Subsidy-free solar to accelerate through co-location with storage

Hybrid energy systems could see an acceleration of subsidy-free solar on the GB power system by 2030, according to a report by Aurora Energy Research.

Forecasting that there could be 5GW of subsidy-free solar by that date, Aurora explained that co-locating solar with battery storage was enabling such systems to come of age. These hybrid projects are presenting investable opportunities, carrying lower costs and lower risks than standalone projects, without the need for subsidy. Aurora added that a typical hybrid project deployed in 2020 was predicted to achieve an internal rate of return of around 7%.

Benjamin Collie, Principal at Aurora and the report’s author, said: “Investing in either standalone solar or standalone storage assets carries technology and policy risks. If rapid innovation and supportive policy lead to fast deployment of solar, then that will tend to increase revenues for storage assets, but decrease revenues for existing solar assets. Conversely, slower deployment of solar would lead to lower revenues for storage but higher revenues for existing solar. Investing in a portfolio with both solar and storage can help mitigate these risks, and co-locating the assets allows for cost savings and more efficient use of grid connections.”

Aurora Energy Research