Xcel Energy’s Bidding Process Shows Energy Storage Prices Keep Falling

by | Jan 9, 2018

Price has always been considered the primary obstacle to building out energy storage systems — until now. Xcel Energy said that it has received hundreds of bids to help it integrate energy storage into its wind and solar energy networks, which are making such systems ever-more competitive.

To be precise, the median price was $21 per megawatt hour for wind plus storage and $36 a megawatt hour for solar plus storage. While those bids and any deals will still require the Okay from Colorado’s public utility commission, it shows that the technology is becoming competitive with conventional generation. Prices, in fact, are much cheaper than they were this time last year.

“The response to this solicitation is unprecedented with 430 individual proposals received from bidders,” Xcel Energy said. By comparison, in 2013, the company received 55 such bids, it said, and in the current year, there were 238 projects proposed. And of those, 99 of them had some level of utility ownership.

Joe Smyth, founder of cleancooperative.com first broke the news. Shayle Kahn of GTM Research spoke about it on Twitter and it was subsequently reported on by Utility Dive and PV Magazine. 

As for Xcel, it is on a mission to increase its wind and solar capacity. It’s already announced the retirement of 660 megawatts of coal-fired generation and in doing so, issued a request for proposal for 1,000 megawatts of wind and 700 megawatts of solar. Xcel aims to surpass Colorado’s 30% renewable energy standard by 2020.

Thompson Reuters white paper, meanwhile, specifically notes Xcel Energy its effort reduce CO2 emissions. Meanwhile, it has long been named one of the country’s greenest utilities.

Today, storage adds value to power systems because it can create capacity. That gives manufacturers and other industrials greater reliability and it has the potential to allow utilities to defer investment in expensive infrastructure and carbon-intensive power plants. An application could be anything from shaving peak load to storing and injecting wind and solar electrons onto the grid.

Right now, the “levelized cost” – the cost of continuous operations – of battery production is between 15 cents and 30 cents per kilowatt/hour, depending on the application and the type of storage device. For comparative purposes, natural gas cost 7 cents per kilowatt/hour.

Prices are dropping because such companies as Tesla Inc. are investing $5 billion into a battery storage manufacturing facility while the states are also involved. California, for example, is mandating investments in energy devices, which should create economies of scale. To that end, it is requiring its incumbent utilities to provide 1,325 megawatts of energy storage capacity by 2020. Edison International, PG&E Corp. and Sempra Energy are participating.

Earlier this year, Tesla joined forces with Edison’s Southern California Edison to utilize Tesla’s Powerpack on the grid. The goal is to avoid momentary electricity outages, which increases reliability. Such efficiencies mean that there will be more room on the wires for green electrons.

“Batteries allow us to capture and store energy during times of low demand, when it is plentiful and inexpensive, and use it during times of high demand, when energy is in short supply and more expensive,” SoCalEd said.

“The batteries provide grid support that grid operators would otherwise not have,” adds Jeff Gates of Duke Energy, in an earlier interview with this writer. “A typical fossil-fired generator would take several minutes to kick in and stabilize the grid. But a battery can respond in less than a second.”

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