Month: May 2019

IEEFA: Solar-plus-storage undermines coal economics by ‘hundreds of millions’ of dollars

Tumbling solar-plus-storage costs could see the hybrid technology become a money saver for US firms grappling with expensive legacy coal portfolios, according to the Institute for Energy Economics and Financial Analysis (IEEFA).

Utilities shutting down coal units ahead of their end-of-life point and replacing them with renewables, stand to reap savings in the “hundreds of millions”, the think tank claimed in a recent update.

PacifiCorp, a subsidiary of Warren Buffett’s Berkshire Hathaway Energy, is one a raft of utilities IEEFA said is “reckoning with a new reality” of coal closures. In a recent review, the firm found early retirement of certain coal units would create “potential benefits” for its 1.8 million customers.

According to IEEFA, PacifiCorp’s coal units can’t compete with “cheaper and cleaner alternatives” despite their high power performance levels. For the firm – reportedly the largest grid operator in the US West – the savings from early closures could reach the US$248 million mark, depending on scenarios.

Cost parity with mainstream gas plants

The spotlight on ever cheaper solar-plus-storage has gradually built in recent times. Only this month, new analysis claimed the duo can outcompete certain new-build gas generators in the US, and not only peaker plants as previously thought.

According to the review led by Fluence, utilities opting for solar-plus-storage can expect lower LCOEs (US$39-US$48/MWh) than comparable mid-merit NGCC plants (US$60-$116/MWh). For reference, some of PacifiCorp’s coal units feature LCOEs above the US$85/MWh threshold, based on the firm’s own stats.

The Berkshire Hathaway Energy subsidiary will not confirm the extent of coal phase-outs – nor the technologies that will replace it – until the late summer. For now, however, several of its scenarios would result in hundreds of megawatts of solar-plus-storage additions.

As noted by the IEEFA this week, other utilities have already finalised similar moves. Nevada’s NV Energy, for one, is shutting down coal plants even as it acts to add 1GW of solar and 100MW of battery storage capacity. Meanwhile, Colorado’s Xcel has filed proposals for solar- and wind-plus-storage at average prices of $30-$36/MWh.

See here for IEEFA’s statement and here for PacifiCorp’s note

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Danish clean energy fund draws US$700m from Nordic investors eyeing Asia and LATAM

Fund management firm Copenhagen Infrastructure Partners (CIP) has established a new fund to invest in greenfield renewable energy infrastructure primarily in Asia and Latin America, with expectations of reaching US$1 billion by the final close.

The Copenhagen Infrastructure New Markets Fund I K/S (CI NMF I) reached a US$700 million first close on 9 May with commitments from cornerstone investors PensionDanmark (PD), Arbejdsmarkedets Tillægspension (ATP), Kommunal Landspensjonskasse (KLP), and Lægernes Pension. Three of the organisations have also been cornerstone investors in other CIP funds, but ATP is a new cornerstone investor.

The fund will also focus on certain countries in Eastern Europe and Africa.

“Obtaining first close commitments of US$700m from a group of leading Nordic investors is an important proof of investor confidence in CIP’s approach to energy infrastructure investments and a testament to the track record built with CIP’s Western Europe and North America focused energy infrastructure funds CI I, CI II, and CI III,” said Jakob Baruël Poulsen, managing partner in CIP. ”The CI NMF I is a significant step in CIP’s continued expansion as it broadens our offering to also include infrastructure funds targeted at fast-growing major new economies.”

”CIP has come a long way since PensionDanmark and CIP’s senior partners established CI I back in 2012 with PD as sole and founding investor. CIP has demonstrated its ability to develop and construct renewable infrastructure projects in Europe and America on time and budget and has delivered very attractive returns to its investors. We see the New Markets Fund as a natural next step to broaden the investment universe to new markets in Asia and Latin America where there is a significant need for renewable energy investments that represents attractive investment opportunities for CIP and its investors,” said Torben Möger Pedersen, CEO at PensionDenmark

CI NMF I will apply the same value creation and de-risking approach as CIP’s existing OECD-focused funds and invest in offshore and onshore wind, solar PV, biomass and waste-to-energy and transmission grid systems among others.

CIP is a fund management company focused on energy infrastructure including offshore wind, onshore wind, solar PV, biomass and energy-from-waste, transmission and distribution, and other energy assets like reserve capacity and storage. CIP manages five funds and has ~€7.5bn under management.

Last August, CIP started construction on two solar projects totalling 300MWac in the US.

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Japan’s Marubeni invests in US distributed generation company GridMarket

Japanese conglomerate Marubeni Corporation has invested in US-based company, GridMarket, which is focused on distributed generation projects using battery storage, solar PV, fuel cells, and combined heat and power. 

Marubeni is looking to capitalise on GridMarket’s ability to use proprietary analytics and machine learning to identify cost-effective project opportunities and source technologies to build distributed generation systems across its huge network. The Japanese firm has been working solar energy for two decades but is now looking to promote distributed generation systems for its customers by applying GridMarket’s services particularly in North America, Japan and island areas.

The move should help to reduce electricity bills for consumers.

This is not the first time that a large conglomerate or traditional power companies has taken an interest in distributed generation opportunities, although many such cases are in developing countries. For example, French energy giant Engie has recently teamed up with Myanmar-focused off-grid energy specialist Mandalay Yoma to help spur rural electrification across the Southeast Asian country with mini-grids combining PV, diesel and battery storage. French power giant EDF also acquired a 50% stake in the Togo-focused unit of off-grid renewable energy specialist BBOXX.

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Walmart closes deal with C2 Energy for 46 PV projects

C2 Energy Capital has signed off on 46 Power Purchase Agreements (PPAs) and leases with Walmart that will see the company provide renewable energy to the retailer in five US states. 

These deals, totalling around 40MW of capacity, fall in line with Walmart’s goal of having 50% of its operations powered by renewable energy by 2025.

These 46 PV projects will generate more than 65,000,000kWh of renewable energy annually, enough of an energy output to power nearly 5,500 homes. These installations are expected to cover 10-60% of each stores’ overall electricity use.

Mark Vanderhelm, vice president of energy for Walmart Inc., said: “Solar is a vital component of Walmart’s expanding renewable energy portfolio. Walmart plans to tirelessly pursue renewable energy projects that are right for our customers, our business and the environment. These planned projects with C2 Energy Capital are moving us in the right direction toward our renewable energy goals.”

This new deal comes one year after Walmart chose C2 Energy Capital to install 13 rooftop solar projects in South Carolina. All 13 projects are now operational. 

Candice Michalowicz, co-founder and managing member of C2, said: “Walmart is a seasoned expert at onsite solar generation, and they have high expectations for their vendor partners. We are honored to be a part of their renewable energy program, and the important steps they are taking that will benefit the local communities and the environment.”

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Corporations, citizens and most bankable batteries: ‘Storage & Smart Power’ returns

Volume 19 of PV Tech Power has just hit the (digital) shelves and once again the quarterly technical journal from our publisher Solar Media includes ‘Storage & Smart Power’, the dedicated section created and curated by Energy-Storage.news.

The magazine is available for free download from the PV Tech site, while individual papers from Storage & Smart Power will also appear here on E-S.N in the coming weeks.

We’re looking at two of the biggest ‘stakeholder’ groups in the energy industry of tomorrow: corporations and ordinary people. From customers, to providers, with roles in between, some of the world’s biggest companies and ordinary citizens are shaping the future, in very different ways.

Heavy industry and big tech companies are big procurers of renewable energy, but when it comes to the need to adapt, corporations with a direct interest in fossil fuel industries are, for obvious reasons, going to have to seek new tactics to survive. Our feature, “Corporate takeover: the end of independence?” (p.100) looks at Shell’s acquisition of battery storage player Sonnen, as well as the new ownership of Greensmith and Younicos by Wartsila and Aggreko respectively. 

We ask what makes an energy storage company an attractive target, whether these mission-driven companies can retain their commitment to their original aims and if corporate involvement is vital to roll out clean energy technologies at scale. 

Complementary to that piece in some ways is the feature, “Power to the People” by Liam Stoker, Solar Media’s UK editor (p.106). It looks at how control of Britain’s domestic energy market, traditionally held by the ‘Big Six’ group of utilities, is now a hotly contested prize. From big players from other industries taking a sideways step, to start-ups that claim to have cracked the grid’s complex combination safe of stacked revenues, an energy market revolution is happening as the energy transition accelerates. 

We’re also privileged that this edition of Storage & Smart Power includes a contributed piece on DNV GL’s Battery Module Scorecard, through which the accreditation, certification and testing house explains the importance of comparing and accurately assessing the capabilities of different lithium modules used for energy storage (p.96). 

Elsewhere in the main magazine, the cover feature focuses on the roles of big data and predictive analytics in the PV industry, with specific regards to post-subsidy deployment. PV Tech Power takes a deep dive into the ways buzzwords like big data, artificial intelligence and augmented reality can provide practical benefits to the industry. Engineers and data scientists from i-EM explain how predictive analytics and a ‘democratic’ future for big data access and analytics can bring big benefits (p.17) – not in the misty, distant future but right now. 

Complementary to that, the journal runs some real-world case studies as Enel Green Power, Aquila Capital and Pöyry discuss the impact of their own digitalisation efforts so far (p.32). 

Within the 116-page free journal are also feature articles and technical papers on topics including bifacial solar’s transition from niche to mainstream, the impact of soil erosion control and drainage, building PV systems to weather storms, strategies to minimise risk of wind damage to solar arrays, some novel ways to boost PV module output, the evolution of solar asset management and an in-depth look at Spain’s 175MW Don Rodrigo solar plant. 

Download PV Tech Power Volume 19, including E-S.N’s ‘Storage & Smart Power’, here.

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Solar-plus-storage is ‘chasing gas off the grid’

The price of power from solar-plus-storage is already cost-competitive with some new build gas generators in the US and not just for gas peaker plants.

In a study by Fluence and a group of MBA candidates at the Tepper School of Business at Carnegie Mellon University, it was found building new mid-merit gas plants was no longer the best value option for utilities.

“Coal’s market share of electric power generation has decreased from 57% 30 years ago to 27% in 2018,” Professor Jay Apt, Tepper School of Business, Carnegie Mellon University told Energy-Storage.News.

“During the same 30 years, natural gas’s share has leapt from 9% to 35%. The shale gas revolution has made gas the fuel that most executives think of first. This work makes it clear that, under certain conditions that the paper defines clearly, a solar-and-storage plant can more than hold its own against gas when the decision is made about what plants to build,” explained Apt.

Fluence’s lead data scientist Colleen Lueken explained in a blog for the company that the report was comparing both the operational and financial performance of the projects.

“The surprising results are in the chart below: S+S can compete – operationally and financially – with mid-merit NGCC plants in many regions of the United States today. For example, in the California Independent System Operator (CAISO) service territory, the net levelized cost of energy (net LCOE, defined below) for S+S runs from US$39 to US$48, with a mid-point of US$43.20. A comparable mid-merit NGCC would have a net LCOE of US$60-$116.”

Professor Chris Telmer, who oversaw the study together with Apt, stresses that utilities need to be thinking about the precise nature of job that any new build plant will be required to perform.

“The context for the paper’s question is that of a utility preparing an IRP, looking at its existing fleet of NGCC plants, recognizing that some of them operate as shoulder plants, and then considering how to do these ‘jobs’ as it expands its load base or replaces some of its fleet.  

“A utility executive considering the paper’s answer might ask themselves ‘why would I build a new gas plant and have it run at a capacity factor that averages 30-40%?’. This is pretty much the same question as ‘why would I ever build a mid-merit shoulder plant’. The students’ paper does not have a definitive answer to these questions. They simply look at the data, see that many plants do run as shoulder plants, and then they ask ‘if you do build such a plant, here is how cost-effective it would be relative to solar-and-storage’.”  

Importantly, Telmer flags that the study doesn’t factor in how a utility might more broadly plan its strategy for bidding into the mid-merit market. As a result, the study’s conclusions could be less persuasive to a utility decision-maker.

The scope of the study may appear fairly niche but as Lueken explains, with the peaker argument put to bed, looking at mid-merit plants is the next step:

Looking beyond peakers, tracking the ability of solar and storage to compete with mid-merit natural gas is the first part of a much larger question – how fast can we replace all natural gas – and even baseload – generation with renewables and storage? In response, the storage industry is now pivoting its focus toward long-duration systems – and which technologies are best positioned to supply storage with the 6-10 hours of duration, or longer, that will be required to meet this stretch goal.”

This month Southern California Edison signed up for six additional storage systems to compensate for a localised absence of gas generation as a result of the Aliso Canyon leak.

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