Kauai Island Utility Cooperative (KIUC) recently signed a power purchase agreement (PPA) with AES Distributed Energy to purchase energy from a solar-plus-storage facility consisting of 28 MW solar capacity coupled with a 20 MW five-hour duration energy storage system.

Key Details

• KIUC will purchase energy for 11¢/kWh from the facility designed to balance generation with peak demand
• The PPA reveals attractive economics for KIUC and the rapidly declining cost of solar-plus-storage. The price is:
  • Less than the 12.2¢/kWh to 18¢/kWh in fuel and commodity costs KIUC incurred since December 2014
  • 21% lower than the 13.9¢/kWh solar-plus-storage contract KIUC signed with SolaCity in 2015; data reflects price per November 2016 revision
  • 56% lower than the levelized cost of energy (LCOE) of a stand-alone utility-scale solar project in 2010; mean LCOE in 2010 was 24.8¢/kWh per Lazard data
• AES Distributed Energy will own and operate the asset, which will provide 11% of electric generation to the island of Kauai
• The new solar-plus-storage project is expected to become operational in late 2018

Implications

Continued cost declines in solar-plus-storage could make the resource an attractive alternative to natural gas peaking plants. Just consider the foretelling comments of Jim Robo, CEO of NextEra Energy. In September 2015, Mr. Robo stated, “Post-2020, there may never be another peaker built in the United States—very likely you’ll be just building energy storage instead.”

Additional Resources

AES Press Release: AES Distributed Energy and KIUC Announce Plan to Construct Innovative Renewable Peaker Plant in Kauaʻi Utilizing a Hybrid Solar and Energy Storage System

Utility Dive: Hawaii Co-Op Signs Deal for Solar+Storage Project at 11¢/kWh

Greentech Media: AES’ New Kauai Solar-Storage ‘Peaker’ Shows How Fast Battery Costs Are Falling

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