PV plus storage owners focus on dispatch payoff to maximize returns
Maintenance windows, system degradation and future upgrade profits are all impacted by dispatch and charge decisions during operations, PV plus storage experts told the PV Operations USA conference.
The U.S. PV plus storage market is set to soar in the coming years as falling prices create new market openings.
PV plus storage projects are set to spread from Southwest markets into more eastern states, replacing retiring coal-fired generation in a direct threat to gas plant developers.
PV plus storage projects are already undercutting new gas plants in states such as Nevada, Arizona and Hawaii due to federal tax credit support, Tara Narayanan, solar analyst at BNEF, told New Energy Update in October.
Within a few years, falling costs will push the price of PV plus storage projects below gas plants without any state subsidies, Narayanan said.
Initially, most solar plus storage contracts will be procured with vertically integrated utilities in regulated markets, but more liberalized markets with high solar penetration are also becoming increasingly attractive. California will be a key growth market as a growing “duck curve” effect on evening peak prices will place significant value on dispatchable clean energy.
As falling costs open up new opportunities, PV plus storage owners must tackle a complex array of operations and maintenance (O&M) challenges to realize the full value of these systems, experts told the PV Operations USA conference on November 8.
PV plus storage assets can be used for a range of utility-scale applications, depending on the market need.
One key application is time shifting, where storage can be charged during periods of high solar PV output and discharged later, often during evening peak demand periods. Storage can also be charged during periods of surplus power generation or when market prices are low and help utilities control morning ramp up and ramp down periods.
US wind, solar generation by state in 2017
Source: U.S. Energy Information Administration (EIA), October 2018.
This operational flexibility means that far more control modes are involved in PV plus storage projects, requiring many more proactive decisions on the timing and volume of charging and discharging, Leigh Zanone, Director, Operations and Asset Management, 8-minutenergy, told the conference.
"There's a lot of decision-making that has to happen, both from the people operating the project and automatically through the SCADA control algorithm," he said.
Developers must ensure storage software is efficiently integrated with other platforms used by the operator, Chris Frantz, VP Asset Management, Cypress Creek Renewables, told attendees.
In March, Cypress Creek brought online 12 solar plus storage projects in North Carolina. The projects incorporate 12 MWh of Lockheed Martin lithium-ion battery capacity.
Efficient integration of storage software is key to maximising revenues, Frantz said.
"It's so critical for the value proposition here, being able to discharge exactly when that PPA [power purchase agreement] makes you the most money," he said.
Differences in the characteristics of PV and storage operations significantly impact O&M practices for coupled systems, Zanone said.
Longer dispatch periods impact maintenance windows for key components such as inverters and this must be reflected in O&M contracts, he said.
"Your night-time maintenance exclusions-- that you may have in a PPA contract or an interconnection agreement-- become limited," Zanone said.
Changes in inverter usage also influence the mean time between failure, important for warranty agreements, he noted.
Differences in degradation rates of PV and storage systems are a key consideration for maintenance and upgrade strategies, Zanone said.
While degradation rates for PV projects might be around 0.5% per year and relatively linear, degradation of lithium ion batteries can range from 0.75% to 5% per year, depending on variables such as technology and use case, he said.
Batteries will require maintenance and augmentation every 6 to 10 years, equating to several major maintenance projects during the 25 year PV asset lifespan, Zanone said.
"It's an additional investment and an additional service that you have to do multiple times," he said.
Going forward, operators will want to take advantage of falling battery costs and wider system improvements to maximize returns. Battery costs are set to fall by a further 52% by 2030, according to Bloomberg New Energy Finance.
Variances in solar supply and charging decisions also impact the degradation rate, which in turn impacts the long-term strategy for battery cell replacement, Zanone noted.
"You have to take into account your initial design, the use case, your operational parameters, to estimate your degradation curve which then allows you to put together an augmentation [plan]," he said.
As the PV plus storage market matures, operators must decide whether they want to take on more of the risks associated with storage systems, Zanone said.
Storage service providers have traditionally provided a full wrap O&M service and the separation of warranties, capacity guarantees, augmentation schedules, and other responsibilities could provide savings, he said.
New Energy Update