Timing is important, but it's not everything: Considerations on when to add energy storage to your solar project
The U.S. energy storage industry is booming, with annual commercial- and utility-scale deployments reaching gigawatt-level run rates. Although it is still relatively nascent, the industry is mature enough that the big questions around storage system design, battery chemistries, and topology are well-understood by a handful of sophisticated engineering, procurement and construction (EPC) firms and energy storage integrators. Those companies have gained the experience and expertise and have the relationships with developers, independent power producers (IPPs), utilities and permitting authorities to successfully navigate the complex and still murky waters of storage integration and installation.
However, solar-plus-storage is a distinct type of system integration, not just a simple add-on of storage to PV and different than stand-alone storage, a process that requires an experienced EPC and developer. The ideal scenario would find the storage components designed in from the beginning of the project, but there are many reasons to consider adding storage to a solar project at various times during development, construction and even once the plant is operational. Storage optionality (the ability to add storage) can help the marketability of the project to utilities that are increasingly looking for the grid stability and reliability benefits that storage offers.
Utilities prefer storage-paired solar facilities: for a modest increase in levelized cost of energy (LCOE), they receive benefits such as the ability to shift energy to times more consistent with peak load and to utilize ancillary services. Storage attachment rates are climbing, indicating that the wider energy industry is recognizing the increasing value of storage and capitalizing on new opportunities.
This article looks at the key considerations for adding energy storage and how the timing of the decision of when to add storage impacts the project. There are three scenarios for adding storage to a solar project: designing in storage from project conception, adding storage once solar development is already under way, and retrofitting an existing operating PV system with storage.
Scenario One: Design in Storage from the Beginning
Ideally, storage is designed into the solar array from the beginning of project conception. By planning for storage from the early stages, a project owner can optimize for the most beneficial commercial use case for the battery and best meet an offtaker’s needs. This approach makes it less likely for a restudy or utility delay, permitting and planning approvals won’t need to be revisited, and the site can be optimized with storage in mind instead of as an afterthought.
Initial considerations for this plan include land space, interconnection limit, system size, and potential revenue streams. For example, in some markets the enhanced solar production that comes with a high DC-to-AC ratio is rewarded. In these markets it is ideal to make decisions on storage and solar sizes early, in order to avoid development rework that could occur should a developer want to increase the DC-to-AC ratio with the addition of batteries later.
In markets experiencing interconnection constraints, DC-coupled energy storage may help mitigate otherwise expensive system upgrade costs by driving down the AC net injection of the combined system. This market model has been used extensively in both Massachusetts and New York, where years of distributed solar activity have reserved the vast majority of available hosting capacity on the systems.
Scenario Two: Add Storage Once Project Is Under Way
The second scenario for adding storage is adapting as you go; that is, layering in storage after the initial interconnection and permitting applications have been submitted. It’s less disruptive to the project and continues the momentum that the project is already carrying through permitting, lease agreements and the like. If there is an incentive, adding storage at this stage will help secure the highest incentive.
Adding storage around EPC project award has distinct advantages. Depending on the configuration that was approved in interconnection, there may be an opportunity to jump ahead of the line (depending on the program) or start a study in parallel while getting town approvals for a relatively small footprint adder (at least on most distributed generation sites).
By doing so, remobilization and restudy costs can be mitigated or potentially avoided. The storage can be considered as a part of site optimization and provide midstage value engineering that may otherwise be lost. This should occur ideally before the offtake origination effort and definitely before the offtake agreement is finalized. It’s a reasonable approach to introduce additional revenue streams at this juncture but not as practical later in the process.
Adding DC-coupled storage is a potential avenue for introducing storage to an in-flight project without changing fault current contribution and the anti-islanding/effective grounding methodologies on the inverter, which could lead to a restudy.
Oftentimes, public policy drivers can influence developers to add energy storage to in-process PV applications when a new energy storage program is introduced within an existing PV market. As an example, both Massachusetts and New York introduced energy storage incentives as part of their PV programs between 2017 and 2018. In both cases, developers in those markets already had mature PV portfolios and naturally reacted by requesting to add energy storage to those active interconnection applications. The overwhelming demand for application modifications resulted in both jurisdictions adopting statewide guidelines for adding energy storage to in-flight PV applications.
If the plan calls for adding storage once site improvement has begun, it should likely be treated as a separate project, given the long permitting, study, and procurement lead times. At this juncture, stakeholders may provide additional space on the project site and make general design decisions to support any future add-ons without affecting the construction timeline.
Scenario Three: Adding Storage to An Operating PV Plant
The final scenario would be to integrate the storage system with an operating PV power plant. Adding storage after the fact differs from designing a storage-only project and has some unique challenges. But there are certain cases where it makes sense to retrofit PV with storage, such as upcoming capacity RFPs, tariff-based program updates, utility preference, and the like.
A key challenge can arise when the original terms of a power purchase agreement do not consider storage. Primary questions include whether the solar facility needs to be augmented to better support storage integration, higher DC-to-AC ratio, and other factors.
Another factor is interconnection logistics. If the system is AC-coupled, will it need a new interconnection entirely? If it‘s DC-coupled, will this require any changes in interconnection? The answers to both these questions may vary, depending on the interconnection entities.
In terms of design and optimization, it’s prudent to identify if there are opportunities to expand or repower the existing power plant. Incentives can play a key role in the decision-making as well, since retrofitted solar-plus-storage plants are eligible for the federal Investment Tax Credit.
Timing Isn’t Everything
Ideally, integrating energy storage with a solar PV system should be considered from the beginning of a project, but adding storage at any stage in development and construction is possible. As storage costs decrease, retrofits have become an increasingly attractive way to maximize the financial returns for a project. The key to success for any solar-plus-storage project is working with an experienced EPC team that can guide the site owner to the best possible outcome.
Charley Weschler is a fresh face at Borrego, stepping in as director of business development for energy storage. He is based in Denver.
Mike Conway has been with Borrego for nearly nine years, previously serving as a utility electrical engineer and as Borrego’s director of grid integration. He now serves as a director of business development for energy storage. He is based in Boston.