Large scale batteries are the hottest fashion in the energy industry and will be essential for the transition to higher renewable energy penetration.

Where else do you see a CAGR of 22% during the forecast period of 2019 – 2027? This is the estimated CAGR of the world wide Grid Scale battery market. (Source: PR Newswire https://www.prnewswire.com/news-releases/grid-scale-battery-market-set-to-rise-at-a-cagr-of-22-during-2019-2027-301018949.html)

The market for large scale batteries can be split into 3 segments:

1. Behind the meter batteries for C&I customers
2. Behind the meter batteries for renewable generation projects
3. Battery systems for grids (in from of the meter

1) Behind the meter systems at C&I customers are for local use only. They mainly serve the purpose of peak shaving and reduction of capacity charges (see my report from Jan. 2020), yet also deliver ancillary services or voltage stabilization. These systems are built and operated by large industrial clients, which are able to handle procurement and operation. The most current additions are those by Royal Dutch Shell New Energies in Canada and the Philippines. (https://www.pv-magazine.com/2019/10/11/shell-to-power-philippines-refinery-with-solar-storage-and-natural-gas/)

2) The biggest driver today are renewable power plus battery systems, mainly PV + battery. The most impressive current project is the 400m MW solar Eland project in Kern County, CA. Eland was developed by 8minute Solar Energy and recently sold to Investment firm Capital Dynamics (https://www.greentechmedia.com/articles/read/capital-dynamics-buys-eland-solar-from-8minute-energy)

The project incorporates a 300 MW/1.200 MWh battery system which will lift its capacity factor to 60%. 8minute energy offered energy at a rate of less than 40 $/MWh for a 25 year contract. https://www.greentechmedia.com/articles/read/massive-solar-battery-plant-wins-approval-in-l-a-overcoming-union-concerns

Batteries allow solar projects to shift its power sale from the radiation peak to the demand peak, which is usually occurring later in the day, and even into the evening hours after sunset. This allows the operators to capture higher rates and allows utilities to serve loads after dark with renewable power instead of gas fired generation.

Operation and regulation of such systems is rather straight forward in most jurisdictions, as the owner of the PV plant also is the owner of the power in the battery system, allowing for simple regulation and operation.

3) The issue becomes more complex with batteries in front of the meter, e.g. to support weak spots in distribution grids in order to reduce investment for improving grids or to secure supply in areas where overhead grid lines can be damaged.

Falling battery prices have made such investments attractive, and returns are high with increasing demand for voltage and frequency regulation, peak shaving and power arbitrage.

All this has raised interest by utilities and grid operators, who are itching to get into the market. In integrated markets, like California, this is no issue, so utilities like SDG&E of San Diego have already invested heavily on batteries and have plans for expansion. However, even in integrated and regulated markets, utilities are not free to invest in batteries.

In Arizona, utilities have to tender these services and buy from 3^rd parties.

And even in California, California Public Utility Commission CPUC is forcing utilities to open the market to 3^rd parties, like LS Power. https://www.greentechmedia.com/articles/read/san-diego-gas-electric-faces-challenge-to-microgrid-rollout

In deregulated markets, there usually is no role for grid operators and utilities in owning batteries.

In deregulated and unbundled markets, power can only be sold into the system by generators and ESCOs. Utilities and grid operators need to buy power and ancillary services from generators, may they operate power plants or batteries.

Unfortunately, several states yet have to adopt the legislation for this, with Texas being the biggest market to have not yet laid down rules and regulations for grid scale batteries. https://www.houstonchronicle.com/business/article/How-will-batteries-plug-into-Texas-power-grid-15031826.php, while California has stalled its development due to the pending decision on the LS Power case. 

This means, grid scale battery projects to support the stability of the grid and to shift power from peak generation times to peak demand times, thus lowering cost for consumers in the sunny States have been stalled, stopping the investment of several millions of dollars and keeping rates unnecessary high.

For the sake of the industry and the consumers, we need political solutions, ideally before the next legislative break.