Solar PV is poised for a steady and continued growth with a projected annual solar market of 20 GW by 2020, according to a new white paper published by ICF International.
As solar PV grows, the need accelerates to improve the flexibility of the grid via changes in the operational structures and incentives for new technologies such as storage systems, according to the analysis by Harjeet Johal a Senior Manager with ICF, and ICF Vice President for Transmission and Ancillary Services Kenneth Collison
Some markets with high solar PV levels are seeing negative prices, resulting in a loss of both critical “down reserves” and stability margins. ICF describes down reserves as “the capability on the unit to curtail the output and mathematically equal the dispatched power point minus the minimum power point.”
Most markets lack the mechanisms to provide adequate incentives to storage systems for providing flexibility services to the grid. For example, the markets compensate units that operate at their minimum block through uplift payments, masking the actual market price signals that would have provided incentives to other technologies.
“Recent policies such as the Federal Energy Regulatory Commission’s (FERC’s) order 755 (or pay for performance regulation) and its recent notice of inquiry on adequacy of primary frequency response are steps that can incentivize storage deployment,” ICF said in the paper. “Developing a suite of stacked applications to extract value from all possible grid services (in the capacity, ancillary, and energy markets) is needed if storage is intended to play a meaningful role.”
The past few years have seen strong growth in utility-scale and non-utility scale or distributed solar PV systems. Incentives such as net energy metering (NEM) and the federal investment tax credits (ITC) helping to lower the overall cost of ownership.
Third-party financing models allow customers to spend far less upfront than they did even a year ago. The cost of solar PV systems continues to decline ahead of expectations.
Solar generation is still only 1% of U.S. output, with two-thirds of the output from central solar power plants and the remainder from distributed solar installations.
California accounts for 40% of distributed solar installations in the United States. Five states—New Jersey, Arizona, Massachusetts, New York, and Hawaii—have 34% of the installations. Thus, the operational experience with distributed solar PV on the bulk power grid has been fairly limited.
The paper is titled “How Energy Storage Will Feed the Duck and Keep the Grid Stable.”