Nevada soon could become the sleeper hit of the energy storage industry.
There’s nothing much to see if you look at installed capacity right now — it's literally zero. But a handful of major projects have already been approved that will change that situation rapidly.
Major utility NV Energy has three battery plants totaling 100 megawatts slated to come online in 2021. Another 590 megawatts are approved and on their way for 2023, which would shoot Nevada to the top three utility-scale storage state markets that year, based on current projections from Wood Mackenzie.
Whether or not this is evidence of a healthy market springing up is a matter of debate. The major projects all flow through regulated utility NV Energy, the Berkshire Hathaway-owned company that serves four-fifths of the state. The utility sees the value of cheap desert solar power and recognizes a need to store it for more valuable dispatch in summer peak hours, when Las Vegas air conditioning hits maximum velocity.
So far, storage development happens when NV Energy asks for it. Commercial installations have yet to materialize, while residential battery installers have found some traction but not much. Sunrun, the largest home solar installer, does not even offer its Brightbox solar-plus-storage product in the state, despite a lively standalone solar market.
But in January, Google unveiled a proposed solar-plus-storage project to power a new data center with round-the-clock clean energy, a first of its kind for corporate procurement. NV Energy is the one delivering it, but Google proved that corporate demand can make things happen in Nevada.
If not so bustling as neighboring states California or Arizona, Nevada nonetheless stands out in the nation for its rapid acceptance of a highly renewable future and its willingness to invest in big batteries to make it happen.
The case for massive storage in Nevada
Unlike the other states we’ve examined, where storage comes to market serving a variety of policy and market needs, Nevada storage is all about one thing: time-shifting solar power plants for lucrative peak-hour delivery.
- Quinbrook Infrastructure Partners’ Gemini project, 690 megawatts solar with 380 megawatts/1.5 gigawatt-hour storage
- 8Minute Solar Energy’s Southern Bighorn, 300 megawatts solar with 135 megawatt/540 megawatt-hour storage
- EDF’s Arrow Canyon, 200 megawatts solar with a 75 megawatt/375 megawatt-hour battery
Nevada enjoys exceptional conditions for solar generation in the desert, which make it a highly attractive low-priced power option, said Robert Johnston, who tracks energy policy in the state as a senior staff attorney at Western Resource Advocates, which promotes a transition to clean energy in the Interior West.
“However, peak demand is not aligned with the sun and continues on into the late afternoon and evening hours as solar generation declines and disappears, but the heat of the day lingers and air conditioning load remains high,” he noted.
So the system either uses cheap solar by day and fires up more expensive gas peaker plants by night, or finds a way to use that cheap solar for the late afternoon and evening peaks.
The battery plants attached to solar plants make that possible. The contract structure makes it profitable: The utility agreed to pay 6.5 times more for power delivered during the hours of 4 to 9 p.m. in June, July and August than it pays for the plant production the rest of the time. Blending the on- and off-peak production yields an expected levelized cost of energy of $33.17 to $38.44 per megawatt-hour, which compares to an expected new combined-cycle gas plant LCOE of $58 per megawatt-hour.
All three of those recently approved batteries outsize anything built today in terms of megawatt-hour storage capacity. Unlike perhaps any other utility, NV Energy signed off on truly massive battery plants without spending years piloting tiny batteries first.
“Although from a scale perspective, these were relatively large solar and battery projects, the underlying technology was well proven,” said NV Energy spokesperson Kristen Saibini.
Keep that in mind the next time some other utility says it needs to study small batteries for years before it feels confident in the technology.
The other factor that distinguishes Nevada is how the adoption of massive energy storage advanced on its own merits, rather than following a prescriptive policy.
Here’s Saibini explaining the utility’s thought process: "In early 2018, NV Energy ran a competitive solicitation for renewable energy and storage projects which resulted in pricing that, for the first time, compared well to the company’s forecasted energy and capacity costs. This allowed the company to make significant investments in both solar energy and battery capacity that would not require an increase in customer power bills."
Or, in the words of Sean Kiernan, head of development at 8Minute Solar: “It’s largely market-driven.”
Policy battles set the stage
In 2019, Nevada adopted a 50 percent renewable electricity target that comes due in 2030. But NV Energy had already embarked on a solar-storage building spree in 2018, and the three biggest projects were in the works by the time the legislature passed that goal.
This timeline differentiates the state from New York or Massachusetts, where a concerted storage policy strategy preceded and made possible the growth in installations. But it would be wrong to say policy had no role to play; it served as the backdrop against which NV Energy made its decisions.
Nevada gained notoriety in the energy policy arena thanks to the 2015 solar wars. Many utilities at the time were pushing to roll back the net metering payments that rooftop solar customers received. Nevada’s regulators heard NV Energy’s plea and went further than regulators anywhere else: They slashed solar customer compensation and applied the new rules to existing customers who had signed up based on the old set of rules.
Flying in the face of basic notions of fairness and business environment continuity, this decision prompted a massive public backlash. The legislature responded by passing a law in 2017 increasing compensation for solar customers, establishing a right to self-generate electricity, speeding up interconnection and banning solar-specific fees. In the meantime, voters approved a retail-choice ballot initiative in 2016, which would have eliminated NV Energy’s monopoly status — one of the least desirable outcomes any monopoly can imagine.
“This ‘high renewables’ vision was part of an aggressive and successful campaign by the utility to defeat the Energy Choice Initiative, which was overwhelmingly rejected by Nevadans on the required second vote in the 2018 election,” Johnston said.
Clean energy worked on its own terms as a cost-effective source of peak power. But it also served as a messaging tool, demonstrating goodwill and defending the utility from policies it hoped to avoid.
What the future holds
The already-approved projects will take NV Energy from around 14 percent renewable power in 2017 to 40 percent in 2024. That leaves six years to close the gap to 50 percent.
The three latest projects stand out globally in their scale and ambition. Whether future projects can match or exceed their grandeur is an open question.
8minute Solar Energy foresees more opportunities to develop similar projects in Nevada, Kiernan said. And that type of solar-storage project pioneered in Nevada is drawing interest from utilities elsewhere.
“In a state like Nevada that’s got a tremendous amount of solar resource, having the dispatchable capabilities of plants like this will continue to be a central component of their resource planning efforts,” Kiernan said. “It is very uncommon for us at 8minute to be advancing projects and have the buyer be interested just in solar. Everybody wants solar-plus-storage.”
Fans of the format include not just desert utilities but also tech giant Google, which made headlines earlier this year for creating the first corporate offtake deal for solar-paired storage with NV Energy.
The innovative project, still awaiting regulatory approval, extends the corporate renewable procurement trend into round-the-clock clean energy. Google will buy clean power from an NV Energy project combining 350 megawatts of solar with a battery of at least 250 megawatts (megawatt-hour capacity undisclosed).
When Google doesn’t need the plant’s output, NV Energy can tap it for grid stability, most notably for clean capacity during those pesky summer peak hours. The structure sets up a win-win between Google’s corporate interests and NV Energy’s ratepayers. If regulators sign off, this model could serve any other tech giant looking to build a data center in Nevada.
On one hand, Nevada’s new storage market remains out of reach to all but the best large-scale developers, capable of mustering cheap capital and putting together some of the biggest solar-storage deals in the world. The introduction of corporate storage procurement could open up more opportunities for smaller-scale commercial and industrial development.
But Nevada’s impact may be felt in other states. It’s hard to find a better baseline of how quickly storage adoption can accelerate when a utility grasps the potential. It’s an inspiring model for sunny states grappling with tricky peak power demands. And as more states commit to 50 percent carbon-free goals of their own, Nevada’s solar-plus-storage adoption may well prove that goal to be not just achievable but actually easy.
For residents of places where the utility chooses not to proactively invest in such things, Nevada teaches a different lesson: When a populace pushes clean-energy policy through concerted legislative and political action, utilities must eventually take notice.