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10 findings on the growth of hybrid power plants

Early data suggests a twist for the 2020s may be the rapid deployment of ‘hybrid’ generation resources.

Jo Seel & Will Gorman, Lawrence Berkeley National Laboratory

One of the most important electric power system trends of the 2010s was the rapid deployment of wind
turbines and photovoltaic arrays, but early data suggests a twist for the 2020s may be the rapid
deployment of ‘hybrid’ generation resources.

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Hybrid power plants typically combine solar or wind (or other energy sources) with co-located storage.

Just as cost declines drove last decade’s wind and solar expansion, falling battery prices and growing needs to integrate variable renewable energy generation are driving plans to deploy hybrid power plants.

By the end of 2021, there was more than 8,000 MW of wind or solar generation connected to storage in the US. But there are thousands of solar hybrids that have applied for connection to the grid, amounting to a staggering 280,000 MW of solar and 208,000 MW of storage. Even if only a quarter of these make it to commercial operation, they will have big impacts on grid operations. While hybridization helps to ease the challenge of balancing variable supply and demand, its relative novelty means that research is needed to facilitate integration and promote innovation.

Combining the characteristics of multiple energy, storage, and conversion technologies poses complex questions for grid operations and economics. Project developers, system operators, planners, and regulators would benefit from better data, methods, and tools to estimate the costs, values, and system impacts of hybrid projects. The opportunity for hybrids is clearly large as we move toward greater levels of renewable energy, but their implications and optimal applications have yet to be established.

This publication showcases some of Berkeley Lab’s robust research program intended to support private and public-sector decision-making about hybrid plants in the United States. Our short briefing summarizes articles that we published over the past two years, links to the in-depth reports, and provides contact details for further engagement on the specific research topics. Our recent top ten findings are summarized in the graph below.

Figure 1: Summary of Top 10 findings from Berkeley Lab research. All Findings summarized below
  1. Developer interest in hybrid power plants is strong and growing: Falling battery prices and the growth of variable renewable generation are driving a surge of interest (133% increase in operational capacity from 2020 to 2021) in hybrid power plants. Current interest is mostly directed toward pairing solar photovoltaic (PV) plants with batteries, with 286 GW of PV+storage projects proposed in interconnection queues at end of 2021, but a wide range of generator and storage pairings is possible.
  2. PV+storage hybrids have low PPA prices and high value in some regions: We gain insight into hybrid plant configurations and pricing by reviewing power purchase agreements (PPAs), which are often executed several years before a plant becomes operational. PPA prices have fallen from $40-$95 per MWh-PV in 2017 to $30-$75 per MWh-PV in 2021 (Figure 2). While the cost of adding storage to PV is around $10/MWh-PV for a battery sized to 50% of the PV’s capacity, we’ve found value gains between $8-21/MWh-PV, depending on regional and dispatch assumptions.
Figure 2: Levelized PV Hybrid PPA Prices have fallen in recent years, even though the battery:PV capacity ratios
have increased. Open circles are sized to reflect the battery-to-PV capacity ratio; standalone PV plants are the
smaller filled circles, not sized.
  1. Solar hybridization is driven by tax credits and other benefits: Hybrid plants with co-located: Hybrid plants with co-located renewable generators and batteries can benefit from tax credits, construction cost savings, and more flexible generator dispatch, but suffer from siting constraints. Berkeley Lab quantified the benefits and costs of hybridization and found a rough equivalence in their values, suggesting that the colocation choice is sensitive to local market conditions and configuration choices (Figure 3).
Figure 3: The penalty for co-locating generation and storage is sensitive to modeling assumptions, while colocation offers some cost savings and incentives that can outweigh the penalty
  1. Market prices have incentivized shorter duration batteries with PV: Berkeley Lab used wholesale market prices from 2012 to 2019 and a simple battery degradation model to compare the revenues and costs of different hybrid designs. Battery duration and capacity have the largest impact on hybrid net value, with short-duration (2-4 hr duration) batteries providing the highest net value. Local solar contribution levels can be a major factor for net value. Overall, we found that hybrids were most attractive in CAISO and that solar hybrids had a higher net-value than wind hybrids in most regions—trends that align with commercial activity.
  2. The capacity contribution of a hybrid is less than the sum of its parts: The capacity contribution of hybrid projects varies by region, and depends on configuration and operational constraints. Berkeley Lab developed a simple algorithm for calculating the capacity credit of hybrid plants, suitable for exploratory analysis. Shared hybrid project infrastructure can cut costs but may reduce the capacity value.
  3. Ancillary service markets are a valuable yet fleeting option for hybrids: Berkeley Lab analysis shows that hybrid projects can unlock significant value from ancillary service (AS) markets, at least in some regions, yielding additional revenue from $1-33/MWh. But AS markets are thin and can become saturated by battery projects that are currently in interconnection queues. In 2017, ISOs/RTOs procured an average of around 60-800 MW of regulation reserves each, compared to 289 GW of standalone and hybrid storage in their interconnection queues at end of 2021. Expecting additional AS revenues to offset declining energy and capacity value may be a risky strategy for wind and solar hybrid project owners.
  4. Hybrids can more flexibly engage with electricity markets: The multiple possible configurations of hybrid projects increase the opportunities for and complexity of bidding and dispatching into electricity markets. Developers will be able to evaluate the risks and rewards of operating hybrids as a single unit or as multiple parts with different capabilities. The Federal Energy Regulatory Commission (FERC) has issued only broad electric storage rulings that are not yet specific to hybrid resources.
  5. The power system value of hybrids depends on how they are operated: The operational strategies of a PV+storage hybrid plant are a key driver of its market value, in addition to technical characteristics and location. Berkeley Lab used empirical data to analyze the value impact of different battery dispatch choices. Some of these dispatch strategies can yield large increases in private revenues relative to a standalone PV design (approaching $150/MWh-PV), but they do not optimize storage dispatch from a grid perspective and produce thus often only lower wholesale market premiums ($1-$48/MWh-PV). Understanding the prevalent battery charge and discharge signals and aligning related incentive structures with grid needs is increasingly important as the hybrid sector grows.
  6. Growth of customer-sited PV+storage hybrids offers new opportunities: Roughly 30% of all U.S. battery storage capacity installed through 2020 was behind-the-meter (BTM), much of that paired with solar PV. Still, only 6% of residential and 2% of non-residential PV systems include storage nationwide, although these “attachment rates” can be as high as 80% in Hawaii. We find adding storage to BTM PV increases total installed cost by $1000/kWh of storage on average.
  1. Where next? Priority areas for hybrid power research: While hybridization of power plants provides opportunities to ease the challenge of balancing intermittent renewable resources, its relative novelty means that research is needed to facilitate integration and promote innovation. Berkeley Lab’s ongoing work focuses on themes of hybrid valuation, market rule development, and customer resilience opportunities.
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