- Policymakers should use tax incentives and more flexible interconnection rules to encourage development of hybrid projects combining renewable energy production and storage, according to a panel at the Clean Power 2021 conference hosted by the American Clean Power Association.
- According to projections from U.S. Energy Information Administration (EIA), the U.S power grid will have an estimated 59 GW of battery storage by 2050. In the near term, a significant amount of that will be part of hybrid projects with renewables, as EIA data shows that paired sites will increase from 19 installed in 2016 to more than 100 by the end of 2023.
- "We’re going to continue as developers to deliver commercially viable solutions to energy needs," said Jennifer Goodwillie, senior director of onshore development for Ørsted Onshore North America. "A better alignment between what we need on the grid and making sure our policies and incentives support that is really needed to make sure developers are delivering solutions that are good for the grid as well."
Will Gorman, a graduate student researcher at the Lawrence Berkeley National Laboratory (LBNL), said that years ago, the conventional wisdom was to think about storage and generation as "independent resources, sited where it makes the most sense for the system as a whole." That, he said, would mean prioritizing battery locations where it makes the most sense for the transmission system rather than simply putting it near renewable generation.
However, an analysis of 37 U.S. interconnection queues by Gorman and other researchers found that at the end of 2020, there were 160 GW of solar development being proposed in hybrid form, mostly with storage, and about 13 GW of wind proposed in hybrid form, half of that with storage and half with another renewable resource.
A key factor, Gorman said, was the drop in the price of solar panels and batteries; for projects in the U.S. outside of Hawaii (where prices are higher), the average price of a solar+storage project dropped from $40-$70/MWh in 2017 to $20-30/MWh in 2019 and 2020. Developing hybrid projects can be easier and cheaper because it allows developers to take advantage of the same land rights, equipment and construction costs. Another factor, panelists said, is an investment tax credit (ITC) that only rewards storage deployment when it is paired with solar generation, rather than for standalone projects.
That could be skewing the market; an analysis authored by Gorman and other LBNL researchers published in May found that co-locating batteries with generation rather than siting them independently and closer to high-demand nodes led to an average $10/MWh drop in electricity market value, although the value changes depending on geography.
The White House has proposed making standalone energy storage eligible for the ITC as part of its budget proposal and the $2 trillion infrastructure plan. The storage ITC also recently passed the Senate Finance Committee as part of an energy tax credit package, which has not reached the Senate floor.
Also important, panelists said, will be changes to interconnection rules and policies governing electricity markets that can account for the unique role that storage plays. Goodwillie said that a more "streamlined" process that accounts for storage and hybrids can accelerate development. Grid operators — including California Independent System Operator and Midcontinent Independent System Operator — are crafting new rules to better integrate storage. The Federal Energy Regulatory Commission’s Order 845, which revised the definition of a generating facility to include storage, is also a key step, panelists said.
Ultimately, said Rocio Herrera, a project manager focused on wind energy for engineering consulting firm DNV, regional rules that value storage’s contribution during peak hours are helpful, but that policy should also come from the federal level.
"More policy development and more incentives are needed for developers to be interested in this market," Herrera said. "Federal support will unlock more renewable projects and more renewable plus storage projects."