1.5 cents per kilowatt-hour. That’s how much NextEra Chief Financial Officer (CFO) Jim Ketchum estimates that batteries have added to the cost of solar and wind projects that the company has built over the last six to 12 months, as revealed in the company’s second quarter results call yesterday.

But that’s not all. Ketchum further added that he expects this cost to fall to around half a cent per kilowatt-hour in the middle of the next decade.

Early in the next decade, mid-next decade, it’s going to probably be about $0.005 a kilowatt hour add, maybe $0.01, but probably closer to about $0.005. And so if we find ourselves in a marketplace where we are selling wind right around $0.02, I mean, a combined wind and solar product probably looks roughly around $0.025. Solar, into the next decade, probably looks more like a $0.03 product, sub-$0.03 in some markets. You add half a penny on that on the high end, you’re probably at about $0.035 a kilowatt hour.

NextEra CEO Jim Robo added to this, noting that batteries are allowing the company to provide “firm” power. “We’re right at the beginning of, I think, a real revolution in this country in terms of how electricity is – how storage interacts with electricity on the grid, and how we’re going to start delivering much different, firm, renewable products to our customers going forward,” stated Robo on the results call.

CFO Ketchum elaborated on that statement, noting that the economics of wind and solar are going to allow these resources to out-compete existing conventional power plants – and potentially knock them off the grid.

As battery cost declines and efficiency gains are realized during the four-year start of construction period, we continue to expect that in the next decade new nearly firm wind and solar, without incentives, will be cheaper than the operating costs of traditional inefficient generation resources, creating significant opportunities for new renewables growth going forward.

7.4 GW backlog

These confident statements about the costs and abilities of solar and wind plus storage come as the company has reached a record backlog of 7.4 GW of solar, wind and energy storage projects.

This includes nearly 2 GW of solar projects that the company has contracted to put online through 2020. During the quarter NextEra added 692 MW of solar projects and 90 MW of battery storage to its backlog.

The large majority of this, at 1.48 GW of solar and 75 MW of battery storage, is planned for the 2019-2020 timeframe, however NextEra is also planning projects after 2020, and notes that the new IRS guidelines on the beginning of construction allow the company to claim the full 30% Investment Tax Credit for projects that it puts online as late as 2023, as long as they have started construction in 2019.

It’s not on the economics of solar plus storage that are improving, but this is being validated in financial markets. NextEra reports that during the quarter it secured project finance for its first solar plus storage program.

The company additionally noted that IRS guidelines for energy storage have provided the clarity that it can claim the ITC for the battery portion of paired solar plus storage projects, and the 300 MW of post-2020 solar projects that the company has added to its backlog includes 75 MW of paired energy storage.