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Renewables and energy storage - the way forward for ERCOT?
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The installation of new renewable generation across the country is not slowing down. Texas is not an exception here, despite the uncertainty of the scope and direction of the reforms planned by the Texas Senate and ERCOT in response to the weather driven difficulties of balancing the grid network.
The recent data[1] on the solar market shows that 5GWdc of solar capacity was installed in the US in Q1 2021 a record 46% increase over the first quarter of 2020, with Texas installing nearly three-times as much solar as any other US state during the first three months of this year. The Lone Star State is also home to the highest level of installed wind power capacity in the US, having grown from 9.4GW in 2011 to 27.9GW at the end of 2020[2].
All of this has been combined with a significant increase in the deployment of new energy storage projects. ERCOT has recently confirmed it has approximately 250MW[3] of operational energy storage at its disposal, and this is expected to rise to 1GW this summer. Furthermore, there is also 2.7GW still waiting to be connected to the network.
There is a significant number of opportunities and projects in the pipeline in Texas and this represents a very strong energy storage queue that ERCOT will need to decide how best to manage going forward. GridBeyond’s experience in managing batteries and hybridizing them with load assets in the UK and Ireland; two of the most advanced and digitalized energy markets, tells us that energy storage on the network, whether it is on a utility/transmission level or behind-the-meter, can deliver significant benefits to all market participants.
As the proportion of renewable electricity increases in the energy mix, so does the need for battery storage, to manage the intermittency of renewable generation. In addition to providing arbitrage and dispatching additional capacity, batteries play a crucial part in balancing the frequency of the grid and maintaining its integrity on a second and sub-second basis through participation in ancillary services. Renewable generation and energy storage go hand-in-hand, whether they are co-located or not, and Texas is no different in this regard to any other market, especially considering the high volumes of wind and solar generation that are coming onto the grid in the ERCOT.
Battery storage should be seen as a part of a solution that improves system flexibility and provides greater resilience against extreme weather conditions. It supports grid operators with maintaining network balance, and empowers energy consumers to be more efficient, while helping them to manage price volatility, as we have seen in the market for a while now, and protect their bottom lines.
Greater deployment of battery storage should be considered alongside other measures already announced by the ERCOT, such as winterization of the generation assets. The energy network is a very complex mechanism with numerous moving parts and there is no single type of asset or element that can independently propel the Grid through its transition. It is more about looking at the system as a whole - a combination of various generation assets, both on industrial and community levels, powered by gas and renewables, and energy storage units, including not only large scale industrial batteries but also those that sit behind-the-meter, and those that are used to develop charging infrastructure for the growing number of EVs.
Greater diversification and decentralisation of assets are parts of the solution to improve grid reliability, both on the network level and for individual energy consumer, especially those who operate in critical power sectors. In this context, batteries are often seen as ‘ultimate diversifiers’ as they can be deployed to improve resilience at any level, whether it be on a customer or generation site, or at the distribution or transmission levels.
At the moment, the opportunity for energy storage in Texas is dominated by large, utility scale deployments. To improve the integration of batteries into the network, the market needs to find a way to integrate smaller, distributed energy storage assets effectively into both the energy and ancillary services markets.
[1] US Solar Market Insight by the Solar Energy Industries Association and Wood Mackenzie, https://www.woodmac.com/research/products/power-and-renewables/
[2] Global Energy after the U.S. Energy Information Administration, https://www.energyglobal.com/wind/24062021/eia-most-new-us-wind-capacity-built-in-central-regions/
[3] https://www.energy-storage.news/news/recognising-market-value-of-energy-storage-is-key-priority-for-some-us-grid
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