The Department of Energy’s SunShot program is already well on its way toward achieving its goal for solar PV at $1 per watt installed cost, or 6 cents per kilowatt-hour. But that price is paying for an intermittent resource, one that flows when the sun is shining and falls off when clouds pass overhead, and lacks any ability for utilities or owners to control it for the good of the power grid. 

On Tuesday, DOE's SunShot launched its latest program, dubbed Sustainable and Holistic Integration of Energy Storage and Solar PV (SHINES), that’s set a new price target of 14 cents per kilowatt-hour for a new class of solar power, one that’s fully integrated with energy storage and the grid at large.

It’s the first DOE funding specifically aimed at solar-plus-storage systems, and it will test behind-the-meter and grid-tied batteries with smart inverters, dynamic load management, utility control systems, and smart buildings and smart appliances, to help make PV a much more flexible and dispatchable resource.

To get the ball rolling, the SHINES program is directing $18 million in grants toward six projects across the country. Participants include utilities such as Hawaiian Electric, Commonwealth Edison, Austin Energy and Southern Company, research organizations Fraunhofer and EPRI, and an exhaustive list of solar, storage and grid companies including 1Energy Systems, General Electric’s Alstom, Aquion Energy, Clean Power Research, EnerNOC, OSIsoft, S&C Electric, Siemens, Samsung, SolarEdge and Tesla.

The goal of all six projects is to demonstrate distribution-grid-scale balancing of distributed solar at scale, using a combination of demand-side and grid-facing resources, according to David Danielson, DOE assistant secretary of energy efficiency and renewable energy. “Without a doubt, innovation in energy storage will help drive adoption in the United States to new heights,” he said in a Tuesday conference call. 

The U.S. has about 24 gigawatts of solar today, but DOE wants to help drive improvements to support hundreds of gigawatts in future years, he said. That involves cheaper solar, of course. But it also requires dealing with intermittency, two-way power flows and challenging ramp requirements that could limit growth at the edges of the grid, he said.

The program’s new target of 14 cents per kilowatt-hour bears some additional explanation, since it doesn’t track exactly to how solar PV prices are calculated. Specifically, DOE is looking for “solutions [to] enable widespread, sustainable deployment of reliable PV generation and provide for successful integration of PV power plants with the electric grid at the system levelized cost of energy (LCOE) of less than 14 cents per KWh,” according to Tuesday’s announcement.

Ravi Manghani, GTM Research senior storage analyst, noted that "unlike solar, where levelized cost is a more passive metric, for integrated solar-plus-storage systems, levelized cost is a function of use cases." These dictate battery sizing and operating parameters, storage size in megawatt and megawatt-hour terms, the number of cycles per day they're expected to manage, and the depths of discharge they'll be asked to achieve over time.

In this context, DOE's new price goal will have its work cut out for it, given today's storage prices, Manghani said. For instance, 1 megawatt of solar coupled with a 1-megawatt/2-megawatt-hour storage system with 90 percent depth of discharge and daily cycling used for time-shifting has levelized costs ranging around 30 cents per kilowatt-hour today, he said, assuming $1.50-per-watt solar and about $650 per kilowatt-hour in upfront storage costs. To reach below 14 cents per kilowatt-hour, storage costs will have to fall by more than 50 percent, in addition to the projected drop in utility-scale solar costs, he said. 

Danielson noted in Tuesday's call that DOE's target price will include a lot of factors, not all of them under the private sector’s control. To be sure, the cost of batteries and storage balance-of-system costs are both falling rapidly, which helps improve the still-expensive proposition of storing solar power for grid needs. But the most effective forms of solar-storage integration will also include tight and seamless integration with flexible loads behind the meter, as well as the distribution grid communications and control systems to make the most of this more flexible resource.

“One of the big opportunities around new distributed devices, demand response, distributed energy like solar photovoltaics, and energy storage, is that there are a number of valuable services that these new forms of distributed energy can provide to the grid -- and the grid isn’t currently set up to take advantage of them,” Danielson said. “We’re hoping to drive an analytical foundation” for utilities and the private sector to find the most cost-effective combinations of these pieces of the puzzle, and make them available to others, he said.

Today, batteries or other forms of energy storage account for less than 1 percent of all solar projects, Rhone Resch, head of the Solar Energy Industries Association, said during Tuesday’s conference call. But to enable solar to shift grid support to later in the day, or ride through moments of intermittency without disrupting local grid conditions, “storage is the missing piece of the puzzle,” he said. “By combining solar with storage, we create the most transformational development, really, since the creation of the grid.”

Tuesday’s awards are part of a larger DOE plan to invest $220 million in grid modernization over the next three years, something Danielson told us was coming back in June at GTM's Grid Edge Live conference in San Diego. While Congress still has to authorize the bulk of these funds, this year’s round of grants has been largely secured, according to sources with knowledge of the matter. 

The $18 million in SHINES grants is already on its way to participants, and will be matched with at least as much in member contributions, Danielson said in Tuesday’s call. DOE is planning to hold a grid modernization summit in the coming months to help bring its larger-scale plans to the public, and to help connect researchers from the 14 regional DOE labs that are organizing the effort.

Some of these projects are building on previous DOE-backed work, such as Hawaiian Electric’s edge-of-network distributed energy resource control platform, and Commonwealth Edison and IIT's microgrid research. Most of them involve a half-dozen or more partners, although two are more exclusive -- Carnegie Mellon University’s project with battery startup Aquion Energy and the National Rural Electric Cooperative Association, and Fraunhofer USA's project with National Grid and EnerNOC.

As for establishing the rules for how the target of 14 cents per kilowatt-hour can be attained, that’s the job of Texas utility Austin Energy and associated distributed energy research hub Pecan Street. The utility is trying to “demonstrate a solution adaptable to any region and market structure that offers a credible pathway to an LCOE of 14 cents per kilowatt-hour for solar energy, when augmented by storage and other distributed energy resource management options.”

At the same time, it’s going to “enable distribution utilities to mitigate potential negative impacts of high penetration levels of PV caused by the intermittency and variability of solar production,” according to the project description.

Here’s a list of the projects, partners and what they’re working on.