Influence of business models on PV-battery dispatch decisions and market value: A pilot study of operating plants

• Published in: Advances in applied energy 2022-02, Vol.5 (C), p.100076, Article 100076
• Main Authors: Seel, Joachim, Warner, Cody, Mills, Andrew
• Format: Article
• Language: English
• Subjects: Empirical data analysis; PV-battery business model; PV-battery hybrid project; Storage value premium; Wholesale electricity market valuation
• ISSN: 2666-7924; 2666-7924
• DOI: 10.1016/j.adapen.2021.100076

•We assess marginal market value of PV-battery hybrids using empirical dispatch data.•Market value varies by location, technical design, and battery dispatch.•Merchant PV-battery hybrids follow wholesale market prices most closely.•Other business models dispatch during peak load hours or incentive program schedules.•Non-market dispatch can yield higher private revenue but lower grid value. PV-battery hybrid projects dominate interconnection queues in some regions in the United States. But few large-scale projects have been in use long enough to assess how the hybrid capabilities may be used in practice and the existing literature scantly discusses observed operational strategies. We interview plant operators and analyze empirical dispatch data for eleven large-scale PV-battery hybrids in three organized wholesale markets in the United States. We estimate the market value of our sample hybrids in 2020. The empirical increase in market value of a PV-battery hybrid relative to a standalone PV plant varies by project and ranges from $1 to $48/MWhsolar, often aided by a large boost in capacity value. This premium is driven by market, location, technical characteristics of the PV and battery asset, and battery dispatch strategies. In contrast to the widespread assumptions in the PV-battery hybrid modeling literature, only three of the eleven project operators optimize battery usage for wholesale market revenue as merchant plants. Instead, load-serving entities target peak load reductions, incentive program participants focus on compliance with program requirements, and large energy consumers prioritize resiliency and utility bill minimization. These alternative business models can result in high revenues for the project operators, but do not optimize the storage dispatch from a grid perspective. Understanding real-world dispatch signals and aligning them closer with system-wide grid needs will be important for electric grid operators and system planners, and can increase the market value of PV-battery hybrids. [Display omitted]