Two weeks ago it was announced that Origis Energy, one of America’s largest solar and energy storage developers, had contracted Mitsubishi Power Americas to provide three utility-scale battery energy storage systems (BESS) that would be co-located with three photovoltaic solar facilities in the Southeast United States.
Why had Origis taken the step of acquiring the storage systems?
The explanation provided by Kenneth Kim, vice president, engineering & strategy planning at Origis Energy was simple. “By adding the BESS solution to these facilities, we increase the value of the asset,” he said.
It was a wise move by Origis. Any investment in a solar project that does not have a storage component should be given careful consideration because the lack of storage means that the asset’s value has not been maximised.
Solar projects not fulfilling potential
More and more renewable energy developers are waking up to the need for storage, but many are still developing projects that let investors down by failing to fulfil their true potential due to a lack of storage.
How exactly does energy storage enhance the value of solar assets? The addition of a storage system can mean increased energy production, greater end-user savings and also play a key role in helping to meet environmental, social, and governance (ESG) goals by lowering greenhouse gas emissions.
Meanwhile, standalone solar projects in major commercial and industrial solar markets have become less effective at reducing customer bills.
Value of exported solar being reduced
As NYSE-listed energy storage optimisation software provider Stem has highlighted, in the “top three markets for C&I solar”, namely California, New Jersey, and New York, peak demand charges have grown annually over a five-year period while energy charges have mostly remained flat. The problem is that, while solar reduces overall energy charges, such charges are flat to declining and therefore they are a decreasing portion of customer bills. Solar is not effective at reducing demand charges and therefore energy storage is needed to address this growing component of customer bills.
Meanwhile, a lot of US states are altering their Net Energy Metering (NEM) policies with the result that the value of exported solar generation is reduced. For example, last month the California Public Utilities Commission revised its net energy metering (NEM) programme with the result that solar owners will earn around 75 per cent less for the excess electricity they push onto the grid.
Therefore, adding storage to solar assets can help to maintain their value by storing extra solar generation, that would have otherwise been exported, and discharging it during times when energy is more valuable than the NEM compensation rate.