which is available now to download for free, here

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‘Only’ 20MW, but New York’s biggest battery project shows how to make it, there

This week, NYSERDA officially announced the completion of the biggest battery energy storage system to be connected to the grid in New York.

Executed by developer Key Capture Energy (KCE), the 20MW lithium-ion battery system was supplied by NEC and went into action a few months ago in Stillwater, New York. KCE declined to disclose the megawatt-hour capacity of the system at this stage and while it is far smaller than many other recently announced ‘biggest battery projects ever’ connected to grids across the world, its completion nonetheless puts down a flag in the state.

In the past few years, this site has reported extensively on challenges facing New York’s energy storage sector - including stringent building codes and fire regulations, as well as net metering for residential solar – which continue to make smaller-scale behind-the-meter storage a tricky sell. That said, we should add that while actual deployment has not been as fast as some might have hoped, the likes of technology and trade group NY BEST would be quick to argue that the state is home to many relevant startups and established businesses with an interest in the field.

Brushing this early mismatch aside, New York State Governor Andrew Cuomo has now enacted one of the most ambitious energy storage deployment targets (1,500MW by 2025, 3,000MW by 2030) – in tandem with renewable energy and decarbonisation legislation – ever seen.

Key Capture Energy chief operations officer Dan Fitzgerald told that it wasn’t easy being “first mover on many fronts, such as market, permitting and interconnection hurdles,” but felt that the lead time was time well spent. Fitzgerald said the project creates “a foundation from which many more energy storage systems can be developed and deployed”. 

‘The first day we turned the battery on…’

“When KCE started developing this project, it was not entirely clear to us how we could participate in the wholesale markets. Countless hours spent with the team at the NY ISO on interconnecting and participating in the market cleared it up for us,” Fitzgerald says.

The battery system, KCE NY1, was installed under utility NYSERDA’s energy storage incentive plan. It’s the first project to benefit from that programme and NYSERDA president and CEO Alicia Barton said the battery system will “enhance our electric system and demonstrate the value of large-scale energy storage systems that will accelerate our ability to meet the state’s commitment to a carbon-free electric system by 2040”.

For Key Capture Energy, it was then a question of proving the case through the successful entry into markets, Dan Fitzgerald says.

“With no large-scale batteries participating in the wholesale market in New York, the first day we turned the battery on it was exciting to see if all our internal models were correct in how the battery would behave.”

Fitzgerald confirmed that the supplied system is a NEC Grid-Scale Storage (GSS) end-to-end solution including battery energy storage, power conversion and the company’s proprietary AEROS controls suite, which manages everything. This includes flexible design to enable the batteries in the system to “accommodate wholesale market opportunities in the NY ISO market,” KCE’s Dan Fitzgerald says.

‘Working together to map out the future of energy storage…’

So ultimately, what made it possible for KCE to push through the project, and why does a 20MW project matter so much for a state – and urban metropolis within - as big as New York, going forwards?

“When a state sets a goal, like California, Massachusetts or New York has done – that gives developers like us a clear framework to operate in and the knowledge that the challenges new technology faces will be figured out,” Fitzgerald says, adding that those challenges can include market access, development soft costs, clear timelines and structures.

It’s always dangerous to characterise the US as one market across its states, but Fitzgerald notes that it’s equally important to view individual states as “testing grounds for what is and what is not working when it comes to grid-scale energy storage policies and regulations.”

Obviously, one big aspect of making large-scale storage competitive in New York and in other “non-traditional markets” has been the decline in battery costs, Fitzgerald says. In addition, however, the COO notes New York has offered KCE with a “cooperative environment where we have productive discussions with regulatory bodies and the ISO as both policy and markets are formed.”

“We’re working together to map out the future of energy storage, and we will see a lot more energy storage to come.”

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Ultra-low solar bid of $0.01997/kWh in the US – not quite so sunny

PV technology has made significant progress in a short amount of time, leaving solar enthusiasts chuffed. Opponents, on the other hand, brand it as unworkable boondoggle, surviving on the crutches of subsidies and only salving the conscience of the green-minded companies cosseted by political forces. The naysayers do have partial truth in their argument – governments the world over have been supporting the growth of this child with the moniker “solar” with public finances. So, this is the partial truth and the enthusiasts have just enough firepower to say that all energy is, after all, subsidised one way or another – in terms of uncompensated costs of air pollution, congestion and global warming and the consequential irreversible damage these fossil fuels have done to the planet. Perhaps more important and statistically relevant is a report published by the IMF in 2015, which had pegged subsidies to fossil fuels at US$5.3 trillion.

Straight to the point now; the heroic forward march of solar entered into a new trajectory (whether devoid of sense or laden with it, only time will tell) when 8minuteenergy, America’s largest IPP, proposed a PPA rate of US$0.01997/kWh for 400MWac / 530MWdc of solar power plants to be developed in sun-drenched city of Los Angeles in the United States in a recently-concluded auction. With this, 8 Minutes has beat its own pricing leader of US$0.02375/kWh from the 300MW Eagle Shadow Mountain solar project. There is also a US$0.013/kWh adder for the excess electricity later delivered from a co-located 200MW / 400MWh energy storage system.

At first glance, this looks like a mirage in the hot deserts of Arabia, and, obviously, raised a lot of hubbub in the industry around its economic viability. Will it make sense? Let us see.

It is true that almost any external surface can generate solar electricity, and costs are plummeting (not just for the silicon wafers, but also for installation, electronics and storage needed to make the system work), the financial models the developers must have used are testing their limits, we are inclined to believe. It appears that they are calculating development costs well below comparable global benchmarks. It might not come as a surprise if they are forced to stretch this budget to make some returns out of this project.

Yet again, we can use LCOE as the yardstick to unshroud this mystery. We punched some assumptions in our LCOE model and it sprang returns to the tune of 5%, which might just look good in terms of US market. The assumptions go like this:

LCoE plant life 25
Project Configuration Single-axis tracker
Type of PV module Bifacial p-type monocrytalline
Rated power at STC 370 Wp
Energy yield DC 2,350 kWh/kWp
Degradation 0.70% / yr
Project cost US$0.67/Wp
O&M cost US$7/kWp
Gearing ratio (debt/(debt+equity)) 50%
Cost of debt 3.50%
Tenure of debt 15
Cost of equity 6%
Corporate tax 0%
Weighted average cost of capital (WACC) 4.5%

These numbers are audacious and over-optimistic per se but a deep dive insight can untie the knots in the understanding so far.

It goes without saying that a single-axis tracker mechanism is the obvious choice, given that only trackers can help get the last electron out from the cell by gathering more radiation from the sun. However, it is imperative that tracker manufacturers keep innovating design and tracking algorithms to pump up the yield in the next two years, since this project is slated to go online by April 2023.

Then again, one of the most important assumptions is the energy yield, which has been input as 2,350 kWh/kWp in our model. While this yield, which translates into a utilisation of 26.8%, might seem to be a herculean task to achieve, it is achievable only with bifacial modules, keeping in mind that California is a sun-drenched area and receives good quality sunlight. Over an inverter loading ratio (ILR) – called DC-AC overloading in India) – above 30%, bifacial modules can increase yield by some 7-9%. Interestingly, the fact that bifacial modules will get a pass on the Trump administration’s solar import tariffs will help reach these yield levels, without hurting cost economics, as they have recently been excluded from Section 201 tariffs.

The next important factor is the project cost, which, in the US, currently stands between US$1 to US$1.1 on per Wp basis. According to our model, US$0.67/Wp is the capex required to build the project from a clean slate. The typical break up of this pricing is as follows:

Modules US$0.24 / Wp
BoS US$0.17 / Wp
I&C US$0.17 / Wp
Pre-op cost US$0.09 / Wp

As is common knowledge, the most critical component of a solar project is the solar PV modules and, as per our market insights, monocrystalline bifacial modules can, presently, be delivered at site in the US from Southeast Asia at US$0.30/Wp. Considering a historic 10% decline, this will, most probably, hit US$0.24/Wp by 2022, when actual modules would be required. Then again, electrical and structural BoP (balance of plant, which is all the hardware sans modules) constitutes around 25-30% of the total project cost in the US and translates into US$0.17/Wp, assuming lower end of 25% on the basis of market consolidation and pricing maturity. What then remains is the cost of designing, procuring and actually getting hands dirty on the ground with construction, which also forms another 25%-30% of the project cost in this country. At 25%, we have assumed this to be US$0.17/Wp. Finally, we have assumed the pre-operative and other miscellaneous expenses at US$0.09/Wp (around 13.75%, very typical in the US).

All said and done, this factor (project cost) still leaves the model gasping for some fresh air like a bird enveloped in an acrid fug. Tickling an achingly red Excel model, the income tax credits (ITC), like the pristine pinnacles of the Himalayas, whispered a promise of fresh air. ITC stands, currently, at 30% for projects commencing construction before 2020, and will step down to 26% if the project starts ground activity in 2020, further to 22% in 2021. It is only wise to assume that the project should kick off in 2019 to avail this benefit. This takes the project cost down to US$0.47/Wp. Workable? Don’t know yet.

Moving further, Opex is another factor that has a large say on the project’s viability. In the US, it is typically 1.5% of the project cost, which translates into US$7/kWp, a good match with our assumption. There is an annual escalation of 2% over this cost.

To tie all the loose ends together, we need finances. The story unfolds like this: according to National Renewable Energy Laboratory (NREL), the typical PV project financings of large-scale centralized projects owned by independent power producers shows that low-cost debts can be picked up at interest rates around 4% for tenure ranging up to 13 years. The cost of equity, meanwhile, is around 6%. Because debt is a lower-cost source of capital than equity, we have apportioned 50% of capital to debt, which returns a 4.5% weighted average cost of capital (WACC), considering tax for renewable energy projects.

Plugging these numbers in our model threw an equity return of 5%, which leaves very little room for applying sensitivities for these important factors. We were filled with enthusiasm at the beginning of this effort to understand the mind of the bidders but burning the midnight oil does not yield much light, it appears.

“This is like music to my ears,” Commissioner Christina Noonan seems to have told the Los Angeles Department of Water and Power (LADWP), who is looking to sign this record-setting PPA. Madam, a lot is at stake, we humbly submit.

For us, it seems to be confusing, devastating, tickling and exhilarating all at the same time, at best. Time to look ahead.

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