Development of Photovoltaic Energy Storage Projects in the Southwestern US

A number of economically viable photovoltaic and energy storage hybrid projects began to emerge in the southwestern United States. The decline in the price of energy storage batteries and the existence of the Federal Investment Tax Reduction (ITC) policy have encouraged PV developers to integrate energy storage technologies into project construction. This not only enhances the price competitiveness of the entire project, but also meets the current needs of power companies. This hybrid power generation system will soon be available throughout the United States.

(TANFON Photovoltaic Energy Project)

It is worth mentioning that the southwestern United States does not have mandatory or encouraging policies for photovoltaic energy storage. The main driving factor in the development of local photovoltaic energy storage projects is their better economics. A large number of coal-fired power plants in the southwestern United States have been retired, while photovoltaic power generation has flourished. This has led local power companies to introduce more new schedulable power generation technologies. Compared with other stable power sources, including natural gas, the photovoltaic energy storage projects that participate in the local power company's new power supply proposal apply for a lower price.

In the United States, if energy storage equipment is charged by electricity from a photovoltaic system, the energy storage system can also enjoy preferential policies for investment tax reduction. In addition, energy storage projects developed in collaboration with photovoltaics can share some of the hardware and operating costs and save on grid-connected costs, thus having lower unit investment costs than independent energy storage systems. As a result, the unit cost of the energy storage part of the photovoltaic energy storage project is 39% lower than the cost of the independent energy storage project.

(TANFON Photovoltaic Energy Storage System)

The additional capacity costs given to the photovoltaic energy storage project in the southwestern United States reduce the contract price that developers need to achieve profitability. For a large photovoltaic energy storage project that was put into operation at the end of 2021, if it can receive a capacity of US$200/MW per day, the contract price required to achieve profitability is the same as that of a pure PV project.

If there is no subsidy, the economics of the above-mentioned photovoltaic energy storage project will not be realized until 2027. The existence of ITC made the photovoltaic energy storage economy ahead of the economy for six years. The local power company's adoption of PPA combined with capacity costs also provides a typical power purchase contract framework. The development of the US Southwest Light Storage Project can be used as a way to predict the continued growth of a future PV market. We predict that the photovoltaic energy storage combined project model may be extended to the United States before the ITC subsidy is lowered.

Both power companies and project developers including Nextera are actively promoting the development of photovoltaic energy storage. As the power company's application for new power supply proposal for stable output after sunset is also allowed to bid for photovoltaic energy storage projects, photovoltaic energy storage project openers will see more business opportunities than pure PV project openers.