In response to the emergence of Public Safety Power Shutoff (PSPS) events, CCAs and communities are exploring paths to increase community resiliency through deploying islandable solar PV plus battery energy storage systems (micro-grids) at critical facilities and community resiliency centers. These facilities are intended to provide electricity and shelter to the public during these extended grid outages. In our support of several CCAs and public agencies in evaluating and developing these programs, we have identified several key market & project dynamics that have a substantial impact on the speed and the scale of these programs. Specifically, there are several variables (from a program speed and scale perspective) that favor the deployment of new solar PV + battery energy storage projects over adding battery energy storage to existing solar PV systems.
FEDERAL INVESTMENT TAX CREDIT (ITC)
When installed simultaneously with new solar project, battery energy storage projects can also receive the benefits of the Federal Investment Tax Credit (ITC), reducing the cost of the battery energy storage system by 26%. Unfortunately, projects that add storage to existing solar are not eligible for the ITC benefit. Thus, by focusing on new solar + storage projects, CCAs and communities will be able to leverage the ITC benefits to increase the scale of these resiliency programs.
RATES STRUCTURES FOR EXISTING SOLAR SITES
In Northern California in particular, depending on the age of the systems, sites with existing solar are likely to be on grandfathered mid-day time of use peak periods and are also likely on PGE’s time-of-use A-6 rate schedule, which has no demand charges. These rate structure dynamics eliminate demand savings as well as time-of-use arbitrage opportunities, two of the more substantial value streams that batteries can provide to site hosts. Essentially, there is a high probability that facilities in Northern California with existing solar will find little-to-no cost savings benefit from installing a new battery energy storage system.
ELECTRICAL DESIGN COMPLEXITIES
Sites with existing solar have a high probability of facing electrical design complexities that will otherwise be avoided at sites that do not have solar. The physical electrical configuration of the existing solar facilities will need to be restructured in order for the existing solar to pair with the new battery in providing backup power support in the event of a grid outage. In cases where the solar is interconnected via line-side-tap and / or installed behind a central inverter, there will be significant costs related to the reconfiguration of the existing system.
CONTRACTUAL COMPLEXITIES
Sites that are structured under power purchase agreements (PPAs) or lease agreements will require negotiations with the existing system owners before these existing systems could be reconfigured. This exposes the project timeline & success to the variability of the responsiveness and disposition of the system owners.
TerraVerde Energy provides independent advisory services to support CCA, public agencies, and commercial enterprises with evaluating, deploying, and managing distributed solar PV and battery energy storage programs. To learn more about how our team is improving the speed and the scale of community resiliency programs, write to us at hello@terraverde.energy.