Solar+Storage Is Cheaper than Proposed California Gas Plants

The energy requirements for the Oxnard area can be met with solar+storage at a significantly lower price than with gas peaker plants, according to a new Clean Coalition study

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Proposed Puente Power Project

If you’ve been following energy news, you know that solar is quickly becoming competitive with natural gas. In fact, solar is already the same price as or cheaper than new fossil fuel capacity in more than 30 countries.

Add storage to the mix, and the costs come down even more. That’s what the Clean Coalition has found in a recently released study, which showed that solar+storage would be cheaper than two proposed gas plant projects in Southern California.

The proposal calls for building a new Puente Power Project gas plant and refurbishing the existing Ellwood Peaker Plant. Both are part of the Moorpark Subarea, which includes the cities of Oxnard, Santa Barbara, and Goleta. They were approved to meet local electricity capacity requirements that are currently served by about 2000 megawatts (MW) from the Mandalay and Ormond Beach power plants in this grid-constrained area of the Southern California Edison (SCE) service territory. Because both the Mandalay and Ormond facilities are out of date and will not conform to new state regulations, they’re expected to be retired at the end of 2020.

The Clean Coalition’s models of alternatives to the gas plants show that a solar+storage solution would cost $267 million to install, compared to $299 million for the Puente proposal. Solar+storage could replace both Puente and Ellwood for approximately $406 million.

This is in stark contrast to a study conducted by the California Independent System Operator(CAISO), which manages the state’s electric grid. CAISO’s study evaluated only storage, while ignoring far more cost-effective solar+storage, and concluded that replacing the Puente plant with incremental distributed energy resources and storage would cost $805 million, with a cost of up to $1.1 billion to replace both the Puente and the Ellwood plants.

Including 30 years of operations, maintenance, and fuel at current values would add over $550 million to the SCE Puente figure; adding these costs to the Clean Coalition solar+storage and CAISO storage-only cases would add far less. Of note, the only “fuel” costs associated with storage are round-trip inefficiencies, which are minor compared to a peaker plant burning natural gas.

“The CAISO study was highly valuable in demonstrating that distributed renewables are technically capable of meeting the reliability needs of the Moorpark Subarea,” said Craig Lewis, Executive Director of the Clean Coalition. “However, it overlooked a number of significant factors, including updated costs for solar+storage and the opportunity to apply the 30% Investment Tax Credit (ITC) to storage. With our experience in staging complex projects, the Clean Coalition was able to develop the most comprehensive model to date.”

The Clean Coalition model addresses these issues:

  • The model uses a cost-effective solar+storage solution, rather than modeling storage alone as was done by CAISO.
  • The Clean Coalition uses up-to-date component cost estimates for 2018, compared to CAISO’s outdated storage costs from 2014. The cost of storage has fallen by over 40% since then.
  • The Clean Coalition appropriately sizes the storage required, by modeling the real generation and dispatch capabilities of solar+storage. CAISO’s unrealistic profile of solar output and storage dispatch resulted in underestimating the energy generation of solar by nearly half and oversizing of storage.
  • The Clean Coalition includes the impact of the 30% federal ITC, which can substantially lower the cost of solar+storage facilities, provided that 70% of the storage charging comes from co-located renewables. Because CAISO modeled additional storage without renewables, it could not account for reaping ITC benefits that result from an implementation featuring solar+storage.
  • For demand response costs, which CAISO overestimated, the Clean Coalition model uses data from an April 2017 Lawrence Berkeley National Labs analysis, as well as current demand response contract costs as reported by Greentech Media in April 2017.

The CAISO study, as well as subsequent analysis by Greentech Media, also left out the costs of operations, maintenance, and fuel. These are expected to run approximately $19 million per year for Puente based on current costs, making it about twice as expensive as a solar+storage design. Accounting for these costs would raise the total cost of Puente to over $870 million over thirty years. A comparable calculation for a solar+storage facility would run about $462 million. Including the health, mortality, and social costs of carbon from the natural gas plant would increase the cost of Puente and Ellwood dramatically.

“Beyond being more cost-effective, the solar+storage approach provides substantial additional functionality and community benefits,” said Mr. Lewis. “And any quantification of the health and environmental value of solar+storage versus gas plants just adds to the vastly superior value of solar+storage.”

More details can be found in the Clean Coalition filing to the California Energy Commission (CEC) on the Puente Power Project and the Clean Coalition model for alternatives to Puente and Ellwood, both available online. A prior Clean Coalition cost analysis of a solar+storage alternative to the Ellwood Peaker plant is also available online.

Late last week, SCE filed a motion to strike the Clean Coalition’s testimony to the CEC on the Puente project. It’s still unknown whether that attempt will be successful. An evidentiary hearing on the Puente project is scheduled for September 14 – 15 in Oxnard.