The economic feasibility of solar and storage system in Illinois

Abstract

To help understand the economic feasibility of installing solar and energy storage in Illinois, we conducted a case study to examine the viability of multiple options of (1) installing utility-scale storage at the Waukegan plant site and surrounding area, and (2) investing in behind-the-meter storage combined with solar and energy efficiency on the residential and commercial buildings. To analyze the economics of the utility-scale storage system, we quantified the net present cost of installing the system, the reliability and transmission benefits, and the increase in capacity revenue. For the customer-owned systems, we estimated the cost of investing in the solar-storage hybrid systems, the electricity bill savings, and the payback periods of three different building types. We found that the financial benefits of solar plus storage, accompanied by load reduction by energy efficiency would exceed the costs in most cases. Assuming a 16 MW four-hour duration lithium-ion battery, the initial capital cost of installing a utility-scale energy storage system would be $14.3 million. Over the 25-year project lifetime, financial benefits total $19.1 million including $6.9 million of avoided transmission costs and $12.1 million of capacity revenue. In addition, investing in solar could significantly lower consumer electricity bills. Most homes and businesses in the area could cut their electricity bills by more than half by investing in solar energy. When energy efficiency and solar energy are combined, a household in the area could save 66 percent annually on its electricity bill. Stronger climate policies and expanded use of time-varying electricity rates could further improve the economics of solar plus storage systems.