In recent years, solar energy, particularly via photovoltaic (PV) cells, has been at the forefront of renewable energy generation. Solar energy is inexpensive, easily available for most locations, and is easily serviceable. However, solar energy is limited by intermittency; fluctuations in light intensity, cloud coverage and the day-night cycle can cause a discrepancy between energy generation and demand. This has led to the conceptualisation of PV-plus-storage (PVS) systems.

PVS is a system in which battery storage is integrated with solar farms to store excess energy when generation is high and demand is low, then supply it to consumers when demand overtakes generation. This allows more efficient integration of solar energy into the energy gird, and will be crucial as renewables penetration increases. As renewable energy sources are less consistent than traditional fossil fuels, scalable power sources must be included in the energy grid to ensure demand is always met by supply. Increasingly, this is job is being handled by gas turbines. These turbines could eventually be replaced by systems such as PVS, which were reported by Bloomberg New Energy Finance to be capable of ramping up faster and more precisely than gas power plants. The technology, however, is not yet mature enough to compete directly with gas power, but for the time being could be a clean supplement.

PV-plus-storage is becoming increasingly important due to decreases in solar energy costs. As solar energy has matured, PV costs have decreased dramatically with an estimated 42% reduction in cost-per-kWh between 2019 and 2021, amounting to a 20% discount compared to coal-based energy. Furthermore, investment in solar energy is ever-growing, with global investments in new renewable energy capacity have surging past $2.5 trillion over the last decade, solar photovoltaic (PV) power claiming the largest share. The hard costs of PV, the cost of physical solar cell hardware, has come down by over 50% since the year 2000 and soft costs, the costs of labor and services, have also been steadily dipping.

Battery technology, too, is becoming cheaper and more efficient, and battery-producing companies gaining significant attention from investors. Fluence Energy, for example, made news at the tail-end of 2020 for its investment of $125 million from the Qatar Investment Authority (QIA), putting its valuation above $1 billion. Similarly, NextEra Energy, a world leader in battery storage, has seen its stock rise by over 30% from the start of 2020 to the start of 2021, despite the effects of the Coronavirus Crash. Furthermore, the global energy storage market is growing exponentially, and is expected to grow to an annual installation size of over 40 GW by 2022 compared to an initial capacity of only 0.34 GW installed in 2012 and 2013, indicating bullish investors may be rewarded for taking a risk on batteries.

PV-plus-storage developments are already underway. Per BNEF’s report, PVS projects with the capacity of 8.9GW are already in the pipeline in the United States and are expected to come online by the end of 2023. In addition, 69GW of hybrid projects are also loaded in the interconnection queue. Sun-rich states like California are particularly optimistic about PVS, with models in the state’s 2019 Integrated Resource Plan expecting solar and battery storage to dominate resource installation in the 2030s and ‘40s.

Solar energy in conjunction with battery storage is seeing increasing investment. With photovoltaics becoming ever-cheaper and unicorns cropping up in the battery industry, PVS shows promise in supporting higher renewables penetration and simultaneously cutting reliance on natural gas. Whilst the technology is not fully mature, and solar is by no means a ‘silver bullet’ for the energy transition, investors may keep an eye on both PV and battery manufacturers, as PVS uptake may grow rapidly in the coming decade.

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