Once a novelty, utility-scale hybrid projects pairing solar or wind power with energy storage – and in an increasing number of cases all three together – are poised for sharply accelerated US deployment over the next several years.
“We’re seeing a big proliferation of these hybrid projects. They are going to be a larger part of the conversation going forward,” said John Hensley, vice president of research and analytics, at Washington, DC-based American Clean Power Association (ACP), itself a body ‘hybridised’ from US wind, solar and energy storage associations.
At the end of 2021, the hybrid project pipeline stood at 26.9GW with 95% consisting of solar plus storage. California leads all states with nearly 7.8GW in development and then Nevada 3.6GW – all solar plus storage – while investment is also flooding to Arizona, Florida, New York, and Texas.
Last quarter, developers placed 2.23GW of hybrid project capacity online, bringing 2021 installations to almost 5GW, a 14-fold increase from the previous year. By the end of last year, the US had 8.7GW of cumulative operational hybrid capacity, a 133% increase from a year earlier, according to ACP.
That includes nearly 6GW of solar plus storage, about 1.9GW of wind and storage, and 752MW of solar and wind plus storage.
Factors helping drive hybrid capacity expansion, in ACP’s view, include: declining battery and energy system costs, greater storage duration as technology evolves, and the opportunity to save on shared equipment, interconnection, land use, maintenance, and permitting expenses.
With interconnection queues bursting in the four largest US grids, getting through them to tie in new standalone solar and wind projects is often a costly and lengthy process.
Added incentive in solar-plus-storage
Some developers can skip a “large chunk” of the interconnection process by adding a storage facility to an existing solar or wind farm – if they don’t interfere with their existing interconnection agreement, said Hensley.
Also facilitating hybrid expansion is the ability for a developer to qualify a project for the federal investment tax credit (ITC) if storage is employed with solar.
“There is no tax credit for storage systems but if you pair that storage system with a facility that is eligible for an ITC, then the tax credit can also be applied to the cost of the storage facility itself,” said Hensley, adding that because of the solar ITC, “there is that added incentive driving those solar plus storage facilities”.
Trying to achieve key reliability and peak demand goals is also part of why investors are embracing hybrid solutions. Congestion and curtailment are on the rise as more renewable resources are added and the problem is getting worse faster in the main California and Texas grids. In some cases, storage has taken the place of transmission buildout.
If you are a project owner getting curtailed all the time, a storage facility starts to look more and more appetising
“If you are a project owner getting curtailed all the time and unable to get your power to the system, a storage facility starts to look more and more appetising. It would help you avoid that curtailment and eventually somehow get your power back on to the system,” said Hensley.
Solar paired with storage is the best match in California. With solar energy oversupply during the late morning through mid-afternoon, being able to store and deliver in the early evening when demand ramps as people come home is a money-maker for project owners.
“In California, we’re at the point now where solar projects don’t really move forward unless they have a storage component,” he said. “To make the economics work, you’ve got to be able to move that power to a different part of the day when it has more value on it contributing to a higher net peak in those markets.”
As more shifts nationwide occur in where peak demand is for energy in the day, there is more and more of a rationale in a case to building storage facilities neighbouring solar projects.
For now, four-hour lithium-ion (li-ion) batteries are becoming the US industry norm for pairing with both solar and wind projects, but 6-10 hours is where the next generation of technology is going to try to land.
“Li-ion is the technology of choice and still king for the moment, but... we’re going to see some new entrants coming into the US market down the road,” said Hensley, citing iron-air technology as an example of the new battery chemistries that are set to challenge li-ion.
When discharging, the battery ‘breathes in’ oxygen from the air and converts iron to rust. While charging, an electrical current is applied and converts the rust back to iron and the battery ‘breathes out’ O2.
The ‘wind-led’ hybrid project
While solar plus storage projects will predominate in the hybrid sector, wind and storage can make financial sense in certain applications depending on factors such as availability of interconnection, location, off-take contracts, peak demand, where power is traded, and wind resource quality.
For most developers, it has been more economic to take the federal production tax credit (PTC) than try to find a project that pencils in with the ITC and pair it with a battery storage facility.
The PTC, which expired at the end of 2021, had paid between $14.40-$25/MWh for electricity sent to the grid during a project’s first decade in operation depending on criteria and timing of eligibility. The ITC, in contrast, is worth between 18% and 30% of capital costs up-front.
So-called tri-hybrid projects incorporating solar, wind, and storage are also gaining certain momentum in the market. Wheatridge in Washington State, the biggest, came fully online in 2021, with NextEra Energy Resources and utility Portland General Electric sharing ownership of the 300MW wind farm with the former owning the 50MW PV and 30MW battery storage facilities.
David Lawlor, director of development for NextEra Energy Resources, said as the project was launched that Wheatridge “will serve as a model for future projects as we continue to develop projects that couple a combination of wind or solar generation with battery energy storage”.
NextEra is developing an even larger hybrid called Skeleton Creek in Oklahoma that comprises 250MW of wind capacity, now online, 250MW of PV and 200MW of storage.
“These projects are trying to optimise around all three of those technologies. Frankly, driving a resource able to deliver a pretty firm power profile to their customers,” said Hensley.