Dive Brief:
- As the grid operator for most of Texas warns of a high-demand summer that could strain electricity supply, a new analysis finds that the state is one of the country's top markets for new energy storage development.
- An S&P Global Market Intelligence analysis finds that Texas could have as much as 1,400 MW of battery storage available by September of this year, eight times more than was online the year before.
- That storage capacity could help improve reliability ahead of a summer with unusually high demand. Already, ERCOT asked residents to conserve electricity this week during a heat wave because of tight grid conditions.
Dive Insight:
The challenges of the Texas grid were on display in February when a winter storm led to the loss of almost half of ERCOT's generation, leaving millions without power for days. In May, the North American Electric Reliability Corp. (NERC) warned that Texas faces an "elevated risk" of energy emergencies this summer due to high heat or potential long periods of low wind production. Although ERCOT itself said that it expects to have sufficient generation to meet peak loads, it did outline three "extreme" scenarios that could lead to blackouts, including extended hot weather that spikes demand, thermal generator outages or a shortage in generation from wind and solar.
The grid operator is expecting record-breaking demand this summer, but ERCOT had a 15.7% reserve margin, slightly below preferred levels, at the beginning of the summer.
Although the grid set a June record for electricity demand on Monday with 69,943 MW, ERCOT says the reliability of the grid remains strong.
"One of the pretty clear lessons learned from Texas' power challenges this year is that renewable power is outperforming other forms of generation when the grid is under stress," said Gregory Wetstone, president and CEO of the American Council on Renewable Energy.
According to S&P, there are nearly a dozen storage projects ranging from 50 MW to larger than 200 MW scheduled to start up this summer, headlined by the 203 MW Crossett Power Battery Storage system in Crane County. ERCOT expects that battery storage on the system could rise from 225 MW at the end of 2020 to 1,771 MW at the end of 2021 and 3,008 MW in 2022. Developers have announced large-scale projects expected to come online in 2022, like a pair of 100 MW battery storage facilities announced by Wärtsilä Energy a month after the February cold snap.
North Carolina-based FlexGen is one of the largest storage installers in the state, claiming to be responsible for more than three-quarters of the storage there by megawatts. Yann Brandt, FlexGen Chief Financial Officer, said ERCOT's market is attractive for developers looking to engage in energy arbitrage, but value of storage as an ancillary resource has risen as Texas faces more extreme weather events.
"It's a unique situation where you're able to maximize revenue when the market needs it because you're providing a valuable service," Brandt said. "I hope grid operators and planners start viewing energy storage as part of the planning process and not try to plug it into a generation-first power market."
ERCOT has taken steps to boost storage installations as solar and wind installations have increased in recent years. Speaking at an industry conference this month, ERCOT interim president and CEO Brad Jones said the operator wants to see as much battery storage as possible "that will provide us the opportunity to really balance out the variable generation that we receive from our solar, and our wind, generation," the S&P analysis reports.
ACORE's Wetstone said that ERCOT could look to neighboring regions, like the Southwest Power Pool, for guidance on how to transition to renewables without losing reliability, a strategy that includes "commonsense energy storage and transmission solutions."
"With more energy storage and more high-voltage transmission to better connect regional electricity markets, we can take full advantage of Texas' renewable resources as part of the ongoing clean energy transition," Wetstone said.
