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Utility-scale batteries challenge peakers

Feb. 14, 2018

The Wall Street Journal has an update on utility-scale battery installations, noting that such installations are challenging gas-fired peaking plants, especially in the Southwest, where solar power is abundant.

“Known as peakers, the natural-gas-fired plants are expensive to run, and typically are called into service only when demand rises and regular supplies are insufficient,” writes Russell Gold. “That makes them vulnerable to inroads from lithium-ion batteries, which have fallen in price in recent years, and are emerging as a competitive alternative for providing extra jolts of electricity.”

He notes that NextEra Energy Inc. is building a 100-MW solar facility incorporating a 30-MW battery array for Tucson Electric Power.

In addition, he says, Fluence Energy LLC is building in Long Beach a battery three times the size of the one in the Tucson project that could power 60,000 Southern California homes for up to four hours. He quotes John Zahurancik, chief operating officer of Fluence, as saying, “It really is a substitution for building a new peaking-power plant. Instead of living next to a smoke stack, you will live near what looks like a big-box store and is filled with racks and rows of batteries.”

Gold writes that the Long Beach project “…will be the largest lithium-ion battery in the world—three times larger than a battery built last year by Tesla Inc. in Australia.”

The batteries are putting pressure on turbine makers such as General Electric and Siemens, which have announced layoffs in their turbine businesses, Gold writes. He also notes that Fluence is a joint venture of Siemens and AES Corp.

Gold cites federal government estimates that the cost of a new gas-fired peaker is about $87/MWh (including building the plant and buying the fuel), whereas a Colorado subsidiary of Minnesota-based Xcel Energy recently received bids for solar-plus-storage projects at a median price of $36/MWh. Gold quotes Ben Fowke, chief executive of Xcel Energy, as saying, “I could see in 10 to 15 years where you have 30% of what is traditionally a peaker market served by storage.”

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