700 MW Wind+Solar+Storage Deal in Oklahoma is cheaper and battery will respond faster than a gas peaker can, plus the added benefit of absorbing excess capacity

‘Cheaper Than a Peaker’: NextEra Inks Massive Wind+Solar+Storage Deal in Oklahoma: NextEra will build a combined 700 megawatts for an electric cooperative group in a landmark deal for the hybrid renewables sector. By Julian Spector in GreenTechMedia, July 25, 2019

Oklahoma-based Western Farmers Electric Cooperative to build the largest proposed solar-plus-wind-plus-storage plant in the U.S. with even amounts of each.

The battery will serve as a peaker for the rural cooperatives, while wind and solar generate cheap energy.

The battery will serve as a peaker for the rural cooperatives, while wind and solar generate cheap energy.13

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:

  • 250 megawatts of wind capacity (which will arrive first, before the end of 2019)
  • 250 megawatts of solar power
  • 200 megawatts/800 megawatt-hours of battery storage

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.”

Cheaper than a peaker

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 federal 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.

Putting the pieces together

The differences between NextEra’s two hybrid plants illustrate the many design opportunities this form allows.

Portland General Electric’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 4-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 and 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.”

Willingness to be early

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 Western Farmers Electric Cooperative). 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.


NextEra Sees Little Threat to Wind and Solar From Fading Tax Credits

Wind and solar will be cheaper than nearly any other form of U.S. generation in the 2020s, with or without federal subsidies, the nation’s leading developer says. By KARL-ERIK STROMSTA JULY 24, 2019, GTMedia

Florida-based NextEra develops wind, solar and energy storage projects across the U.S.

Florida-based NextEra develops wind, solar and energy storage projects across the U.S. 4

NextEra Energy, the largest U.S. wind and solar developer, sees little threat to the renewables market from the fading federal tax credits, executives said Wednesday.

With the federal Production Tax Credit (PTC) for wind already phasing down, and the federal Investment Tax Credit (ITC) for solar set to begin declining next year for new projects, individual companies and their broader industries are grappling with how — or whether — to push for an additional extension.

The Trump administration’s elimination of the Clean Power Plan in favor of a more coal-friendly approach has led some in the renewables business to change their minds in favor of asking for another extension, despite the political challenges of doing so.

NextEra, for its part, is focused on its gargantuan development pipeline, and believes wind and solar will remain highly competitive without federal subsidies, CFO Rebecca Kujawa said on an analyst call Wednesday discussing the company’s financial results.

“With continued cost and efficiency improvements, we expect new near-firm wind and solar to be cheaper than the operating costs of coal, nuclear and less-efficient oil- and gas-fired generation units, even after the tax credits phase down early in the next decade,” Kujawa said.

“The combination of low-cost renewables plus storage is expected to be increasingly disruptive to the nation’s generation fleet, providing significant growth opportunities well into the next decade.”

Last week the Solar Energy Industries Association, which represents the solar sector in Washington, D.C., organized a letter to Congress signed by nearly 1,000 companies calling for an extension of the ITC.

The wind industry has so far taken a less explicit approach toward another PTC extension, with the American Wind Energy Association (AWEA) having only gone as far as calling for a technology-neutral tax credit.

Pressed Wednesday on the renewed efforts to extend the solar ITC, Kujawa said: “We’ve benefited over the last couple of years from some of the most significant visibility for long-term incentives the industry has ever had.”

“When the tax credits were last extended [in 2015], implementing the phase-down currently in place, we were very supportive of that, as an industry and our company specifically.”

While another extension could create a stronger tailwind for the renewables market, NextEra is “excited about our development program” with or without subsidies, she said.

NextEra on Wednesday revealed that its renewables backlog — or projects to be built over the next few years — has grown to a record 11.7 gigawatts.

A pivot toward solar

NextEra is by far the largest owner of U.S. wind capacity, with more than 14 gigawatts in operation, according to AWEA.

But the company is in the midst of a pivot toward solar and somewhat away from wind, reflecting shifts in the broader U.S. power market. Solar’s ITC has an advantaged phase-down schedule compared to the wind PTC.

While wind is expected to remain Energy Resources’ main focus through 2020, solar will overtake it in the 2021-2022 timeframe, in part because the company’s industry-leading efforts to upgrade — or repower — many of its existing wind farms have been heavily tied to the PTC.

Florida-based NextEra, which owns several large regulated utilities in addition to its more freewheeling Energy Resources development arm, is already second only to First Solar when it comes to installed utility-scale solar capacity in the U.S., according to Wood Mackenzie Power & Renewables. 

Although a much smaller part of its business, NextEra is also a leading player in the distributed solar market, focused primarily on the commercial and industrial segment. It continues to look at opportunities in residential solar, Kujawa said.