Solar-Plus-Battery: The Future is Now
25 cents. Enough to interpret divine will or start a game of Pac-Man, this simple, easy to remember figure is what the California Energy Storage Alliance now says is the value per kilowatt-hour (kWh) of a generic solar photovoltaic (PV) system backed with three hours of energy storage. While a quarter per kWh may sound meaningless, it’s actually a fairly significant figure, especially in California where the going rate for net-metering customers can range from 13 cents/kWh to 42 cents/kWh. Knowing how much a system is worth over its lifetime can add tremendous sales value in any market.
More importantly, the ability to narrow down the precise value of a solar-plus-battery system into a single figure, as supposed to one-off, customer-specific benefits such as reduced demand charges or availability of backup power, is a major achievement which will aid solar developers and regulators in the quest to create a commonly accepted rate or tariff for solar-storage systems. Economically competitive batteries have long been considered the Holy Grail of solar penetration, with some utilities, including San Diego Gas & Electric, proposing pilot projects that would create tariffs to pay customers with energy storage. In the immortal words of Ron Burgundy, this is a big deal.
Storage is also becoming the growth industry many experts have long predicted. According to GTM Research, the U.S. energy storage industry deployed 40.7 megawatts of capacity in the second quarter 2015, nine times the capacity installed during the same period last year. Just this week, General Electric inked its largest energy storage deal to date, agreeing to provide Coachella Energy Storage Partners with a 30-megawatt battery system as part of a contract with Imperial Irrigation District.
CESA came to its 25-cents per kWh figure by utilizing the California Public Utilities Commission (CPUC) “Public Tool” software, which calculates the cost-effectiveness of distributed resources, then changing the default settings to take into account the state’s newly proposed 50 percent renewable portfolio standard and assigning a “marginal avoided energy cost locational multiplier,” which is a value provided on portions of the grid facing peak capacity conditions and other locational needs.
CESA isn’t advocating that the CPUC require utilities to pay solar customers retail rates for the energy they produce, unlike some other renewable and environmental groups. However, they do believe that the CPUC should include energy storage in the equation of how much to compensate solar and other distributed energy resource (DER)-equipped customers.
“CESA believes that smart tariffs mixed with specialized adders and/or incentives will send service providers and customers the data needed to maximize the value of DER assets,” the group said in a recent PUC filing.