The U.S. electric grid is decarbonizing and is likely to continue to do so given the increasing competitiveness of renewable resources over traditional resources. Most markedly, solar photovoltaic (PV) installations have skyrocketed in recent years due to plummeting technology costs. Solar PV provides low-cost, low-risk energy that coincides with hours of the highest level of demand, which for most utilities is during hot summer afternoons.
But a high enough concentration of solar PV shifts the need for power to the evening, after the sun has set. This necessitates resources that can quickly provide power to pick up the slack. Effectively, the default resource to serve this need was a natural gas combustion turbine (CT), which can rapidly generate power without the lead time required of a coal or nuclear plant. Many capacity markets in the United States are based on the premise that a CT is the “marginal” capacity resource filling this need for rapid response. But in recent years, battery storage has become a more attractive way to fulfil this need. Solar PV and battery resources can be sited together (a solar-battery “hybrid”) whereby the solar PV charges the battery during the day and the battery can discharge that power at night. Battery resources that are paired with solar PV can also get the same federal tax credits as the solar resource.
Utilities are increasingly adopting renewable and storage technologies for both policy and purely economic reasons. For instance, Public Service Company of New Mexico (PNM) is replacing the retiring San Juan coal plant with solar and battery hybrids, and the company is asking for approval to do the same for its share of the Palo Verde nuclear plant. PNM illustrated the value and complementarity of solar and battery storage hybrids below:
Source: Copy of Figure NS-3 from Direct Testimony of Nicolai Schlag, Before the New Mexico Regulation Commission, Case No. 21-04-02-UT, p.11.
The boom in solar PV, storage, and hybrids is not a flash in the pan. Like solar PV, battery storage costs have fallen dramatically and are expected to continue to decrease markedly in the future. While both resources are attractive, when combined, they are mutually beneficial. Expect to see many more in the near future.
