How Utilities Can Look Beyond Natural Gas with Cost-Effective Solar Plus Storage Strategies

The utility-scale energy storage market has grown steadily since 2011. In the past 7 years, 8,934.7 MW of non-pumped hydro storage projects have come online. The technology risk and cost associated with energy storage systems decreased rapidly, with Lithium ion (Li-ion) batteries leading market share for advanced batteries. Li-ion accounts for 29.4% of the non-pumped storage capacity installed and 70% of the advanced battery capacity deployed since 2011.

Energy storage is being developed in tandem with renewable resources at competitive prices. This storage plus renewables (storage-plus) development is enabling a transition of large-scale renewables from intermittent assets to dispatchable resources able to displace thermal assets, thereby changing the solicitation environment. Guidehouse Insights expects storage-plus Power Purchase Agreement (PPA) prices to fall as adoption of this technology expands. In 2018, storage-plus made its first shift from the validation and first-mover adopters to diffuse adoption led by utilities. The accurate valuing and positioning of storage-plus by utilities will continue to drive the market in coming years as storage-plus PPAs are already less expensive than levelized cost of energy for combined cycle natural gas in the US.

This Guidehouse Insights report tracks the North American market for utility-scale storage-plus adoption and PPA prices. The study provides recommendations for utilities and regulators globally to take advantage of storage-plus plants to meet flexibility, reliability, and renewables targets using all-resource solicitations. The report provides estimates of market trends into 2021. It also examines a variety of market trends and use cases around the globe.