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The Future of Large-scale Solar PV + Energy Storage Power Generation

Chet Lyons

September 10th 2017

Solar Power International, Las Vegas, NV

Director, Energy Storage & Related Markets

Energy Group

The End of One Era Marks the Beginning of Another

“Duke Power kills nuclear

plant, plans $6 billion in

solar, battery investment”

Tampa Bay Times wrote that Duke “is effectively giving up its long-held

belief that nuclear power is a key component to its Florida future and,

instead, making a dramatic shift toward more solar power.”

Learning Curves Tipping Points Disruption

Source: Earth Policy Institute, Bloomberg New Energy Finance

• Solar PV cost “tipping point”

• Storage will undergo a price “tipping point” by 2020 for solar PV + bulk energy

• Global disruption of the utility industry will follow

Source: Bloomberg New Energy Finance

Solar Will Dominate New Generation Capacity Globally

• Investments in new fossil generation will total $2.1 trillion through 2040

• Investments in renewables will dwarf fossil generation

• $7.8 trillion will be invested in renewable generation

› $3.4 trillion for solar

› $3.1 trillion for wind

› $911 billion for hydro

Application Relevance for Canadian Solar

Energy Shifting True Microgrid

Demand Management Solar Smoothing

Energy Storage Application Market Value

Largest MWh segments

Source: CLSA, “Battery Ram – Storage Set to Shake Things Up”

Lithium Ion and Front of Meter Dominate

Source: GTM Research, DOE

• Lowest capital cost of

bulk storage except compressed air energy storage (CAES)

• Lazard’s 2015 Levelized Cost of Storage Analysis shows $213 to 313/kWh of capacity for PH

• Li-ion will begin to intercept Pumped Hydro LCOS* in 5 years

Pumped Hydro Dominates Bulk Energy Storage Today

* LCOS = Levelized Cost of Storage

Source: USDOE, May 2016; BNEF

Electro-chemical

Electro-chemical

Pumped Hydro Thermal Electro-mechanical H2

5-year Lithium Ion Installed Cost Forecast

• Rapid increase in global manufacturing capacity

• Better battery designs, manufacturing, scale

• Li-ion will start to overlap bulk solutions storage in the 4 to 6 hour range…

• Installed cost will drop from ~ $450 per kWh to ~ $225 per kWh by 2022

“Energy” = battery; “Power” = Inverter/PCS; “BOP” = Balance-of-Plant; “ADD” = manufacturing plant

depreciation + profit

Source of cost reduction

Source: Energy Environ. Sci., 2014, 7, 3459–3477 | Robert M. Darling, Kevin G. Gallagher, Jeffrey A. Kowalski, Seungbum Haac and Fikile R. Brushettad

Today 2022

• Assumes large-scale, long

duration energy shifting,

e.g., 5 to 6 hours

• Excludes land, taxes,

finance, developer profit

• Is this an accurate

forecast? Probably not.

Scale, technology

improvements will likely

drive down costs faster

Li-ion Energy Storage Market Price Projection: 2017 – 2030

Stage 1.0 – Fast Frequency Regulation

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• First frequency regulation (FR) storage projects (AES Energy Services, Beacon Power

• FR was largest front-of-meter storage application in USA until 2016

• 265 MW of fast-response storage in PJM

• Jake & Elwood 20MW FR plants • Developer: RES, 2012

• Power-to-energy ratio 4:1 (30 minute capacity)

• Asset value: 20MW, 5MWh plant ~ $15M

• Volatile pricing, merchant market

• Limited market: 3/10ths of 1% average peak load

Stage 2.0 – Gas Peaker Substitution

• Tesla built a 20MW, 80MWh peaker plant in less than 4-months from award date to COD

• Timing stunned global utility industry

• Plant MWh capacity approximately equal to 15% of total installed grid storage globally

• Primarily a storage-only application

• Solar PV synergy possible in some markets

• Merchant play, or utility rate base

• Asset value: 20MW, 80MWh ~ $40M @ $500K/MWh

Stage 2.5 – Solar PV + Peaker Substitution

• TEP 100MW PV + 30MW, 120MWh storage

• 20-yr. PPA for “less than 4.5¢/kWh”

– Solar: $1/watt installed → $0.029/kWh PPA

– Storage: $450K/MWh installed → $0.016 PPA

– 2.9 cents : $100M :: X cents : $54M

– X = 4.47 cents/kWh (math checks)

• Large-scale solar PV project with a 4-hour storage-based peaker added on

• Not comparable to energy shifting projects for KIUC in Hawaii (Tesla, AES)

Stage 2.75 – Solar PV + Storage for Bulk Energy Shifting

• Hawaii: SolarCity built a 13MW PV + 52MWh li-ion storage plant (Tesla batteries)

• 20-year PPA, 13.9 cents/kWh

• Beats KIUC’s 16 cents/kWh wholesale generation

• Supply power between 5 – 10 PM (“duck” region)

• Hawaii: AES Distributed Energy 20MW PV + storage "peaker plant" on Kauai

• 20-year PPA, 11.0 cents/kWh; AES will own and operate 5-hour storage duration; most PV energy will be shifted into dark hours

• 21% cheaper PPA rate vs. 15 months earlier

Stage 3.0 – Solar PV + Storage for Bulk Energy Shifting

• Australia: 3/30/17 – Lyon Group announced 330MW PV + 100MW/400MWh storage

• Altogether, Lyon Group planning 1.7GW of PV and 1GW of battery storage by 2020

• Australia: 4/18/17 – SolarQ filed to build 350MW solar PV + storage, Phase I of a planned 800MW PV farm near Gympie

• At 800MW scale, the project would provide ~ 15% of the state's south-east electricity needs from PV and 4,000 MWh of batteries

• CSP cost trajectory is impressive

• CSP limitations: scale, coherent light, water, gas, height, environmental

• Solar PV + low cost long-duration batteries will compete with CSP

Concentrating Solar Power with Thermal Salt Storage Cost Reductions for CSP Technologies Since 2012 Sun Shot Study

Source: NREL May 2016

• Solar PV + battery storage will ultimately beat the economics of Concentrating Solar Power (CSP) + thermal salt storage... and pumped hydro for 6-hrs. or less discharge duration

Comparing CSP, Solar PV, Solar PV + Combustion Turbines Annualized net cost of current and future cost for CSP, PV

with batteries, and PV with combustion turbines

Source: NREL May 2016

PV + Battery PV + CT

CSP Peaker

CSP Baseload

CSP Intermediate

Supply

Return

Solar PV + Thermal Chilled Water Energy Storage

• Solar PV + thermal cold water energy storage for district cooling, data centers, etc.

• “Duck curve compliant”

Grid benefit/cost studies often miss:

• Current costs of solar PV and storage

• Flexible range, ramp rate, response rate

• Higher reliability

• Lower operating cost

• Multiple value streams

• Speed of installation

• No air emissions

• Less water usage, no natural gas

Recognizing Full Value of Solar + Storage Vs. Fossil

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Example from CAISO *

• A hybrid 210 MW solar PV + 130 MW/560 MWh energy storage system could replace both the Puente Power Project and the Ellwood Peaker for less cost than fossil-based generation.

• This hybrid PV + Li-ion system would cost ~ $430 to $530 million with ground mount solar compared to $1.1 billion estimated by CAISO in its grid study (net of solar/storage ITC benefit).

* Source: Cost and Engineering Study of Puente Power Project Cost Effective PV Solar and Storage Capacity; Clean Coalition Study, Aug. 2017.

Key Points

• Solar + storage industry entering a “third stage”

• Li-ion storage will drop in cost by 50% in 5-years and will be used for 5 & 6 hr. bulk storage

• Large-scale solar PV + storage will out-compete fossil generation in many parts of the world

• Thermal chilled water storage powered by solar PV will be used for some C&I applications

• Getting utilities, grid operators and regulators to recognize full value of solar + storage will take sustained effort by the renewable energy industry

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[email protected]

M: (925) 394 6136