A Californian solar and battery storage power purchase agreement is plumbing new lows for the cost of electricity from solar – a US-dollar price of 1.99c/kWh for 400MW of PV and 1.3c/kWh for stored solar power from a co-located 400MW/800MWh battery storage system.

The record setting deal, struck by a team at the Los Angeles Department of Water and Power (LADWP) with renewables developer 8minute, seeks to lock-in a two-stage, 25-year contract to serve 7 per cent of L.A.’s electricity demand from the massive solar and battery project.

The project, called the Eland Solar and Storage Center, would be built in two 200MW stages in Kern County north of Los Angeles, with an option to add a further 50MW/200 MWh of energy storage for 0.665 cents per kWh more.

The project aims not only to help power L.A. during the day with dirt-cheap solar power but to use the stored battery power in the evening peak period to ease the effect of fossil fuel “ramping” as the solar leaves the system.

And while the project’s size is impressive – particularly the size of the battery system, which would be twice the size of the world’s current biggest big battery, Australia’s own Hornsdale Power Reserve – it has been the prices quoted for the PPA that have really caught the market’s attention.

Goodnight #naturalgas, goodnight #coal, goodnight #nuclear#LosAngeles seeks record setting solar PV price under 2¢/kWh and battery storage at 1.3¢/kWh under a 25-year contract https://t.co/KkwOqGyfWK¢-kwh/ @pvmagazine @howarth_cornell @ProfStrachan @ProfRayWills @NickCowern

— Mark Z. Jacobson (@mzjacobson) June 28, 2019

As PV Magazine’s John Weaver noted, the current world record solar power price was set in Mexico at 1.97¢/kWh as part of a batch of projects averaging just over 2¢/kWh. A lower bid submitted in Saudi Arabia at 1.79¢/kWh was not ultimately signed.

“This is the lowest solar-photovoltaic price in the United States, and it is the largest and lowest-cost solar and high-capacity battery-storage project in the U.S., and we believe in the world today,” said the LADWP’s manager for strategic initiatives, said James Barner. “So this is, I believe, truly revolutionary in the industry.”

Barner has also noted that the project has been able to make “full use” of a “substantial” federal solar investment tax credit, which amounted to around 30 per cent “basically knocked off the capital cost of the project.”

According to reports, Barner told a June briefing on the project that net peak load in the evening would be offset by the Eland facility, to keep gas powered generation “not running at the full amount.”

“The battery can be dispatched differently, depending on the system need,” he said. “So you could run that four-hour battery over 16 hours at one-fourth of the output so that you can vary it over time. It’s not just fixed over four hours.

“The battery is able to take a portion of (the) solar from that facility …and then store it into the battery so that the facility can provide a constant output to the grid. It can turn this solar facility, which is not typically dispatchable, into a dispatchable type of facility.”

According to data from the U.S. Energy Information Agency, and quoted in Forbes, a natural-gas plant opening at the same time as the Eland facility would produce power at more than twice the price, or 4-4.3¢/kWh.

Presuming the power off-take contract is approved, the Eland project is expected start construction in 2022, with the first production expected in the first half of 2023, and a guaranteed commercial operation date of the last day of that year, PV Magazine reported.