The Optimal Timing of Storage Additions to Solar Power Plants

The addition of battery storage to solar plants enhances the ability of those plants to deliver electricity during high-value periods. However, the value proposition of storage improves over time due to falling battery costs and increasing volatility in electricity prices, making it unclear when storage adoption should occur. In this work, we consider a 100 MW solar plant constructed in the year 2022 and build a techno-economic model to determine the optimal system design and timing of storage additions in four locations (CAISO, NYISO, ERCOT, and PJM). We find that the optimal time to add storage is in the 2027-2032 timeframe, and that the optimal quantity of storage is much higher than the amount selected if storage is included during the solar plant construction. Additionally, the model suggests significant upscaling in inverter capacity, allowing the storage to deliver electricity during brief high-price periods. We also consider the effect of temporary and permanent subsidies for batteries, showing that a long-term subsidy encourages economically optimal delays in storage adoption.