What’s Interesting about integrating solar with demand response (DR), storage, and other DER measures?
Everything. In the area of renewables integration, a news note seems to pop up every 20 minutes. Microgrids, battery storage pilot projects, electric vehicle charging technology, analyst opinions on the cost curve for lithium ion vs. flow batteries, grid-interactive water heaters bid into ancillary services markets (yup, that’s a thing)… All of it is super-interesting.
But what’s important?
In part, that has been defined by the wisdom of our project funders. The CSVP lives under the U.S. Department of Energy Solar Market Pathways program umbrella. Awards in this program must work with market-ready technologies and approaches that could drive down soft costs of distributed solar in the market in the next three to five years, helping to reach SunShot Initiative goals. Further, any results our project develops must facilitate replicable projects at scale, and soon.
That mandate leads an economist like myself to apply some simple rules when considering whether to spend project resources considering any particular technology or approach. Specifically, can I imagine this Thing (product, technology, concept, approach, whatever) driving hundreds of megawatts (MW) of new community solar projects over the next three to five years? If so, it’s important. If not, it’s just interesting.
What makes me imagine that a given approach will yield hundreds of MW of new community solar projects? Economics. Yes, there will be experimental projects that are not economically competitive with other generation sources, and those will deliver a little capacity here or there. But to deliver lots of MW soon, projects have to be economically viable. In this blog, I won’t be doing LCOE calculations, and I won’t even get into whether “economically viable” means a nickel or a dime per kWh, but to be important, a Thing needs to move the dial now, without extraordinary subsidies.
This rule of thumb brings me to the reason why we are leaving some technical options out of our program focus—notably, microgrids. I will be open to reader comments on this, but let me first give my rationale.
I am perfectly willing to believe there will be community solar projects (maybe even quite a few of them) that are part of microgrids. But do I think this will lead to hundreds of MW of new community solar projects over the next three to five years? No I do not. Microgrids are expensive. Sometimes, very expensive. (See http://www.acgov.org/smartgrid.htm) In some applications, that’s fine – maybe a hospital or a jail needs to be on a resilient microgrid, and maybe a military base does too, and maybe current economics in those applications are secondary. But a 1-MW community solar project as part of a microgrid would cost several times more than a 1-MW community solar project that operates as part of the utility grid. Unless there are other sources of funding to subsidize a community solar microgrid, it is doubtful that we will see significant market growth in that option anytime soon.
On the other hand, mundane tweaks to existing demand response (DR) programs are timely and important. DR programs have been around for several decades, and have been targeted primarily at peak reduction (often in emergency situations). New DR technology, including sensors, controls, communications technology, and new priorities—in particular, wind and solar integration—are breathing new life into the DR industry. For most applications, using building thermal mass or hot water as a storage medium by pre-cooling buildings or pre-heating water can be far more attractive economically than using batteries for storage. For example, a 2014 white paper from ESource cited data from Sandia National Labs, comparing the cost of storing a kilowatt-hour in a properly-controlled electric water heater to the cost per kWh for storage using various batteries and other storage technologies. The water heater option cost one-fifth to one-tenth as much as storage in a lithium-ion battery. Of course, the battery costs are declining, and some are recommended for particular applications. But given the relatively low cost and proven success of existing DR programs, applications of DR for renewables integration are, by my definition, important today.
In the coming months, you’ll see some preliminary results from the CSVP project that can assist utilities in selecting different options that raise the total value of a community-solar-plus-storage-plus-DR program. Based on our analysis and experience so far, we are convinced that the incremental value created in community solar programs by this type of integration (along with the strategic solar design and market innovations mentioned above) can be quite significant. And as community solar programs around the country start to scale up, we think that will turn out to be important.