By: Craig Lewis, executive director of the Clean Coalition
Can solar+storage replace gas? A battle has been brewing in California over this question, with recent analyses suggesting that the answer is, technically, yes. What’s more, solar+storage facilities can be deployed more quickly than gas plants, at a significantly lower price.
Today’s reality is that renewable energy alternatives are technically and economically superior to new gas plants. That doesn’t make solar+storage a done deal in California, but it makes it far more likely that the state will move to renewables when considering new electrical generation.
A California face-off
In Ventura County, California, state regulations require that a pair of once-through cooling gas plants be retired by the end of 2020. The plants, Mandalay and Ormond Beach, currently provide about 2,000 MW of electricity to the Moorpark Subarea, the most grid-constrained part of the Southern California Edison (SCE) service territory.
As replacements for these plants, SCE proposed building a new gas plant, the Puente Power Project, as well as refurbishing the existing Ellwood Peaker Plant.
The Puente project was approved by the California Public Utilities Commission (CPUC) in December 2016. Since then, it has faced opposition from environmental groups and locals, who note that the area has long been subject to environmental degradation from polluting power plants. These groups welcomed a recent study by the California Independent System Operator (CAISO), which concluded that “preferred resource alternatives” (energy storage plus renewable energy) can in fact meet the region’s reliability needs.
Despite estimating a high price tag, CAISO asserted that a storage option would be technically feasible. And subsequent studies tell a different story about the cost of energy storage—a story in which storage is cost-competitive with gas.
Possibly the most sophisticated technical and economic analysis to date has been a study and model from the Clean Coalition. That analysis used up-to-date costs and realistic scenarios to show that the Puente and Ellwood gas plants could be replaced with solar+storage at a much lower price than what CAISO estimated—approximately $406 million in upfront costs, less than half of CAISO’s $1.1 billion figure. That’s not even accounting for the much higher costs of operations, maintenance and fuel for gas plants, or their human and environmental health costs.
Why was the Clean Coalition’s estimate so much lower than CAISO’s?
First, CAISO used 2014 prices for energy storage, which has come down more than 10% per year since then. By 2018, storage is expected to cost less than half of what it did in 2014. Second, CAISO modeled a storage-only solution, not including solar, which would bring the price down even further and allow the entire solar+storage project to benefit from the 30% Investment Tax Credit. In addition, CAISO overestimated costs for demand response.
Feasible and preferred resources
Even CAISO’s finding that preferred resources are technically feasible for the Moorpark Subarea has regulators pushing to invest taxpayer dollars in clean energy.
On September 28, the CPUC voted unanimously to reject the Ellwood plant. “At this time, absent very compelling circumstances, we should be directing all of our investments in infrastructure and energy to clean energy resources,” said Commissioner Clifford Rechtschaffen.
The Puente plant is now being considered by the California Energy Commission (CEC). Faced with critiques of its study, CAISO suggested in a September 29 filing to the CEC that rather than relying on studies, which “are largely academic until an actual alternative resource portfolio is procured,” we put preferred resource alternatives to a real-life test. In the filing, CAISO called for an expedited Request for Offer (RFO) to be issued to establish the economic feasibility of preferred resource alternatives to Puente.
In response, a CEC committee took the unusual step of issuing a statement announcing that it will recommend denial of Puente. While the CEC has yet to reach a final decision—and the developer, NRG, will certainly challenge the committee’s recommendation—this early statement is an indication of where things are headed.
We can bring solar+storage online quickly
An expedited RFO is one way to hasten solar+storage deployment, but other methods are even more effective.
The Clean Coalition has designed a game-changing feed-in tariff (FIT) that includes a market responsive pricing mechanism to ensure the best value for ratepayers, along with a dispatchability adder to incentivize energy storage. This innovative FIT is designed to procure and deploy cost-effective renewables and energy storage much more quickly than auction processes, which are burdened by excessive preparation requirements, transaction costs, and failure rates—and a FIT approach is far faster than building a gas plant.
Sacramento Municipal Utility District (SMUD) has already shown this can be done. SMUD launched a FIT in 2010 to develop 100 MW of distributed solar. Within two years, over 98% of the 100 MW of FIT program capacity was successfully constructed and online.
Solar+storage is already happening. Can it replace California gas plants?
Solar+storage solutions are already in place and proving to be cost-effective.
Tesla’s 17 MW solar + 52 MWh storage facility on Kauai stores solar energy during the day to use at night, making solar dispatchable when it is needed rather than only when the sun is shining. AES’ 28-MW solar + 100 MWh storage facility, also on Kauai, will provide 11% of the island’s electricity needs starting next year, at a game-changing 11 cents per kWh for dispatchable solar.
Projects like these show that solar+storage is not a dream for the future. It’s viable now, and it’s being deployed now.
It remains to be seen what will happen with the gas plants in Southern California. But the latest developments in the area show that the sun is shining brightly on solar+storage.