2020-StdSolar-Solar+Storage-2020.pdf

Smart energy technologies are anticipated to withstand and support the industry during these times of economic crisis. Now is the time to gain insights into how DG solar + storage is shaping the energy landscape.

SOLAR + STORAGE The Evolution of Storage with Distributed Generation Solar PV

Cover photo: Enel X North America

Photo: Enel X North America

T he solar industry has experienced annual average growth rate of 50%, attributed to a price drop of more than 70% and the stability of the Investment Tax Credit (ITC). With growth and affordability comes expansion and innovation. A prime example is battery storage—an early accessory for off-grid solar customers—which has evolved to become the solution to many of our energy-dependent societal challenges. After all, distributed generation (DG) photovoltaic (PV) solar and storage have a natural, symbiotic relationship. Together, they help energy consumers meet our increasing demands for energy, aid our nation’s aging grid and achieve aggressive clean energy targets. rapid growth over the past decade. Wood Mackenzie (WoodMac) reports an Solar + storage makes good economic sense for utility-scale solar. However, for DG PV, viable methods of monetizing DG PV + storage have remained elusive. Incentives for DG solar development have originated from state-funded programs, most notably in New York, Massachusetts and California, which have opened the solar + storage market to DG solar developers. However, much of the growth still lies with utilities. Progressive states with model storage incentives have realized the enormous potential for DG PV + storage to boost, complement and supplement utility storage projects to the ultimate benefit of taxpayers. 

In this eBook we’ll explain why DG PV + storage is beneficial, cover current compensation models, and examine possibilities for a standard system of compensation—one that will help developers determine the overall cost of installing systems that include storage, adding that much-needed level of certainty.

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best uses for DG PV+ Storage

I n the past, battery storage was most commonly used to power residences for those living entirely off the grid. Today, batteries play a wider role in the energy landscape, offering a solution to some of the more critical grid challenges. Here are two examples:

MITIGATING THE INTERMITTENCY OF SOLAR POWER:

ENERGY ARBITRAGE: Under this system, batteries are used to shift energy purchases from high-cost times to lower-cost times. Also known as load shifting, energy arbitrage is particularly useful in reducing demands on the grid at times of high use, such as the evening when people are returning home from work and school, or in the morning before sunrise. As a result of shifting the loads, the grid equipment is under less strain and reduces the maintenance and upgrade costs for utilities, bringing down costs of electricity for everyone. 

DG PV + storage has become essential in helping to regulate the peaks and valleys that naturally occur when the sun either isn’t shining or is interrupted by cloud cover. Behind-the-meter batteries are a source of backup power during grid shutdowns, increasing resiliency and security for the offtaker, which is mission-critical for entities such as hospitals, prisons and the military.

ENERGY ARBITRAGE: COMBATING THE DUCK CURVE

A newer, innovative use for storage is to maximize the generation through a limited AC interconnection point. Particularly in New York and Massachusetts it is becoming common to oversize a PV array far above the AC inversion capacity, beyond what would be traditionally acceptable. DC coupled energy storage is being integrated into the design to absorb clipping losses and release the excess generation into the late afternoon and evening. This is also another way to combat the infamous “duck” curve as solar PV deployment increases.

Source: https://www.caiso.com/Documents/FlexibleResourcesHelpRenewables_FastFacts.pdf

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COMPENSATION The Big Challenge Facing DGPV + Storage S torage systems are a beneficial and, arguably, a necessary part of future grid viability. Therefore, developers and consumers involved in the deployment of storage systems will need a standard method of compensation. Unfortunately, most compensation structures are not yet fully developed, don’t exist or don’t provide enough benefit to justify deploying an energy storage system. Here are two models currently in play that either focus on energy usage or energy power/capacity.

A PERFECT MATCH As DG solar deployment has grown, naturally so has the deployment of energy storage systems— the two complement each other. Standard Solar’s Vice President of Engineering C.J. Colavito shares some of the vital services storage adds to DG solar arrays: ENERGY ARBITRAGE Absorbing generation during less valuable hours and releasing it later, typically late afternoons and evenings during summertime. CAPACITY FIRMING Maintaining the maximum power output of a solar electricity system during specific hours in a year, i.e. allowing it to provide maximum power even when the sun isn’t shining. RAMP RATE CONTROL Addressing the inherent intermittency of solar energy, limiting the power ramp down as clouds pass over to eliminate issues like voltage flicker.

1 ENERGY USAGE COMPENSATION In this compensation model, system owners are compensated on the kilowatt-hours of energy they produce and hold. This arrangement is most common for power-purchase agreements (PPAs), and how many DG PV + storage deals are currently arranged. The benefit of this model is that the contractual familiarity of a PPA makes the transaction easy to understand and gives a sense of comfort to those involved. 2 POWER/CAPACITY COMPENSATION A more recent and less widely used method of compensation focuses on power or capacity

amount of relief the storage system provides the grid. When batteries are holding the power during low-cost times and discharging at high-cost times, there’s a cost savings involved, and the consumer of the power is compensated on that basis instead of the energy they produce. Capacity payments are most common in virtually net- metered projects, community solar projects and systems with dedicated service lines that feed directly back into the grid. Since capacity payments for DG PV + storage are relatively new, it causes some confusion among consumers and state officials alike. But as it becomes more common, it will likely be the best method for accurately depicting and compensating DG PV + storage on the grid. 

instead of energy usage. Payment is based on the

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common technologies for DGPV + Storage

DEFERRAL OF WIRE UPGRADES

A ccording to WoodMac, storage-battery prices have dropped nearly 40% since 2015. In addition, the prices for the two most common key rawmaterials used in batteries—lithium and vanadium—have also significantly dropped in price since 2018. For much of DG PV + storage history, lead-acid batteries (think gasoline-fueled automobile batteries) were the most common storage type when systems were used primarily to power individual homes in off-grid installations. The reason they were used most often is that they were dependable and relatively inexpensive. But lead-acid batteries tend to be both heavy and bulky, which makes them less than ideal for use in today’s commercial- and community- solar applications. They are also less efficient and have limited lifecycles, requiring more frequent replacement when compared to newer energy storage solutions. That’s why the larger trend in solar applications is toward lithium- ion batteries like the ones used

Alleviating loads on the electrical system, which eliminates or delays the need for transmission or distribution system upgrades. RESILIENCE Improving the electrical system’s ability to handle disruptions like severe weather or other outage- causing phenomena. FREQUENCY REGULATION Adjusting energy storage system charging/ discharging in response to ISO/RTO signals received every two to four seconds to balance generation and load on the transmission system. 

in laptop computers and most cell phones today. A 2018 study by the U.S. Energy Information Administration reported that lithium-ion batteries made up more than 80% of the installed power and energy capacity of large-scale energy storage applications. Unlike lead-acid batteries, lithium-ion batteries are more expensive because of additional equipment, such as advanced battery management systems, that are necessary to monitor voltage and temperature. The additional expense is offset, however, by the fact that they have long lifecycles, high charge and discharge efficiency, are lighter weight and have no maintenance (they are solid state batteries and therefore don’t require electrolyte refills). Although other options may come on the market in the future, lithium- ion batteries, which continue to fall in price as manufacturers ramp up production for electrical vehicles and other large-scale deployment, will be the battery of choice in most DG PV + storage applications. 

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Photo: Enel X North America

A dvocacy for storage policy and standardization is ongoing at a federal, state and local level. As the DG PV + storage market continues to expand, we expect more states to begin to use storage to meet their ambitious renewable portfolio standards. Here is a run-down of current state policies based on a report by the Energy Storage Association: The State of State Policies

CALIFORNIA

COLORADO Colorado was the first state to advance the right to energy storage into law, and it’s continuing to look at opportunities to expand storage beyond its current boundaries. Proposals include expanding RESA (Renewable Energy Standard Adjustment) funds to include DG PV + storage projects.

Toward the end of 2019, California added storage provisions to its popular Self Generation Incentive Program (SGIP), which now provides incentives to support existing, new and emerging distributed energy resources. SGIP provides rebates for qualifying distributed energy systems installed on the customer’s side of the utility meter.

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MASSACHUSETTS

Massachusetts has a program offering developers higher compensation per kilowatt-hour if storage is included in the project. This favorable policy allows developers to put larger DG solar projects behind the same interconnection point, enabling them to generate more power during the day and discharge it in the evening.

RHODE ISLAND

The Rhode Island Public Utilities Commission is investigating the treatment of storage as an electric distribution system resource and issued a notice requesting stakeholder comments, which were due by Jan. 30, 2020.

NEW YORK

Thanks to aggressive goals set by both Governor Andrew Cuomo and the New York Public Service Commission, energy storage has had a clear glidepath to expansion in the Empire State. The New York Public Service Commission—following on Cuomo’s ambitious proposal of putting 1,500 MW of energy storage into service by 2025—issued an order requiring 3,000 MW of energy storage by 2030. Under the Value of Distributed Energy Resources program, New York is one of the leaders in DG PV commercial storage policy—and it’s expected to continue its growth for years.

MARYLAND

The Maryland Energy Association has announced the continuation of its renewable- energy storage tax credit for 2020, which has set aside $450,000 in tax credits for DG PV + storage. Credits will be given on a first-come, first-served basis for energy storage systems installed from Jan. 1, 2020–Dec. 31, 2020. 

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the inevitable future of DG PV + Storage

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Here are reasons why DG PV + storage will be vital in the future. TO HELP MEET AMBITIOUS STATE CLEAN ENERGY GOALS Storage would need to go from about 11 gigawatts today to 277.9 by 2040, according to a recent research report from WoodMac. For example, in New York, reaching the goal of 100% renewable electricity generation by 2050 will not be achievable without storage, which is why it’s good that the state has put storage goals in place in parallel with its ambitious solar goals. AN INTEGRAL PART OF GRID MODERNIZATION As cities and states transition to 100% carbon- free energy sources within a few decades, the WoodMac report highlights the need to transform the grid in a way that could meet demand on the hottest and coldest days, and that transformation would require building-out infrastructure for solar and energy storage. “Storage may become a requirement for grid interconnection,” predicts Dobbs. “As demand for solar increases, storage will be needed to mitigate volt fluctuations.” Dobbs recalls a time when it was believed that having more than 15% of solar on the grid would cause problems. As time goes on, the advantages of solar + storage will be utilized to a greater extent to manage dispatchability. It may even become a factor in how Net Metering programs are configured by helping to assign value to specific fuel types. 

I t won’t be many years with every solar project. It might be a little bit to deal with grid integration issues or it could be a lot to facilitate load shifting. What we need to be doing as an industry is partnering with groups like the Energy Storage Association and SEIA. From a project standpoint, you want to understand what revenue is available and design your systems around that. — Dan Dobbs CFO, Standard Solar

from now that there will be some amount of storage

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IN THE WAKE OF COVID-19 According to a March, 2020 survey from the Energy Storage Association (ESA), the energy storage industry is being hit with project delays and potential job losses. However, the ESA recognizes the overwhelming potential of energy storage to increase resiliency and grid reliability (particularly in behind-the-meter applications) as America heads towards hurricane and wildfire season and continues to push for federal support measures.

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About the Contributing Authors

DAN DOBBS A solar and energy storage industry veteran, Mr. Dobbs joined Standard Solar in December 2018 as Executive Vice President, Structured Finance and moved into the Chief Financial Officer role in December 2019. As CFO, Dobbs’ expertise is critical in adding multiple megawatts to Standard Solar’s balance sheet, securing strategic partnerships and projects in more than a dozen states, and reinforcing its financial strength and leadership. Mr. Dobbs began his solar career at SunEdison, where he held various positions in finance, marketing and product management before leaving to co-found Solar Grid Storage. Dobbs holds an MBA from the Wharton School at the University of Pennsylvania. He holds an M.S. in Mechanical Engineering and Technology & Policy and a B.S. in Mechanical Engineering from MIT.

C.J. COLAVITO, REP As Vice President of Engineering for Standard Solar, Mr. Colavito heads one of the most innovative design and engineering teams in solar, overseeing engineering, vendor qualification and new technology integration. Widely recognized for his technical expertise and passion for precision and detail, he is a coveted speaker at solar conferences and his commentary and expert viewpoint has appeared in all the industry’s leading trade publications. He has also guest lectured at leading colleges and universities and is a regular speaker at local schools. Mr. Colavito has a B.S. in Mechanical Engineering from Virginia Tech. He is both a NABCEP Certified Solar PV Installation Professional and an Association of Energy Engineers Certified Renewable Energy Professional.

ABOUT STANDARD SOLAR Standard Solar, Inc. is a leading solar energy company specializing in the

With more than 100 megawatts installed, financed and maintained, Standard Solar is one of the most trusted and respected solar companies in the US. Owned by Énergir, a leading energy provider with more than $5.8 billion US in assets, Standard Solar operates nationally and is headquartered in Rockville, Md. For more information, please visit www.standardsolar.com . 

development and financing of solar electric systems nationwide. Dedicated to making Distributed Generation (DG) solar more accessible to businesses, institutions, governments and utilities, the company is forging the path for clean, renewable energy development through turnkey solutions.

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