Since several of my favorite twitter persons expressed an interest, and these numbers are routinely presented in the trade press without proper context, here is a quick thread on what Solar Plus Storage PPA prices really mean. https://twitter.com/cody_a_hill/status/1341885769598652416

1. New eye-popping energy storage project announcements have been coming in left and right for the last couple of years now, and they’re still accelerating. There are two main flavors: stand alone projects (most of what I do), and solar plus storage projects (also great)

2. So what do the numbers mean when you see someone quoted saying "Levelized premiums for recent solar-plus-storage contracts in the U.S. Southwest, including mostly four-hour lithium-ion battery systems, have ranged from roughly 0.3 to 1.8 cents per kWh"? https://platform.mi.spglobal.com/web/client?auth=inherit#news/article?id=61841467

3. You probably saw this coming, but the answer is *not much* ... at least without an awful lot of context about the Power Purchase Agreement (PPA) being discussed. It's all about the sizes of the respective Solar and Storage components.

4. Typical solar plus storage projects announced to date have included a relatively small battery attached to a much larger solar project, with a $/MWh PPA adder for the storage applied to *EVERY MWh generated by the solar project*

5. Frequently the actual price paid by the Buyer is an order of magnitude more than this headline $/MWh number when the cost of storage is applied only to MWh that actually pass through the storage system.

6. So let's see some actual examples. The table below shows four recent Solar Plus Storage contracts. All reported publicly. Online dates in 2021-2022. The Nevada projects advertised "storage at $6.38 to $7.84/MWh". The CA project advertised $13/MWh for storage and $19.97 for PV.

7. (I estimated the Solar MWh above based on normal values for a really great utility scale PV project at that size)

To be clear, these prices were unimaginable just a few years ago. But the gimmick is simple: There's a hell of a lot more solar MWh than battery throughput here.

8. So take that ~$20 solar PPA and $13.00 storage price. The $13 is added to every MWh sold by the combined plant, and there are more than 5 times as many MWh generated by the PV as what passes through the battery. Big PV energy #, relatively modest battery throughput.

9. Ultimately the $/MWh "storage cost" on a solar PPA is meaningless without knowing the size of the respective solar and storage components. To get to "apples to apples" let me emphasize:

***The right comparison across storage projects is always the total cost per stored MWh***

10. As you may have noticed, Cost/Stored MWh is almost never announced. You can see my estimates in the chart for the 4 publicly announced S+S PPAs.

I hope this was helpful.

Any questions?