US battery surge outpaces hybrid wind projects
The 2022 Inflation Reduction Act has incentivized renewable energy developers and utilities to increasingly invest in energy storage. The legislation includes investment tax credits (ITCs) for standalone energy storage for the first time, leading to a rise in popularity for standalone storage. This trend is causing a shift away from hybrid wind-storage facilities, with standalone batteries proving more financially beneficial due to separate grid connection points and a choice of charging sources.
Clean Tech Developers Favor Standalone Battery Stations Over Hybrid Wind-Storage
The 2022 Inflation Reduction Act is prompting clean tech developers to focus on separate battery stations instead of hybrid wind-storage, due to associated grid benefits and incentives. Investment tax credits (ITCs) for standalone storage are now available, driving a surge in the development of solar-storage facilities.
While these tax credits also strengthen the case for ‘hybrid’ wind projects, initial activity is mostly concentrated in standalone batteries. Standalone storage is gaining popularity, with the ratio of hybrid facilities dropping to 51% compared to 70% in 2022, according to the American Clean Power (ACP) association.
Hybrid installations increased by 30% in the third quarter to 3 GW, but wind-storage accounts for a mere 8% of this new capacity. The soaring deployment of solar is enhancing the value of energy storage that can dispatch after sunset.
Batteries’ exclusive offering of ITCs are limiting interest in wind-storage, as wind developers typically choose production tax credits (PTCs) due to higher output and capacity factors. Despite the potential of hybrid projects to reduce grid connection costs, standalone batteries offer other advantages, making them a more financially sensible choice for developers.
Standalone storage offers a range of charging sources and can mitigate broader transmission risks. Unlike batteries in hybrid projects that are often tied solely to the energy produced by the facilities, standalone batteries can charge from any generation sources on the grid, providing more flexibility.
“Standalone storage allows developers to trade energy in the battery or sell ancillary services, which can be additional revenue sources,” says Stephanie Smith, Chief Operating Officer at Eolian.
As the demand for renewable energy capacity grows, the rising curtailment of wind and solar facilities will increase the need for hybrid storage facilities. Wind and solar projects often located in remote areas can benefit from standalone storage, which can address predictable constraints to the grid and offer a wider geographical range for installation.