With the cost of battery-based energy storage falling sharply, storage could replace a large share of California’s fossil-fueled peaking fleet as increasing amounts of solar come online in the state, according to a report by a Department of Energy laboratory.
The potential role for storage to be a peaking resource grows with increased solar penetration, DOE’s National Renewable Energy Laboratory said in a report released in March.
Because solar energy makes California’s peak period in the late afternoon more pronounced, the more solar that is added in the state, the larger the potential market is for energy storage to run during that period, according to the report, The Potential for Energy Storage to Provide Peaking Capacity in California under Increased Penetration of Solar Photovoltaics.
The report focused on energy storage that can provide four hours of continuous energy.
California Public Utilities Commission rules provide storage with capacity credits if it can run for four straight hours at maximum output.
NREL “conservatively” estimates that 7,000 megawatts of storage could serve peak load in 2020 when about 17 percent of the state’s electricity is expected to come from solar resources, based on data from the last nine years.
California has about 20,800 MW of fossil-fueled peaking capacity, with about 11,000 MW of once-through-cooling capacity expected to retire by 2029, according to the report. Another 13,000 MW of peaking capacity could retire over the next 20 years based on the plants’ age, NREL estimated.
“Retirements of other generation capacity and any capacity outside the state used to meet peak demand would further increase the substantial opportunity for energy storage to provide peak capacity in California over the next couple of decades,” NREL said.
A large fraction of the retiring capacity could be replaced with four-hour storage, assuming storage costs continue falling and PV installations keep growing, NREL said.
California’s three investor-owned electric utilities are required to have 1,350 MW of energy storage by 2021 under a California Public Utilities Commission rule. They have also been directed to explore adding an additional 500 MW of storage.
Solar and energy storage work well together, according to NREL. PV increases the technical potential of energy storage to provide peaking capacity and reduces the cost of storage by reducing the duration needed, the report said. Meanwhile, storage benefits PV by absorbing low-value or curtailed solar and discharging it later.
“Together, declining costs for both technologies may create a positive feedback effect on deployment, allowing much greater overall penetration of both PV and storage,” NREL said.
While California leads the nation in energy storage and solar deployments, the report on the potential for storage to be a peaking resource may be helpful to system planners in all states and regions where solar and storage deployments are growing, according to NREL.
The fossil-fueled generators that provide most U.S. peaking capacity are getting older, and future retirements will provide opportunities for substantial battery storage to enter the market to provide peak capacity, NREL said.
Last year, about 215 MW of storage was installed in the United States capable of delivering about 390 megawatt hours, according to a March 6 report from GTM Research and the Energy Storage Association.
GTM expects about 550 MW of storage to be deployed this year and more than 1,000 MW to be added in 2019. The consulting firm expects annual installations to grow to about 3,300 MW in 2023.
