POWER January 2020 - 22

2020 INDUSTRY FORECAST
credible promise, energy storage could
be the power subsector most poised for
growth. According to a survey conducted
by Merrill Corp., a software-as-a-service
technology provider for participants in the
merger and acquisition lifecycle, 37.6%
of respondents ranked energy storage
as their most-likely alternative energy
investment in 2020, beating solar-the
second-highest alternative at 23.6%-
and wind (10.1%) by wide margins.
The Brattle Group-a firm that ana3.
The Lawa'i Solar and Energy Storage facility on Kaua'i's south shore consists of a 28-MW
solar photovoltaic (PV) and a 100-MWh five-hour duration energy storage system. The so-called
" PV Peaker " plant was recognized as a POWER Top Plant in 2019. Courtesy: AES Distributed
Energy
PTC for wind steps down in 2020 while
solar still enjoys the ITC [investment tax
credit] benefit, solar could become increasingly
cost-competitive with wind.
As a result, in 2020 and beyond, some
wind-only customers will likely diversify
and build a mixed portfolio of wind, solar,
and storage to fulfill commitments, " Deloitte's
outlook says.
Solar Growth Driven by China and
Corporate Demand
Solar power already seems to have the
upper hand when it comes to new additions
worldwide. Fitch Solutions Macro
Research (a unit of Fitch Group) released
a report on Dec. 3, which showed total
installed solar capacity overtaking total
installed wind capacity by 2021. Its view
was informed by an upbeat outlook for
China, which the firm expects to add
300 GW of solar capacity over the timeframe,
and the firm was also optimistic
about the prospects for solar in the U.S.
and India.
" The three markets [China, the U.S.,
and India] will comprise nearly 70% of
global net solar capacity growth over our
10-year forecast period. We also note
that solar power is suitable at sizes ranging
from small rooftop solar installations
to large-scale solar farms, and relatively
easy projects to implement in a timely
manner, supporting a broad base of
growth for the technology, " the Fitch Solutions
report says.
Fitch expects corporate renewable
energy procurements to bolster
solar
growth in the U.S. Although many corporations
have favored wind energy in the
past, " we expect solar power projects to
22
become the primary choice for corporate
renewable procurements within the next
few years, " the report says.
The firm also pointed to the more favorable
phase-out schedule for the solar
ITC compared to wind power's PTC as
a basis for its prediction. Furthermore,
Fitch said solar power plants often have
more consistent generation profiles than
wind power plants, as solar irradiation is
more predictable, and it peaks during the
day when many companies have their
highest electricity demand. " In combination
with the cost competitiveness,
these factors will lead companies to procure
solar power projects through either
power purchase agreements or on-site
generation, thus supporting our forecast
of higher growth in the solar power sector
than the wind power sector, " the report
says.
Burns and McDonnell's Mashek said
it's not just commercial and industrial
corporations that see value in solar but
also power companies. " We are seeing
a huge uptick in vertically integrated utilities
doing large solar projects, " he said.
Still, tax policy may have a similar effect
on solar development as it does on
wind. Currently, the solar ITC is set to
ratchet down from 30% in 2019 to 26%
in 2020, 22% in 2021, and 10% in 2022
and beyond for commercial projects. The
credit does the same for residential projects
with the exception being it expires
completely in 2022. The solar industry,
however, is lobbying strongly in Congress
to extend the credit.
Storage Garners Big Interest
Yet, even as solar and wind display inwww.powermag.com
lyzes
complex economic, finance, and
regulatory questions for corporations,
law firms, and governments around the
world-released a study in December
that suggests solar-plus-storage deployments
(Figure 3) will increase dramatically
in the next couple of years. The
researchers found " solar-plus-storage
already accounts for over 40% of all capacity
in the California ISO interconnection
queue, and is experiencing sizeable
growth in the PJM queue as well. "
Brattle said favorable economics and
policies are driving the trend toward colocating
energy storage with solar PV. It
pointed to three power purchase agreements
recently approved by the Public
Utilities Commission of Nevada as evidence
for the encouraging outlook. One
of the Nevada projects, a 380-MW/1,416MWh
system, will reportedly be the
world's largest battery installation when
it enters service.
IIR's Burt said a big piece of solar power's
growth hinges on battery storage.
" We're just scratching the surface right
now in terms of building what needs to
be built for battery storage. We're tracking
probably $10 billion worth of battery
storage activity right now that's underway
or is being proposed, " he said, " but
that's just a fraction of what needs to be
invested for battery storage. "
Research company BloombergNEF
(BNEF) released its annual battery price
survey on Dec. 3, showing battery prices,
which were above $1,100/kWh in
2010, have fallen 87% in real terms to
$156/kWh in 2019. BNEF predicts that
as cumulative demand passes 2 TWh in
2024, prices will fall below $100/kWh.
" According to our forecasts, by 2030
the battery market will be worth $116
billion annually, and this doesn't include
investment in the supply chain, " James
Frith, BNEF's senior energy storage
analyst and author of the report, said in
a statement.
However, there is much less certainty
on how the industry will reduce prices
from $100/kWh down to $61/kWh by
POWER | January 2020

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POWER January 2020

Table of Contents for the Digital Edition of POWER January 2020