Strong growth in US solar plus storage

From IEEFA:

The United States is on pace to lead the global market for grid-connected battery storage in 2019, overtaking 2018 leader South Korea, driven by accelerating solar-plus-storage projects and peaking capacity requirements, according to a May 21 research note from IHS Markit.

U.S. energy storage deployments will nearly double to 712 MW this year, surpassing South Korea, which is expected to drop below 600 MW “or even significantly lower,” according to Camron Barati, a senior analyst at IHS Markit.

After installing an estimated 920 MW in 2018, the South Korean energy storage sector tumbled in the first half of 2019 following a series of fires at storage installations that prompted an ongoing government investigation. The country’s Ministry of Trade, Industry and Energy, which launched an investigation in January after more than 20 fires, plans to complete the probe in June, according to a recent article in The Korea Times. In January, the agency asked public institutions, large multipurpose facilities and private owners to shut down their energy storage systems, while suppliers were forced to discontinue shipments, battering the financial results of large battery-makers LG Chem Ltd. and Samsung SDI Co. Ltd.

Both companies expect market activity to revive in the second half of 2019. 

In the meantime, IHS analysts see the U.S. market racing ahead, propelled by “significant regulatory and policy developments as well as the diversification in major applications and geographic activity,” Barati wrote in the research note. Those developments include a Federal Energy Regulatory Commission order to open up wholesale electricity markets, the ability of developers to use the federal investment tax credit for storage projects charging on solar power, new state-level storage mandates and incentives, and growth in behind-the-meter installations.

Between 2019 and 2023, more than 2,000 MW of energy storage paired with 10,000 MW of utility-scale solar photovoltaic arrays will be deployed in the United States, IHS forecasts. The firm estimates that combining 25 MW of four-hour batteries with a 100 MW single-axis tracking photovoltaic plant could reach a levelized cost of energy below $40/MWh if the developer qualifies for the federal investment tax credit.

About 4,300 MW of grid-tied energy storage will be added globally in 2019, according to IHS, with annual installations growing to more than 10,600 MW by 2025. Stronger outlooks in the United States, China, Japan and Australia led the analysts to boost their prior forecast through 2025 by roughly 3,530 MW.

Average capacity factors for fixed solar are around 26%, and adding tracking increases that to 30%:

Another seldom-reported metric to be found in Utility-Scale Solar is capacity factors, broken down by region. Looking across 260 different utility-scale PV projects, the report found a range of 15.4-35.5% in AC terms, with the median capacity factor coming in just above 26%.

That simple number belies a range of differences, including those caused by geography and technology. LBNL finds that the addition of tracking systems boost capacity factors by 3-5% percentage points, which put the average capacity factor for projects in California using tracking coming in above 30%.

[Read more here]

Tracking solar produces a much superior electricity daily supply curve (see chart here), which minimises the storage needed  to extend power supply into the evening.  With a 30% capacity factor, a 100 MW tracking solar installation would produce 30MW of output, so 25 MW from the batteries would cover demand from sunset for another 3.3 hours, say, from 6 pm to 9 or 10.

Demand from 10 pm to 6 am is (generally) half or 1/3rd of daytime levels, so for day-and-night solar, an additional 2-4 hours of storage would be required.  Of course, you'd need more for rainy days, etc, but with a diversified grid, with solar and wind farms in different areas, emergency supplies can be provided by legacy gas generators and seasonal storage.

The $40/MWh quoted above includes subsidies.  My estimate of 2019 pricing for wind+solar+6 hours of storage unsubsidised is $43.2/MWh, which falls to $32.3/MWh in 2021.  Wind+solar+8 hours of storage will cost $33.9/MWh in 2021, unsubsidised.  I reiterate: in a grid with geographically and technology diverse generation plants, 8 hours storage will be enough to produce "firm" supply.

Moral of the story:  Renewables with storage are now competitive with coal, and even in the US, where gas is cheap, with gas too.  And they will go on getting even more competitive.  Growth in renewables plus storage is exploding.  What's happening in the US now will be what happens across the world over the next few years.

Source: Lazard, my estimates, does not include subsidies, USA only.