Solar storage poised for multi-gigawatt growth in 2022, 2023

After spending several years advancing a multi-gigawatt U.S. pipeline of battery-backed solar power plants, developers have begun converting their visions of bottled sunlight into reality — largely in the form of two- to four-hour lithium-ion battery systems.

More than 40 utility-scale solar-storage projects entered operations in the first three quarters of 2021, including batteries tied to existing and new solar farms that combined for nearly 1 GW of storage capacity, according to S&P Global Market Intelligence data. Roughly the same volume of battery power capacity was planned to come online in the fourth quarter at another nearly two dozen U.S. projects.

A much larger portion of the development pipeline appears poised to push through in the next two years. Developers have lined up some 160 projects with planned completions in 2022 and 2023, Market Intelligence data indicates. That includes 4.5 GW of storage capacity in 2022 and 6.9 GW in 2023.

All told, developer plans include more than 18 GW of storage and 35.5 GW of solar, according to the data. Three-quarters of the storage capacity could come online by 2024 if ambitions pan out. The deeper, more speculative project pipelines under study in grid operator interconnection queues point to a considerably larger pool of potential projects.

"It was really only a few years ago that we started to see momentum building toward solar-plus-storage," Philip Hopkins, head of Wells Fargo & Co.'s renewable energy and environmental finance group, said in an interview.

The development pipeline now appears ripe for a deal-making deluge with Wells Fargo and other major investors, thanks to declining battery costs, strong utility demand for more dynamic renewable power plants and a federal investment tax credit that applies to storage when charging on solar.

Wells Fargo announced its first tax equity investment into such combined assets in November, backing D. E. Shaw Renewable Investments LLC's Arroyo Solar and Storage Project in McKinley County, N.M. Currently under construction, the facility features the 150-MW/600-MWh Arroyo Battery Storage Project and the 300-MW Arroyo Solar Project. The battery-equipped solar station is scheduled to come online in 2022, supported by a 20-year power purchase agreement with Public Service Co. of New Mexico, a subsidiary of PNM Resources Inc.

"There are many other projects in the market, and we are pursuing other opportunities for solar plus storage," Hopkins said. "Most solar project developers are integrating storage with projects that we're currently discussing."

The bank is prepared to adjust and expand its financing of such facilities if the rules for federal tax incentives change under pending legislation in Congress, Hopkins added.

"If the nature of the subsidy changes, the type of financing might change, but I would expect the overall volume of financing to go up," Hopkins said.

Battery behemoths

The biggest successes of 2021 were in Florida and California, where subsidiaries of NextEra Energy Inc. energized a series of lithium-ion battery storage systems at existing photovoltaic power plants.

In Manatee County, Fla., Florida Power & Light Co. on Dec. 13 celebrated the completion of the 409-MW/900-MWh Manatee Energy Storage Center, touted as the "world's largest solar-powered battery." The $300 million utility-owned energy storage facility, with the equivalent of 100 million iPhone batteries, can charge entirely from excess generation at the roughly 75-MW FPL Manatee Solar Energy Center over a period of several days, a spokesman for the NextEra affiliate said in an email.

Across the country, in eastern Riverside County, Calif., NextEra Energy Resources LLC in 2021 added 523 MW/2,092 MWh of battery storage at several projects of the contiguous Blythe and McCoy solar complex. The systems are underpinned by long-term contracts with Southern California Edison Co. and Pacific Gas and Electric Co., which signed the deals to enhance grid reliability.

Another major solar-storage project entering service in 2021 was the 88-MW, four-hour facility added at the existing RE Garland Solar Project in Kern County, Calif. Owned by Canadian Solar Inc., Southern Co. and others, it is also under contract with Southern California Edison.

As of Dec. 1, 2,185 MW of battery capacity was connected to the California ISO transmission system, according to the grid operator, including both stand-alone and solar-plus-storage plants.

In Nevada, Consolidated Edison Inc. in 2021 completed its 250-MW Copper Mountain Solar V, which includes 87.5 MW of battery storage, for Berkshire Hathaway Energy subsidiary NV Energy Inc. Also under contract with NV Energy is Quinbrook Infrastructure Partners Pty Ltd.'s massive Gemini Solar + Battery Storage Project in Clark County, Nev.

Currently under construction, the facility features 690 MW of solar and a 380-MW storage system with approximately four hours of energy storage capacity. It is scheduled for completion in 2023.