Solar + Storage vs. Hydropower for Québec’s Winter Peak: An Estimate

Can solar + batteries help reduce winter peak electricity demand in Québec?

This initial analysis suggests that solar + 4-hour storage is 1/3 cheaper than hydropower + transmission per MW of peak capacity. While hydro remains critical for seasonal storage, solar + storage can optimize its use, reduce peak-hour dispatch, and provide ancillary grid services.

Cost per effective winter peak MW: $3.75M (Solar + Storage) vs. $7.10M (Hydro + Transmission).
O&M Costs: Solar + Storage: $20k/MW/year; Hydro: $75k/MW/year.
50-Year Lifetime Cost per MW: $7.25M (Solar) vs. $10.85M (Hydro).

I was taken aback by the initial evaluation’s suggestion that solar panels and batteries could be a cost-effective solution for winter peak shaving. However, a more in-depth analysis is necessary.

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Introduction

Québec’s electricity system is largely designed to meet winter peak demand, driven by electric heating during cold spells. The province’s hydropower reservoirs provide long-term seasonal energy storage, but can solar power, paired with batteries, help shave daily winter peaks cost effectively? This article provides an initial comparison of utility-scale solar with 4-hour LFP battery storage and hydropower with long-distance transmission, focusing on cost per effective MW available during peak hours in winter.

1. The Correlation Between Cold Temperatures and Solar Irradiance

A key concern with solar in winter is low irradiance due to shorter days and the sun’s lower angle. However, there is a notable correlation between clear skies and cold temperatures in Québec.

Cold air masses are often associated with high-pressure systems, which bring clear skies and maximize solar output.
Solar panels operate more efficiently in cold weather, improving performance.
During the coldest winter peaks, solar generation is often strong, and reverberation from snow cover can further increase the solar irradiance reaching the panels.
The equivalent of 2–3 hours of solar generation can be expected during a short winter day, justifying the need for 1.5 MW of solar per 1 MW/4 MWh of battery storage to ensure full battery charging each day.

However, winter solar cannot replace baseload generation, as overall production is still much lower than in summer. Instead, its best winter role is to provide peak shaving during cold spells when paired with batteries, while minimizing water withdrawals from the reservoirs throughout the year.

2. Cost Per MW for Winter Peak Demand

To ensure a fair comparison, we examine the cost per MW of actual peak power availability in winter, rather than installed capacity alone.

Notes on cost derivation:

Solar costs are based on Canadian utility-scale photovoltaic system pricing, with cost reductions expected over time.
Battery costs are derived from National Renewable Energy Laboratory (NREL) projections for LFP battery systems with a 4-hour duration.
The batteries do not necessarily need to be collocated with the solar plants. They can be placed in locations where they offer the most significant advantages, such as on Montréal’s island near large loads.
Hydropower costs are based on reported capital expenditures for projects such as La Romaine and Gull Island.
Transmission costs follow reported 735 kV line costs from projects such as Chamouchouane–Bout-de-l’Île and Churchill Falls expansions.

Cold days typically yield good solar power, but there are cloudy cold days with less solar generation. On such days, hydropower can supplement solar to charge batteries between morning and evening peaks. Conversely, during warmer periods, excess solar generation can reduce water withdrawals. Solar and hydropower complement each other.

This comparison provides median cost estimates; actual project costs will depend on site-specific factors, regulatory considerations, and technology advancements. Specific references for further reading are included at the end.

3. Operating & Maintenance (O&M) Costs

Key Takeaways:

Solar + storage has lower maintenance costs, as batteries and panels require minimal servicing.
Hydropower has higher O&M due to dam maintenance, turbine upkeep, and transmission maintenance.

4. Expected Lifespan

5. Long-Term Cost Comparison Over 50 Years

Since hydropower lasts longer, let’s normalize total costs over 50 years for a fairer comparison.

Key Takeaways:

Even when including a full replacement at Year 25, solar + storage remains ~33% cheaper than hydropower.
Hydropower provides superior long-term reliability, but at a higher total cost.

These cost estimates do not include financing costs, net present value of future expenditures, or potential future cost reductions for solar and battery technologies. Future projects could have different cost structures due to technological advancements and changing economic conditions.

6. Conclusion

Solar + 4-hour storage is a cost-effective way to reduce hydro dispatch during peak hours.
It is nearly 50% cheaper per MW of peak capacity than hydropower with transmission.
While hydropower remains essential for seasonal energy storage, solar + storage can optimize its use.
Batteries provide additional ancillary services, further improving financial viability.
Future cost trends and project-specific conditions could change these results.

7. References & Further Reading

Final Note: More Analysis is Needed

This is a basic analysis that does not take into account all factors, including:

Capacity factor variations due to weather patterns.
Future energy price projections, especially if a different market structure comes to exist.
Potential regulatory incentives, such as if carbon credits could apply.

Before making investment decisions, a detailed feasibility study would be required.

Shortlink: https://benoit.marcoux.ca/blog/solar-storage-vs-hydropower-for-quebecs-winter-peak-an-estimate/