By - Jim Vess

Minnesota study shows solar-storage tandem becoming an alternative to peakers

Energize Weekly, July 26, 2017

Solar arrays linked to energy storage could be an economic and environmental alternative to natural gas peaking plants in Minnesota by 2023, according to a study submitted to the state’s Public Utilities Commission.

The study, Modernizing Minnesota’s Grid: An Economic Analysis of Energy Storage Opportunities, was developed by the Energy Transition Lab (ETL) at the University of Minnesota.

Peaking plants are used to meet peak-demand periods, which are customarily the most expensive megawatt-hours on the grid.

The analysis based on two workshops and economic modeling by ETL, Strategen Consulting and Vibrant Clean Energy showed that a natural gas combustion turbine peaker is currently the least cost option.

The study’s base case, least-cost scenario resulted in the portion of energy generated by natural gas climbing to 80 percent in 2050 from 17 percent in 2017. “This lack of resource diversity could pose additional risks and costs to Minnesota ratepayers, particularly in light of natural gas supply constraints that have afflicted other regions of the country,” the study said.

When environmental benefits and greenhouse gas emission reductions are added to the equation, along with projected declines in costs for storage – the analysis uses a 100-megawatt (MW), 3-hour storage facility plus 50-MW solar system with a 20-year project life – the tandem becomes competitive by 2023.

“Historically, utilities have used gas combustion turbines to meet peak demand. As storage becomes more cost-effective, it will compete with and displace new gas combustion peaking plants,” the study said. “Compared to a simple-cycle gas-fired peaking plant, storage was more cost-effective at meeting Minnesota’s capacity needs beyond 2022.”

Solar-storage combinations would also reduce the need for transmission line projects, the study said.

“Solar + storage was found to be more cost-effective than a peaking plant today, primarily because of the federal Investment Tax Credit and additional environmental benefits, including reduced greenhouse gas emissions,” the analysis said.

The modeling showed that like a natural gas peaking plant, storage was largely dispatched during the summer peak hours – a period when the solar photovoltaic (PV) arrays are also operating. When used together, solar PV and storage can share peak load more efficiently than a gas turbine, the study said.

“In California, for instance, utilities have deployed energy storage to provide necessary generation capacity to critical population areas such as the Los Angeles basin,” the study said. “In the PJM market, storage projects have provided ultrafast grid balancing services (fast frequency regulation). In Hawaii, storage integrated with solar PV has provided a cheaper alternative to expensive oil-burning power.”

Among the study’s recommendations are:

  • Modifying the existing Community Solar Gardens program to facilitate solar plus storage projects.
  • Updating modeling tools used by utilities and regulators for resource planning to better capture the costs and benefits of storage.
  • Identifying utility cost recovery mechanisms for new energy storage investments.
  • Developing rules from the regional wholesale market operated by the Midcontinent Independent System Operator to appropriately consider energy storage as a capacity and grid resource.
  • Developing innovative retail rate designs that would support a greater deployment of energy storage
  • Identifying opportunities for large electric customers to host storage projects.

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