Wood Mackenzie Power & Renewables is forecasting that utility-scale solar-plus-storage capacity will fall to a level where it's competitive with natural-gas peaker plant generation in Australia's National Electricity Market by 2023 at about 23% above the average wholesale electricity price.

The LCOE (levelized cost of electricity) for utility-scale solar-plus-storage in Thailand will drop below roughly equivalent, average wholesale electricity prices over the five-year period, the Wood Mackenzie unit forecasts, making it the only nation across the Asia-Pacific region where that's the case.

More broadly, the unsubsidized LCOE for a utility-scale solar-plus-storage system with four hours of power storage capacity in the Asia-Pacific region will drop from a premium of between 39-121% in 2023 from 48-123% today, according to the power and energy market research specialist.

Wide variations across the region

Distributed, commercial and industrial (C&I) solar-plus-storage LCOE premiums in the Asia-Pacific will decline, as well, dropping to between 47-167% in 2023 from between 56-204% today. Wood Mackenzie expects unsubsidized C&I solar-plus-storage will be cost-competitive with natural-gas peakers in Australia, India and the Philippines by 2023.

Those are very wide ranges. That's "because we have some mature markets where solar cost is extremely competitive, while others are not and some in-between," explained research analyst Rishab Shrestha. "This is due to a mix of labor/ land/ environment/ civil costs, weighted average cost of capital, and procurement methods (tenders vs feed-in tariffs (FIT)). Also, some markets have very well established supply chains with the availability of storage manufacturing."

"In general, we expect the average solar-plus-storage LCOE in Asia Pacific to decrease 23% from US$133/megawatt hour (MWh) this year to US$101/MWh in 2023," said research analyst Rishab Shrestha.

"The residential market also poses a great opportunity for solar-plus-storage," said senior analyst Le Xu, "In 2018 with the help of government subsidies, Australia's New South Wales saw a 76% savings on annual electric bills through solar-plus-storage installations."

Japan is another attractive residential solar-plus-storage market in the region. An FiT for 600-MWs' worth of solar projects are due to expire this year and power prices poised to rise. That opens up an opportunity for homeowners to save on energy costs long-term, according to Wood Mackenzie.

In need of a helping hand from government

Capex (capital expenditure) subsidies and other forms of monetary remuneration, e.g. different types of renewable energy certificates (RECs), will be crucial in order for projects to advance, according to the Wood Mackenzie unit.

"Storage is still at its infancy in market development. The market will need to fairly compensate the value storage provides in order for storage paired renewables to take off. There is also enough leg room for pure solar to be added to the grid, although the extent varies from region to region," the research group points out.

Furthermore, business models need to be refined according to market design and future policy options. Safety and fire hazards need to be examined and addressed thoroughly as well. "Once these challenges are addressed solar-plus-storage will be a great asset for the power grid," according to the research group.