PA Storage Returns
Pennsylvania is plowing ahead to improve solar power and energy storage. As of February 2021, the PJM transmission interconnection queue showed 64 solar-plus-storage projects across 26 counties in the state, a total capacity of over 2.3 GW and approximately 9.2 GWh. Unfortunately the existing structure of the local electricity market poses challenges to the economic viability of energy storage. However, the report “Pennsylvania Energy Storage Assessment: Status, Barriers, and Opportunities,” quantifies the financial potentials of energy storage and outlines the challenges.
The report derives its premise from Pennsylvania’s ambitious goal of achieving 10% of electricity generation from solar power by 2030, as outlined in the 2018 Pennsylvania Solar Future Plan. The College of Agricultural Studies at Penn State University estimates that achieving this goal could drive substantial economic activity, with 1 GW of solar power generating $2.9 – 4.2 million a year in land lease payments alone. The Solar Future Plan envisions the deployment of solar volume from 1 GW to an impressive 11 GW, accompanied by a nearly doubled solar land lease rate. This expansion could translate into $1.7 billion in land lease opportunities for Pennsylvania landowners over 25 years.
Local electricity market’s structure
Financial Benefits of Solar-Plus-Storage Projects
The potential financial benefits according to the report comes from combining 25% of the targeted 11 GW solar power with 1.5 GW/3.45 GWh battery storage. With an investment of $32-64 million in public energy infrastructure, Pennsylvania commercial solar customers are estimated to save $273 million annually in wholesale energy costs, along with the added benefits of reduced public health and environmental impacts. This implies a return on investment ranging from 421% to 841%.
Beyond Financial Gains: Community and Environmental Benefits
The report underscores the broader benefits of energy storage projects, extending beyond financial gains. The doubling of energy storage volume, coupled with increased public support, not only amplifies financial savings but also contributes to a healthier community. Fewer doctor visits, reduced childhood asthma cases, and diminished local pollution are among the societal benefits, which unfortunately go unrecognized and uncompensated for energy storage owners.
Pricing Sensitivities
Analyzing the economic viability of energy storage projects, the report delves into the impact of battery prices on investment decisions. A 23% reduction in battery prices within two years could transform smaller systems into safer investments, while a 34% decrease could make larger systems economically viable. Additionally, higher demand charges within the state could further tip the scales in favor of energy storage investments, showcasing the sensitivity of the market to pricing dynamics.
Policy Recommendations
Recognizing the barriers to energy storage deployment, the report puts forth a comprehensive set of policy recommendations. These recommendations, ranging from immediate implementation to long-term targets, address issues such as storage procurement goals, statewide forums, public funding, wholesale market improvements, and strategic plans for microgrid deployment. The authors emphasize the importance of ongoing support for new technologies through research and development.