Puerto Rico releases technical requirements for solar
The local utility in Puerto Rico, the Puerto Rico Electric Power Authority (PREPA), released the highly anticipated minimum technical requirements (MTRs) compliance details to renewable developers with signed PPA agreements.
Puerto Rico has an aggressive renewable portfolio standard target of 1.6 GW of renewable installations by 2017. The MTRs have been introduced to reduce instabilities in the weak island grid due to the intermittency of the connected renewable energy systems i.e. PV and Wind.
A co-located energy storage system (ESS) can quickly charge and discharge to compensate for fluctuations in PV output, and smooth the energy that is injected into the electricity grid. This is beneficial in regions with weak electricity grids and high levels of PV penetration, to maintain grid stability.
To meet the minimum technical requirements introduced by PREPA, renewable developers will have to deploy an energy storage system (ESS) with utility-scale renewable systems. IHS projects that the addition of an ESS will increase the upfront cost of the PV system by 15%. As a result, PREPA will now need to renegotiate power purchase agreement (PPA) agreements previously agreed with renewable developers, which will further delay the adoption of PV in Puerto Rico. Developers are in the course of identifying how attractive the opportunity in Puerto Rico remains, and whether the addition of an ESS can be financially justified. IHS forecasts that installations will commence in late 2014 once appropriate amendments have been made to PPAs, providing that PV developers can source financing.
The benefits of installing an energy storage system at a renewable power plant to overcome many of the challenges of integrating intermittent renewables into the electricity mix are beginning to be recognised by utilities and grid-operators. Consequently, IHS predicts that similar interconnection requirements to those announced in Puerto Rico will be introduced in other regions where growing levels of renewable penetration. IHS also predicts that even in regions where storage is not required to meet requirements, developers will be able to negotiate "˜premium' PPA rates with utilities for PV plants with storage attached, as they are able to guarantee a more stable and predictable output to the grid. IHS calculates that at current storage pricing if a developer is able to increase the PPA received for a PV plant by $0.02/kWh, the payback time on the cost of the storage could be as short as 10 years (whilst most PPAs typically have terms of 20-25 years).
IHS forecasts that the deployment of energy storage co-located with renewables in the near-term will be driven by regulations such as those introduced in Puerto Rico and by test and pilot installations, resulting in 150 MW being installed in these applications in 2014, compared to almost nothing in 2013. However, in the long-term, as levels of renewable penetration continue to increase, the cost of storage falls, and the benefits of storage in utility-scale renewables is proven, this will help drive the market to reach 1.5 GW in 2017.
Whilst there are a number of energy storage technologies that can be deployed in these applications, IHS projects that Li-Ion will dominate over the next 10 years, due to its capability to provide power intensive functions that are required to meet these interconnection requirements. Deployment of Li-Ion based ESS will be also be encouraged by a projected average annual cost reduction of 11% until 2017.