Opinionated: Solar+Storage Challenges Gas Peakers

28 May 2019

By Fereidoon Sioshansi

Gas peakers have been around well before the recent rise of renewables made them even more indispensible. How else could grid operators fill in the void created by the vanishing solar generation when the sun sets at the end of the day or when wind stops spinning the wind turbines’ blades?

And with natural gas plentiful and cheap–especially in the U.S .– their place in the energy mix appeared safe. Rapid advances in energy storage technologies and an equally rapid fall in prices, however, are beginning to change the economics of natural gas peakers.

While evidence to date is anecdotal and details tend to be sketchy, two recent trends stand out:

  • Renewables–solar in particular, but also wind–are increasingly paired and co-located with on-site storage; and
  • The cost of storage–in particular batteries–is plummeting while their performance continues to improve.

This has prompted a number of utilities in the U.S. and elsewhere to invest in ever-larger solar plus storage projects co-located and paired to optimize their synergies. Batteries, while still expensive, are reportedly performing much better than gas-fired peakers by following critical ramping and frequency requirements coveted by grid operators much more accurately and instantaneously. This means that, everything else being equal, they are increasingly preferred by the grid operators.

In early April 2019, Florida Power & Light, a utility owned by NextEra Energy, announced plans to build the world’s largest solar plus battery storage project, with a battery reportedly four times larger than anything currently in operation. FPL said the new solar plus storage plant is intended to accelerate the retirement and replacement of two aging natural gas peakers.

The new Manatee Energy Storage Center, which will be co-located at an existing FPL solar plant in southwest Florida,will have 409 MW of storage capacity and be able to provide 900 MWh of electricity – enough to serve over 300,000 homes for up to two hours.

In announcing the project, Eric Silagy, FPL chief executive officer, said, “Replacing a large, aging fossil fuel plant with a mega battery that’s adjacent to a large solar plant is another world-first accomplishment and while I’m very pleased of that fact, what I’m most proud of is that our team remained committed to developing this clean energy breakthrough while saving customers money and keeping their bills among the lowest in the nation.” FPL believes the project will save customers over U.S. $100 million and eliminate more than 1 million tons of carbon dioxide emissions.


Tesla’s battery storage co-located near wind park in South Australia

Mayor of Los Angeles, Eric Garcetti vowed not to repower three aging and polluting natural gas-fired plants if given a cleaner alternative. SunRun, a company which serves 250,000 customers with rooftop solar panels, saw an opportunity.

It offered to replace the physical plants with a virtual power plant consisting of 150,000 homes and 500 apartment buildings with rooftop solar panels plus storage. To make the scheme practical when the sun goes down, SunRun is offering to pay each homeowner $4,000 to install a battery in their home provided they agree to allow its capacity to be dispatched at critical periods.

According the SunRun Chief Executive Officer Lynn Jurich, the combination of rooftop solar plus storage could successfully replace the retiring gas plants and be cheaper. Similar schemes are being tested around the world with promising results.

In all such paired applications, storage essentially “firms” or “smooths” the otherwise variable output of solar or wind generation –making the renewable output so much more valuable. Assuming that such paired and co-located schemes perform as expected and can be economically scaled up, they stand to challenge the traditional role of gas peakers, which historically provided rapid ramping, frequency and similar critical services.

The future prospects for solar or wind plus storage will be further strengthened as the performance of batteries improve while their cost continues to plummet as supported by the cost reduction projections of Bloomberg New Energy Finance and others. Bloomberg’s latest figures for the levelized cost of electricity for lithium-ion batteries dropped 35 percent in 2018 to $187/MWh.

Bloomberg Energy, like others, is convinced that as battery costs decline, more renewable energy projects will be paired and co-located to smooth electricity output and provide grid stability services. FPL’s recent announcement is likely to be one among many in the coming months and years.

The trend towards pairing is most noticeable in places with high renewable penetration such as Hawaii, aiming to become 100 percent renewable.

In early April, Hawaii’s Public Utilities Commission approved funding for six grid-scale solar and battery storage projects–three on the island of Oahu, one on Maui, and two on the big island of Hawaii. Together, they will amount to 247 MW of solar capacity and roughly 1 GWh of battery storage to eliminate over 48 million gallons of imported fossil fuels annually.

According to the Hawaiian PUC, the cost will be “significantly” lower than the cost of fossil fuel generation in the mainland U.S., which is around 15 cents/kWh. Retail prices in Hawaii are among the highest in the U.S., averaging around 40-50 cents/kWh, depending on the island. Hawaii, which used to be nearly 100 percent dependent on imported diesel fuel, is rapidly progressing towards a 100 percent renewable future.

One wonders why it took the Hawaiian politicians so long to arrive at a sensible solution considering the abundance of domestic renewable energy–the sun, the wind, geothermal, tidal, biomass and hydro.

This article was originally printed in the June 2019 issue of EEnergy Informer. You can reach the editor at fpsioshansi@aol.com

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