Solar batteries could face 10-year setback — report

Source: By David Iaconangelo, E&E News reporter • Posted: Monday, December 9, 2019

The world’s largest battery project was greenlighted last week by Nevada regulators, but some analysts warn that diminishing federal tax credits could deal a decadelong setback to the economics of other solar-plus-storage projects.

In 2022, the 30% investment tax credit (ITC) for solar is scheduled to fall to 10%. If the ITC follows that path, it would take over a decade of steady declines in the cost of solar panels and batteries to offset the loss of the 30% credit, the Brattle Group said in a report last week.

“The phaseout of the ITC could increase the cost of these systems faster” than the technology improvements would decrease costs, said Roger Lueken, a senior associate at Brattle and lead author of the study.

The amount of solar-plus-storage projects waiting to be connected to the grid in some parts of the country provides a sense of the concept’s recent growth: In California’s queue, those projects make up about 40% of the capacity.

But the picture is less clear after 2022, when the ITC declines to 10% and remains at that level, said Lueken.

“The ITC is one of the largest drivers of this type of co-location of systems,” said Lueken, since storage built specifically for solar installations can take advantage of the credit.

The solar-plus-storage concept is behind much of the recent increase in the utility-scale energy storage market, but uncertainties remain about how utilities will respond to the loss of credits that encourage the pairing of the two.

Grid operators’ rules for electricity markets, and federal policy that guides those rules, would likely influence that, said Lueken.

“I think it’s a bit hard to say what will happen, beyond 2022,” he said.

Last month, House Democrats floated a plan to extend the ITC and other tax incentives (Greenwire, Nov. 19).

The report comes on the heels of regulator approval last week of the Gemini Solar + Battery Storage project near Las Vegas, which has 690 megawatts of solar capacity and 1,400 megawatt-hours of storage. Gemini’s developer, Quinbrook Infrastructure Partners, says it will be capable of powering as many as 400,000 homes.

Gemini and the other two projects in southern Nevada, which will together contribute 1,190 MW of new solar generation and 590 MW of storage, are slated to come online in 2024.

All three will generate electricity for NV Energy. The Warren Buffett-backed utility is the supplier of over 80% of the power for a state that requires its utilities to get half their electricity from renewables by 2030.

Kristen Saibini, a spokesperson for NV Energy, said the three projects would likely be enough to bring the company in line with Nevada’s renewable portfolio standard.

“With the addition of these three projects, NVE projects that it will meet the 50% renewable portfolio standard in 2030,” she said.