‘Cheaper Than a Peaker’: NextEra Inks Massive Wind+Solar+Storage Deal in Oklahoma
Julian Spector July 25, 2019 greentechmedia.com
NextEra will build a combined 700 megawatts for an electric cooperative group in a landmark deal for the hybrid renewables sector.
NextEra Energy Resources seems intent on proving that triple hybrid plants can work in the U.S. market.
The powerhouse renewables developer contracted this week with Oklahoma-based Western Farmers Electric Cooperative to build the largest proposed solar plus wind plus storage plant in the U.S. The Skeleton Creek facility, slated for completion by the close of 2023, will include:
This outranks a project NextEra finalized with Portland General Electric in February, which will be online by the end of 2021. That deal includes 300 megawatts wind, 50 megawatts solar and 30 megawatts/ 120 megawatt-hours storage.
By balancing the divergent production schedules of wind and solar resources, and using batteries for additional flexibility, hybrid plants like these deliver cheap renewables while mitigating the limitations of intermittency. In this case, the configuration offered an economic alternative to a natural gas peaker plant.
So far, at least in the U.S., these projects have stayed in the realm of theory rather than market reality. The cost of storage explains part of that delay, as does regulatory novelty. Finding sites that work just as well for wind and solar and have the grid infrastructure to support significant capacity adds another hurdle.
But these projects are also inherently more difficult to design than conventional plants.
"Optimizing one factor is pretty easy, two is hard, three is complicated, and heck, add storage duration as a fourth question," said Daniel Finn-Foley, an analyst at Wood Mackenzie Power & Renewables. "Utilities do entire portfolio analyses to design their systems around all these factors; NextEra is now doing it at the project level."
Western Farmers, a generation and transmission company that supplies power to 21 member co-ops, needed 400 megawatts of capacity by 2025 for its resource adequacy obligation, said Phillip Schaeffer, the principal resource planning engineer.
The traditional solution would be to build a natural gas peaker to deliver that capacity to the Southwest Power Pool, but Schaeffer crunched the numbers around the solar/wind/storage combination and found something intriguing.
"It’s actually cheaper, economically, than a gas peaker plant of similar size, particularly with the tax credits that are available right now," Schaeffer told GTM. "Prices have fallen significantly over the last several years."
The wind component comes online this year to capture the full federal production tax credit, and the solar and storage will be built together to qualify for the investment tax credit, enhancing project economics.
The new arrangement also improves operationally on a gas peaker, Schaeffer noted. The battery will respond faster than a gas peaker can, and has the added benefit of absorbing excess capacity, useful on Oklahoma's most blustery days.
The co-op solicited competitive bids, and selected NextEra from the "just a handful" of companies that had the expertise for the scale and scope of the project.
The differences between NextEra's two hybrid plants illustrate the many design opportunities this form allows.
PGE's Wheatridge deal leans hard on wind, with solar providing one-sixth the nameplate capacity as the wind component. The storage delivers power capacity equivalent to 60 percent of solar capacity, with a four-hour duration. The wind installation will wrap up next year to capture the full production tax credit; solar and storage will follow the year after and claim the investment tax credit.
In short, Wheatridge looks and feels like a large wind plant with a reasonably significant solar plus storage plant added on. Indeed, the development started life as a solo wind affair, but NextEra and PGE broadened the mission.
In Oklahoma, the three branches appear more co-equal. The project similarly unfolds in two stages dictated by tax credit timelines, but the wind and solar are equally large in nameplate capacity. The battery plant will be among the biggest in the world, handily beating Tesla's Hornsdale facility and the forthcoming AES plant in Alamitos (100 megawatts/ 400 megawatt-hours), but falling just short of Vistra's Moss Landing (300-megawatts/ 1,200 megawatt-hours, slated for late 2020).
That could reflect a better solar resource than Oregon, a greater need for dispatchability, or something else entirely.
"Wind and solar profiles, system needs, interconnection constraints, load patterns, all have to be reviewed and systems sized to optimize value," Finn-Foley noted. "The ability to design these systems effectively to ensure no megawatt is 'wasted' is just as important as the project expertise itself because you have three things to optimize, not just one."
It makes sense that NextEra would blaze trails in the wind/solar/storage hybrid frontier, because the developer cut early paths into each of those sectors individually. The company led on the solar plus storage hybrid, making waves with the pricing and size of a deal for Tucson Electric Power back in 2017.
Western Farmers Electric Cooperative also has a history of early clean energy adoption. The company invested in wind power purchase agreements back in 2003, and has several years of experience with solar. Storage is new for the co-op.
The cooperative governance structure may help with approving cutting edge projects such as Skeleton Creek. Co-ops have flatter hierarchies than massive investor owned utilities, and their shareholders are their customers (in this case, the distribution co-ops that buy from WFEC). That aligns incentives around cheap clean energy investments that could save customers money and help local air quality.
"People in rural communities want the right thing done for their community as well," Schaeffer said. "They want to make sure it’s the right thing to do economically and they liked the aspect of the environmental consciousness."
One thing that did not drive the decision was renewable energy credits. Oklahoma has a 15 percent renewable energy goal pegged to 2015, but renewable generation has easily surpassed that.
"We don’t need to do this for compliance," Schaeffer said.
Skeleton Creek will bring that portfolio's nameplate capacity to at least 50 percent renewable. As renewable penetration gets up that high, it enhances the value of the ability to shape electricity delivery, rather than accept what the sun and the wind offer.
The complementary timing of wind and solar production in Oklahoma stretches availability throughout the day, and the battery provides additional heft to shift generation from less useful to more useful times.
"It doesn't have to solve the whole intermittency problem, but if it can help the utility get partway there, it has tremendous value," Finn-Foley said.
The result doesn't track exactly with the traditional utility categories of always-on baseload plant and on-demand peaker. It's more dynamic than baseload and more steady than a peaker, shaping daily power delivery to match the demand curve of the customers.