Utilities take note: Hybrid renewables projects are coming
Solar, wind and battery storage are starting to gang up on fossil generation
An innovation in renewables generation that could change the way utilities think about meeting reliability and peak demand took some big steps forward in 2017.
Only a few U.S. utilities are pursuing hybrid projects that combine wind, solar and/or battery storage in various combinations. Kauai Island Utility Cooperative (KIUC) is operating a solar-plus-storage project that may be the first U.S. renewables-powered peaker plant. And Arizona Public Service (APS) just contracted with First Solar for what is said to be the first utility-scale renewables peaker plant.
But it's an option whose time has come, Strategen Consulting Vice President Lon Huber told Utility Dive. “Wind-plus is probably in the $0.03/kWh range in many places, solar-plus is in the $0.045/kWh range, and their dispatchability adds enormous benefits,” he said. "Every serious developer in the renewables space will be arming with a storage-plus solution.”
While some analysts ask if hybrid project advantages are theoretical or real, Huber and others, including FTI Consulting's Feng Zhao, and Grid Strategies' Michael Goggin say such projects have advantages that make them cost-competitive with traditional generation. Unlike single renewables, hybrids offer load profiles that meet system needs across the day and the year, fuller use of transmission, and two-for-one bargains on the costs of interconnection, siting, and operations and maintenance.
The global hybrid market could be $1.47 billion by 2024 and the U.S. market is projected to grow from 2015’s $195 million to more than $300 million by 2024, according to Global Market Insights. The appeal is that they operate similarly to baseload power and eliminate the choice between wind or solar or storage “by combining the best of all three,” Jean-Claude Robert, GE Renewable Energy’s Hybrids Leader, emailed Utility Dive.
In addition to the KIUC and APS projects, Consolidated Edison’s unregulated arm and Juhl Energy have a 5.6 MW wind-plus-solar project ready to build in Minnesota, pending regulatory approval. The project is a “true” hybrid that delivers both wind- and solar-generated electricity through a single interconnection, Juhl Energy President Dan Juhl told Utility Dive.
Developers in Texas and California have built wind and solar adjacent to one another but the Juhl Energy project would be the first to combine both at the same interconnection.
Michael Goggin, former research director for the American Wind Energy Association, agreed hybrid projects’ better use of transmission and reduced costs give them an advantage over wind only or solar only projects. But he and GTM Research Senior Solar Analyst Colin Smith both noted that good solar sites and good wind sites are not always the same sites.
Reducing fossil generation demand
KIUC’s 13 MW, 52 MWh solar-plus-storage project has allowed the utility to reduce its use of fossil generation at peak from over 65 MW to below 60 MW, KIUC data provided to Utility Dive show. At $0.139/kWh, the Tesla-developed project is generating electricity at a price significantly below KIUC's cost for fossil generation.
Another KIUC solar-storage hybrid is in development. The 19.3 MW of solar plus 70 MWh AES battery system is due online by the end of 2018 at a cost of $0.108/kWh. It is expected to reduce the utility’s peak fossil generation to below 55 MW, according to KIUC.
“Wind-plus is probably in the $0.03/kWh range in many places, solar-plus is in the $0.04/kWh range, and their dispatchability adds enormous benefits.”
Vice President, Strategen Consulting
Strategen’s Huber said hybrid renewables projects' capability to reduce fossil generation during peak demand will allow policymakers and lawmakers to implement a Clean Peak Standard (CPS), which requires utilities to obtain a portion of their peak generation from renewables.
“The First Solar-APS project in Arizona is the first utility-scale renewables peaker plant,” Huber said.
APS Director of Resource Planning Jeff Burke said the 65 MW solar-50 MW, 135 MWh storage system was specifically designed to meet APS's needs. Unlike other hybrid projects that add only a small amount of storage to utility-scale renewables, “the battery storage in this project will get the APS system past the evening peak.”
Burke said the project’s undisclosed price is competitive with other responses to APS’s solicitation for peak demand capacity. “If costs continue to decline, this type of resource will be even more viable because of its ability to meet system needs,” he added.
Growth drivers, challenges
GTM’s Smith said the theory for hybrid projects is sound. It is “only a matter of time” until companies like Avangrid that have strong teams of developers for each resource take on the challenge, he said.
It is not yet clear the reduced interconnection and inverter costs outweigh other project complexities and incremental costs, he said. But, as costs come down, it is likely “we will see them tested.”
Goggin, now a vice president with consultant Grid Strategies, said U.S. hybrid project growth is also being driven by interconnection rules.
Current rules often require an expensive line upgrade if an interconnection study shows a project causes a slight line overload,” he said. “A less expensive storage system can be used to avoid that upgrade cost by limiting the generation that goes into the line at any one time.”
Another driver is the 30% federal investment tax credit, Goggin said. The ITC can be used to finance solar and offshore wind and, if most of the storage is generated by renewables, it provides a 30% credit on the battery investment.
Either of those drivers could be a factor in the proposal by Orsted, the world’s leading offshore wind developer, to include storage in the recent bid it submitted pursuant to Massachusetts' legislatively-mandated RFP for offshore wind, Goggin acknowledged.
If selected, Bay State Wind would have 800 MW of wind capacity and a 55 MW, 110 MWh NEC Energy Solutions battery system. It would be “the world’s largest wind-paired energy storage system for commercial-scale energy,” Orsted spokesperson Lauren Burm emailed Utility Dive.
Flexibility provided by the storage system could relieve the region’s winter reliability challenges and save $158 million per year by shifting delivery of wind power to meet winter demand spikes, Burm added. She did not address other drivers.
In Minnesota, a Juhl Energy-Otter Tail Power fight over contract price, being adjudicated by the Minnesota Public Utilities Commission (MPUC), is the obstacle to building Juhl’s wind-solar hybrid. The project’s two 2.3 MW GE Renewables turbines and 1 MW solar array would deliver generation at $0.04/kWh, Dan Juhl told Utility Dive.
Otter Tail claims its avoided cost is less than that, Juhl said. Under the federal Public Utilities Regulatory Power Act, the utility is not obligated to pay more than its avoided cost. The MPUC is expected to rule by the end of April, according to Otter Tail spokesperson Stephanie Hoff.
GE’s Robert said proprietary GE technology will make it the U.S.’s first “pure” hybrid by integrating the solar and wind generation through a single inverter. That could cut capital costs for infrastructure and power electronics by 10% and operating costs by a quarter to a third, according to GE.
GE Renewables has two other hybrid initiatives in the works, Robert added. Its 37 MW wind project for Microsoft in Ireland includes an unspecified “small amount” of storage, according to Microsoft. The companies are using the project to evaluate the wind-storage concept.
GE is also participating in an Infrastructure Leasing and Financial Services (IL&FS) Development study in India to create a “blueprint for hybrid renewable energy,” according to the company. It is modeling the impacts and potentials of a 1,240 MW wind-solar-storage project. As part of the study’s first phase, IL&FS is incorporating GE technology in a 41MW wind-solar hybrid project with a 10MW, 15MWh battery storage system.
GE expects hybrid projects to produce cost savings for project development, grid infrastructure deferrals, and operations and maintenance as well as improve demand matching and load following, Robert emailed. They will also produce higher capacity factors that lead to higher project returns.
The global picture
U.S. projects barely hint at possibilities now becoming a reality around the world, according to Feng Zhao, Global Clean Energy Practice senior director for FTI Consulting. Hybrid projects are being operated or built in India, China and Australia, he told Utility Dive.
Denmark-based Vestas is the world’s biggest wind turbine manufacturer. By the end of 2018, its 60.2 MW Kennedy Energy Park in Australia will be the world’s first utility-scale, wind-solar-battery storage project to come online. The $160 million project will include twelve 3.6 MW wind turbines, 15 MW of solar capacity and a 4 MW Tesla battery system
It will “shape a path forward” for renewables by addressing “grid stability challenges” that have restrained renewables growth, Board Chair Bert Nordberg wrote in Vestas's 2017 Annual Report.
Beijing-based Goldwind, another large wind turbine manufacturer, is among the hybrid market’s leaders, Zhao reported.
“2018 will be a year of transition in which policy differences will be resolved. More commercial deployment of hybrid projects will be in 2019 or after.”
Global Clean Energy Practice Senior Director, FTI Consulting
Goldwind Australia has developed two wind-solar hybrid projects, Managing Director John Titchen emailed Utility Dive. The 10 MW Gullen solar project in New South Wales was integrated into the 165 MW Gullen wind project's grid connection last year to become Goldwind’s first operational hybrid. The 175 MW White Rock wind-solar project, also in New South Wales, is newly operational, with 175 MW of wind and 20 MW of solar.
Goldwind’s operation of hybrid projects in Asia allows it to “capitalize” on the unique advantages, Titchen added. The company sees hybrid projects becoming “a key feature in the development of renewable energy in the future,” he wrote.
India has targeted 10 GW of wind-solar hybrid projects by 2022 and China will likely build a GW or more of hybrid projects every year for the next 5 years, Zhao said.
India’s target makes it an attractive opportunity, Zhao said. Along with GE, Siemens Gamesa is working there. And the 2017 annual report from Suzlon, India’s biggest wind developer, said the company “is gearing up for the wind solar hybrid market, which it believes will lead the next phase of growth.”
Zhao said the advantages of hybrid projects will be “especially significant” in Africa because many of the countries’ grids are unreliable.
“Hybrid projects are not cost-competitive everywhere,” Zhao said. “But in some places, especially remote places that rely on diesel oil-powered thermal plants, wind-solar-storage projects can be cheaper. And, with storage for when there is no sun or wind or when demand spikes, they replace the conventional power plant backup solution.”
The availability of access to transmission is also a growing challenge for renewables that hybrid projects can address, Zhao said. China's 19 GW of renewables capacity without transmission access grew to 22 GW in 2017, he added. “China is an extreme case, but there were similar issues in Northern Germany and Brazil.”
Hybrid projects with storage can deliver their output to the local distribution grid, bypassing the transmission system, Zhao said. “Chinese leaders are pushing for more hybrid deployment in the many places where the wind and solar resources are both strong to take advantage of that opportunity."
In Germany, big utilities like RWE, EON and Vattenfall are building wind projects that include storage to avoid the transmission access challenge, he added.
Zhao acknowledged that the economics of storage “are not there yet.” But five years ago, it was assumed PV would take years to compete with wind, he said. “That is happening now, and the cost of storage is likely to follow solar’s cost trajectory."
Hybrid projects will be widely commercialized within a few years because rising renewables penetrations are forcing grid operators to look for ways to stabilize the grid, Zhao said. And renewables developers are looking for those same solutions to keep their industries growing.
“2018 will be a year of transition in which policy differences will be resolved,” Zhao said. “The large deployment of hybrid projects will be in 2019.”