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

Coupled renewable-battery powerplants differ from the traditional concept of independent siting of electricity resources within transmission networks. Prior research on the value proposition and cost savings from coupling did not consider the geographic constraint of co-location. This paper fills the gap by assessing how pricing volatility differences between nodes within electricity markets impact the system value of coupled renewable-battery projects as compared to independent VRE and battery installations. We use wholesale power market prices from 2012–2019 across the seven main U.S. independent system operators (ISOs) with a linear optimization program to compare the electricity market value of coupled projects to the value of the same underlying sub-components, deployed separately. We find that additional value from adding a 4-hour battery sized to 50% of renewable-plant nameplate capacity is $10/MWh across ISOs on average. The highest boost occurs in California ($15/MWh), where the value of adding storage to solar rises over time in tandem with increased solar penetration in the region. If renewables and batteries are deployed independently, we estimate that $12.5/MWh of additional value could be achieved because of more flexibility on battery siting and operation. The $12.5/MWh coupling penalty is reduced to $1.6/MWh when considering alternative approaches to integrating battery storage. This result implies that renewable-battery power plants will play an increasing role in electricity systems if they can be built for $2–$13/MWh less than independent projects of comparable size. However, the wide regional variation in coupling penalties, along with the importance of conditions captured in our sensitivity cases, suggests the tradeoff between coupling penalties and savings will vary by situation. Therefore, roles exist for independent and coupled projects from a system optimization perspective.

A webinar discussing this research recorded on June 15, 2021, can be viewed here. 

This is a pre-print version of an article published in Energy Economics here