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16 February 2018

First Solar wins 50MW battery deal in Arizona with APS

Arizona Public Service (APS) has signed a 50 MW battery installation deal with First Solar, a solar power plant provider, in a deal that will provide ‘solar shifting’ capabilities for a new 65 MW solar farm in the state. Announced shortly after Arizona announced an 80% clean energy and 3 GW storage mandate, APS is hoping to get ahead of the curve – deploying what is currently scheduled as the largest battery in the US.

APS, Arizona’s largest utility (with around 1.2m electricity customers), plans on using the 135 mWh battery to help store the electricity generated by the solar farm and deliver it when it is most needed. Broadly, the battery will store energy when customers are away from home, and then allow APS to serve that power to customers after the sun has set and the panels stop generating electricity.

Due to be online in 2021, and built next to a natural gas plant, the solar farm is subject to a 15-year contract with APS. It is thought that APS will be able to take advantage of a 30% federal investment tax credit here. Pricing hasn’t been announced, but similar solar-plus-storage deals allow us to explore the impact of home storage on the Arizona regulator plans – using some in-depth napkin maths.

The Arizona 80% target, proposed by Arizona’s Corporation Commissioner, Andy Tobin, is aiming to have utilities source 80% of their electricity from renewables and nuclear by 2050, as well as deploy 3 GW of energy storage by 2030. If passed into law, the new plan would ensure that renewables are at the heart of Arizona’s future energy mix – a progressive stance from the state.

Called the Energy Modernization Plan, the framework includes the ‘Clean Peak Standard,’ which would require a utility to push more renewable energy during peak-demand times – starting from a baseline delivery and then increasing by 1.5% annually. Utility Dive provides a good outline.

The rules are designed to encourage the deployment of energy storage technologies, such as the APS project with First Solar. In fact, the storage target may be much easier to meet than the renewables goal, as with the 50 MW installation and a 30 MW deal between Tucson Electric Power, signed in May, Arizona would have around 2.66% of that target on the books already.

While a fraction, it is still very early days for the utilities here. These sorts of grid-scale projects could be augmented by pushing home battery systems to their customers, adding 7-14 kWh of storage capacity to their grids for each home battery installed (equivalent to the Telsa Powerwall v1 or v2).

Collectively, that would add up to some 8,400 mWh (8.4 gWh) of capacity at the lower end of the estimate, or 16,800 mWh (16.8 gWh) at the upper end – assuming all of APS’ 1.2m customers were encouraged to install a battery. Continuing the very rough calculations, as this APS battery’s MW to mWh ratio is around 2.7, then this would mean that 8.4 gWh would give you a capacity of 3.11 GW, and the 16.8 gWh would provide 6.22 GW – assuming that the grid-scale ratio roughly equates to the home-scale ratio.

Finding a number for the total number of electricity customers in Arizona, to work out APS’ market share, proved difficult. If you estimate that of the 6.9m people who live in the state, there’s an average of 2.5 people per ‘customer’ (the residential unit), then there are around 2.76m ‘customers’ available. That gives APS a market share of around 43%, with the other three utilities accounting for the rest.

To this end, APS needs around 100% penetration of the 7 kWh home batteries to meet the proposed 3 GW 2030 target for the whole of Arizona, or around 49% for the 14 kWh units. However, as APS has a market share of around 43%, the collective penetration required for all of Arizona’s four utilities to meet these targets is much lower – at just 20.96% if the homes are adopting 14 kWh batteries, although much higher at 41.93% if using 7 kWh models.

And that’s before you account for any grid-scale storage projects at all, of which there will be quite a few. APS rival Tucson Electric has announced a 100 MW solar array with a 30 MW / 120 mWh storage system, both of which are being developed by NextEra Energy. Salt River Project, another utility rival, is planning a 10 MW battery too.

APS itself is planning on adding 500 MW of storage by 2030, but also 5 GW of natural gas generation, the latter of which won’t draw praise from environmentalists.  Around half the size of the South Australian battery installed by Tesla recently, the new APS system is a lot bigger than the 2 mWh testing units it used, in partnership with AES.

Also scheduled for deployment in 2021 is a 100 MW system from Fluence, which is being developed by AES and Siemens, although we expect many more utility-scale battery projects to be announced in the intermediary years.

Notably, First Solar is free to sell energy generated by the solar farm to other customers, outside of the contract’s 3pm-8pm window – where APS is buying all of its generation capacity. Speaking to Greentech Media, APS’ VP Resource Management, Brad Albert, confirmed the arrangement, adding that APS wasn’t initially looking for a storage solution – rather that solar-plus-storage best fitted APS’ request for proposals.