SolarPower Europe has said the continent is failing to fully exploit potential of hybrid PV+BESS systems – top 6 European nations in terms of PV+BESS capacity revealed, while Tamarindo’s Energy Storage Report proposes five steps Europe can take to further deployment of hybrid PV+BESS
There are a number of benefits associated with linking solar and battery energy storage systems (BESS) together in hybrid projects. Not least of all is the fact that BESS can improve the revenue generated by a solar asset and therefore make solar projects more attractive to investors. As renewables portfolio management software and advisory services provider Pexapark has highlighted: “In mature markets with increased renewables penetration, cannibalization risk becomes a substantial threat to project economics. As price capture for solar assets falls in these markets, a project’s profitability gets stressed, and financing becomes more difficult.”
Yet, despite the instrumental role BESS plays in making solar projects bankable, a new report from SolarPower Europe has concluded that Europe is failing to exploit the full potential of hybrid PV+BESS systems. Consequently, Europe is failing to fully optimise grid infrastructure, in particular grid connection point capacity. SolarPower Europe also highlights how hybrid projects “realise cost synergies by maximising existing infrastructure usage and reducing the financing costs for renewables”.
Which European nations have most hybrid PV+BESS capacity?
Though it is one of the least sunny countries in Europe, the UK – which has only 150 sunny days per year, according to data – is the European leader in hybrid PV+BESS installations, accounting for 62 per cent of total deployed capacity in Europe measured by GWh (see chart below). Key to the UK’s success in this field has been “strong policy support and favourable market conditions” – according to SolarPower Europe – which have facilitated the construction of Europe’s largest hybrid parks. The UK market has also been made attractive due to a well-constructed capacity market, an inclusive CfD [contracts for difference] framework, streamlined permitting, as well as market reforms enabling BESS to provide grid services. The next 5 biggest hybrid PV+BESS markets in Europe are as follows Sweden (10 per cent of Europe’s total hybrid PV+BESS capacity), Italy (8 per cent), Germany (6 per cent), Bulgaria (6 per cent), and Denmark (5 per cent). The remaining EU-27 countries and Switzerland collectively represent only 3 per cent of capacity, which shows how highly concentrated hybrid solar and storage deployment is across Europe.
So what steps can be taken to further the deployment of solar and BESS across Europe? Here are five:
1. Enhancing planning with grid-hosting capacity maps
Grid-hosting capacity maps enable faster decision making in that they enable users to select locations with available capacity, which can potentially speed up investment decisions. Some European nations make such maps available, but not all. The maps can also help reduce grid connection queues.
2. Provide EU funding and targeted state aid for hybrid projects
SolarPower Europe wants to see greater use made of state aid funding to incentivise PV+BESS projects that would not normally get off the ground without public support. For example, last year the European Commission approved – under EU State aid rules – a €1 billion Greek initiative to support two solar and storage projects: The Faethon Project, involving the construction of two photovoltaic units, each with a capacity of 252MW, along with integrated molten-salt thermal storage units and an extra-high voltage substation; and the Seli Project, involving the construction of a 309 MW photovoltaic unit with an integrated lithium-ion battery energy storage system.
3. Streamline permitting processes, with fast-tracking for hybridising existing plants in congested grid areas
The Energy Storage Coalition (ESC) has argued that streamlining permitting is essential if Europe is to meet its energy transition goals. In particular, the ESC has said that streamlining permitting and grid connection rules at EU level are essential. The ESC says: “Sets of measures including clear time limits and the consistent implementation of rules such as one-stop shops for permits, or recognising renewable energy projects including energy storage as projects of overriding public interest – while still adhering to environmental impact assessments – would simplify market entry, reduce transaction cost and be a concrete support to the deployment of storage technologies.”
4. Grid operators should digitalise grid connection agreements
Digitalisation means fewer delays to the grid connection process, enhanced transparency – applicants can be kept up-to-date on the status of their applications – and better collaboration between different stakeholders.
5. Enable batteries to participate in multiple revenue streams
BESS offer multiple opportunities to generate revenue and can capitalise on various market opportunities, meaning that can be very versatile investments. Such opportunities could include energy arbitrage – specifically, batteries ‘buying’ electricity at low prices and later selling it during peak demand – as well as ancillary services that stabilise the grid, and capacity payments in return for guaranteeing power availability. Taking advantage of multiple revenue streams or ‘revenue stacking’ is vital in order maximise returns on BESS investments.
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