POWER November 2021 - 28

POWER GRID
How Different Power Grid
Operators Are Approaching
Renewable-Storage Hybrid
Participation
Pairing renewable resources with energy storage systems makes a lot of sense.
However, grid operators are still developing frameworks for handling these hybrid
projects but they may need to be treated differently in different territories.
John Fernandes and Tony Abate
enewable energy is expected to
increase by a whopping 8% globally
in 2021, the largest increase
in nearly half a century. This tremendous
shift toward renewables, driven largely
by governmental climate change policy
and eager global investors, is well underway.
Generators and developers on the
front lines of this transformation include
long-time renewables producers as well
as fossil fuel players looking to diversify.
Still, everyone knows that renewables
alone can't address the low-carbon transformation
of our electrical system, so
naturally many are looking to storage
and hybridization with renewables as the
next step.
Over the past few years, the Federal
Energy Regulatory Commission (FERC)
has been active in ordering independent
system operators (ISOs) and jurisdictional
regional transmission organizations
(RTOs) to support new technologies like
storage and distributed resources, and
it recently shifted toward supporting a
state's prerogative to choose their forms
of generation. FERC recently opened an
inquiry around hybrid storage participation,
but developers are not necessarily
waiting on full clarity of the rules given
the proliferation of hybrid projects in interconnection
queues across the U.S.
Efficiencies gained in the development
process, like leveraging existing land positions
or interconnection points, were
early drivers for co-locating storage with
other renewable assets (Figure 1). In the
limited number of co-located renewablestorage
project examples over the past
five years, ISO/RTO markets have simply
treated the components of these
systems as separate resources with an
interconnection sized to accommodate
28
R
1. At the end of 2020, 34% of solar and 6% of wind projects by capacity were being developed
with a co-located battery storage unit. This table shows the coupling percentage by technology
at that time, according to the largest U.S. interconnection queues. (N/A values in the " Battery "
column signify that the region does not provide enough information to calculate this statistic.)
Source: Lawrence Berkeley National Laboratory
both, so unique rules for " hybrid " applications
were not necessary.
The federal investment tax credit (ITC)
for renewables can be extended to the
capital expenditures spent on storage if
the battery primarily charges from the renewable
asset. To take advantage of the
ITC, many developers and storage vendors
have looked to hybrids with closer
integration of the parts, spurring interest
in direct-current-coupled (DC-coupled)
solar and storage systems. Because the
storage component must charge primarily
from the associated renewable facility
to get the ITC, this kind of tight coupling
of renewables and storage makes sense.
But not all grid operators agree that hybrids
are necessarily better than operating
the parts independently.
Operating storage alone is still new to
most grid operators, so coming up with
rules for various configurations of hybrids
is a new challenge, especially when the
configurations are driven by IRS policy
and not the needs of the grid. Many in
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the storage industry hope storage will
one day soon have its own tax credit,
which will remove the requirement that
the storage charge primarily from the
renewable and avoid charging from the
grid. This could be a game-changer and
even encourage storage hybrids with
thermal plants.
If the financial influence of a tax credit
does not favor either a closely coupled
hybrid or a separate co-located configuration,
the developer's choice may come
down to which works best in each ISO/
RTO. Nonetheless, there are lessons to
be learned from how some of the leading
markets have tackled setting hybrid
and co-located policies, and operational
rules, for both renewables and storage.
Sources of Complexity for
Accommodating Hybrid
Configurations
Despite the motivations for renewablestorage
hybrids, like development synergies,
the current renewable ITC, and
POWER | November 2021

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POWER November 2021

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