SolarCity signs landmark 'dispatchable' solar PPA

SolarCity and a Hawaiian utility have signed what is said to be the first-ever US power purchase agreement for "dispatchable" utility-scale solar energy, in a landmark deal for both the solar and storage sectors.

SolarCity, which is ramping up its solar-plus-storage offerings using Powerwall battery packs made by Tesla, last year built a 12MW ground-mount PV array for the Kaua’I Island Utility Cooperative (KIUC) – itself an unusual move for the nation’s largest rooftop solar installer. Today that array supplies 5% of the electricity on Kaua’i, Hawaii’s fourth largest island.

Under the terms of the new 20-year PPA, SolarCity will install a 52MWh battery system that can feed up to 13MW of power onto the island’s grid, shaving  Kaua'i's consumption of conventional power – typically diesel – during the peak demand hours of 5pm-10pm. The battery will be filled during daylight hours with solar energy from an adjacent solar array.

SolarCity will sell the stored power to KIUC at $0.145/kWh, which is less than what the utility currently pays for conventional power – and is only “slightly more” than what it pays for the real-time power generated at its two existing 12MW solar arrays.

The PPA – a first for the US solar industry – reflects the rapidly falling cost of battery storage, a trend with major implications for the electricity industry in the years ahead.

"KIUC has been investigating energy storage options for more than two years and price has always been the biggest challenge," says David Bissell, the utility’s chief executive.

"This is a breakthrough project on technology and on price that enables us to move solar energy to the peak demand hours in the evening and reduce the amount of fossil fuel we're using."

The solar-plus-storage system still needs approval from the county and state. KIUC has requested an accelerated approval process, as it wants the system built before the end of 2016, so it can qualify for the 30% investment tax credit.

Tyler Ogden, a solar research associate at Lux Research, points out that the 30% ITC also covers storage systems if they are paired with solar.

Storage is going to become commercially meaningful to SolarCity "in the medium term", particularly in the residential and commercial sectors, Ogden tells Recharge.

"I see this dispatchable solar system as an attempt by SolarCity to experiment and gain experience in this new kind of product offering, which will become more prevalent as solar penetrates deeper into the electricity market," Ogden says.