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Open Access Publications from the University of California

Are coupled renewable-battery power plants more valuable than independently sited installations?


Coupling battery storage to renewable plants is increasingly common in the United States, where a third of proposed solar capacity now includes battery storage. Adding batteries to renewable plants increases the average value of energy sold, can reduce energy losses to curtailment, and is incentivized through the investment tax credit. Additionally, coupling renewables with batteries saves on permitting, planning, and construction costs compared to developing the projects separately. However, collocation limits the potential locations at which the batteries might be sited. This limitation leads to an opportunity cost, or “coupling penalty,” which is the missed value that could be realized by independently siting the batteries in an optimal location away from the wind or solar resources. In this paper, we assess the opportunity costs of coupling batteries with wind and solar plants. Our analysis is based on United States wholesale power markets, and we explore how the coupling penalty varies over time (2012–2019) and across location (across the seven major wholesale markets). We find the coupling penalty ranges from $2.3/MWh to $13.7/MWh, depending on battery integration assumptions. This penalty is the same order of magnitude as cost savings estimates for coupled project development and construction. This rough equivalence in opportunity cost and cost savings suggests that the net value of coupling renewables and batteries is highly sensitive to site-level market conditions and configuration decisions. The current structure of the investment tax credit, which only reduces storage costs when charged by a renewable generator, will often ‘tip the balance’ towards coupling.

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