Hybrid power plants are growing rapidly: are they a good idea?

August 30, 2020

As battery prices continue to fall and the penetration of variable wind and solar generation rises, power plant developers are increasingly combining wind and solar projects with on-site batteries, creating “hybrid” power plants. I had the opportunity to lead a research effort up at Lawrence Berkeley National Lab which outlines the drivers of the new trend while discussing options for integrating the new technologies onto the grid.

The topic has proven to be attractive to the industry. It was recently featured in Green Tech Media, and I was interviewed for the Energy Transition Show podcast!

MARKET TRENDS

We show that there is 69 GW of hybrid projects in the longer-term interconnection queues of regional power markets (Figure 1). In California, almost 2/3 of solar projects are proposed as hybrids.

 

Figure 1. Hybrid capacity and standalone battery capacity in each ISO queue

TO HYBRIDIZE OR NOT TO HYBRIDIZE?

A key aspect of the research was trying to understand why one would hybridize these systems rather than just independently developing them. Putting the generators and batteries in one location can save on shared equipment, interconnection and permitting costs, capture otherwise clipped energy, and take advantage of federal tax credits that encourage coupling solar and batteries. But co-locating batteries with generating units may not always be the optimal solution. Batteries may be blocked from full participation in the market if constrained to charge from their co-located generators. Plus, co-locating could reduce siting flexibility of a battery project.

MARKET COST AND VALUE

The growth of hybrids is also being driven by falling prices.  Power purchase agreement (PPA) prices for hybrid power plants have plummeted in recent years, with declining costs for wind, solar, and batteries. We found that prices have fallen from $40 to $70 per MWh in 2017 to $20 to $30 per MWh in 2018 and 2019

However, whether developers get paid for providing capacity or just energy is a big factor in whether hybrid plants pencil out.   The cost of adding four-hour battery storage at a utility-scale solar project ranges from $4 to $14 per MWh.  But the added value can be as high as $13 to $31 per MWh in the combined energy and capacity market in California, or as low as $1 to $9 per MWh in the energy-only power market in Texas (Figure 2).

 

Figure 2: Value premium for PV and wind hybrids compared to standalone project

Time will tell whether this trend is a short-lived product of current policy drivers or a more lasting phenomenon. Co-locating batteries with wind and solar can offer cost synergies and a value premium in current wholesale markets. But independently sited batteries without limitations on grid charging or renewable generator interconnection limits can currently capture more value. More research is needed to clarify the long-term cost-reduction potential, market value, and risks/benefits of hybrid projects within the electricity system.

 

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The article, “Motivations and options for deploying hybrid generator-plus-battery projects within the bulk power system,” is available in the Vole 33, Issue 5 issue of Electricity Journal, or online at https://www.sciencedirect.com/science/article/pii/S1040619020300312?via%3Dihub

The authors are Will Gorman, Andrew Mills, Mark Bolinger and Ryan Wiser of Berkeley Lab; Nikita G. Singhal and Erik Ela of the Electric Power Research Institute; and Eric O’Shaughnessy of Clean Kilowatts.