Texas’ grid and the idiosyncrasies of its electricity planning system regime made global headlines in February following a harsh winter storm and subsequent blackouts that affected millions of people and businesses for almost an entire week.
The tragic events, which left an estimated 30 people dead, were followed quickly by initial, predictable, depressing knee-jerk reactionary blaming of renewable energy by politicians and media outlets alike. In reality wind and solar both performed above grid planners’ expectations in the state while thermal generation sources not only underperformed, but still — despite a wave of propaganda — comprise the vast majority of the generation mix in the Lone Star State.
This wave of disinformation around the polar vortex events is still ongoing. The truth of the situation is not difficult to find, but requires already tired and weary people to go looking for it, and in many cases to put a particular bias or accepted way of thinking to one side.
“The challenges are not due to the energy transition; they are due to an outdated grid that’s incapable of handling an increasing number of climate-driven extreme weather events,” Gregory Wetstone, CEO and president of the American Council on Renewable Energy (ACORE), said in a statement sent to media outlets including Energy-Storage.news during the storm’s events.
“Data from the Electric Reliability Council of Texas (ERCOT), which manages the electricity grid in Texas, shows that fossil fuels make up the bulk of the power currently forced offline.”
Wetstone said that the events reinforced the importance of critical investment in America’s infrastructure, pointing out that while Texas’ isolated grid suffered massive load-shedding events, elsewhere, the Midwest US’ MISO grid did not, largely due to just 7GW of electricity being shared with the East’s PJM grid.
Where does energy storage fit into the Texas story?
Texas’ ERCOT market has grown very quickly in the past year or two as a destination for energy storage providers to deploy grid-scale battery storage that performs short-duration ancillary services applications, but it still remains a fairly minor concern in terms of overall contribution to the energy system. As Sam Huntington, associate director at the gas, power and energy futures team at research company IHS Markit explains, the market is an “energy only, no capacity payments” design, which “leads to some unique business models”.
Without long-term capacity contracts, which are vital to securing financing in most other regions, everything is entirely merchant in ERCOT, which makes it a risky market to play in. But without duration requirements for batteries, a lot of shorter duration one to two-hour batteries are being deployed. These are not only cheaper than four-hour batteries, but the arbitrage margins on shorter duration “aren’t much worse than a four-hour battery,” he says. Despite the extra risk therefore, lower costs and high revenues make the economics “pretty compelling”.
So it may be a unique market with unique characteristics, but what wider role can batteries — and other energy storage technologies — play in assisting the grid to remain stable and prevent a situation like this from happening again? And what lessons could other regions learn from it?
“Energy storage is being deployed in ERCOT on a pure merchant basis, which is a sign that some market participants see the economics working—although most projects installed to date have been for ancillary services,” Jason Burwen, Interim CEO of the national Energy Storage Association says.
“Most storage capacity of multiple-hours’ duration deployed in the U.S. in recent years have come via long-term contracts with regulated utilities, which reduces risk and increases finance-ability of projects. Recent storage bids clearing capacity auctions is a harbinger of things to come in Eastern markets as well. The fundamental question is, will there be an effective price signal to value and compensate storage for its contribution to reliability?”
It’s a doubly pertinent question when one of the few valid points raised about renewables in Texas was that around 4GW of wind turbines that had not been weatherised to deal with the cold stopped working. This pales in comparison to more than 20GW of fossil fuel and nuclear generators which hadn’t been weatherised either. If Texas’ power companies were not going to pay the extra money for a resilient system then, despite warnings being sounded following a similar cold snap in 2011, the value of storage as resiliency may prove a similarly hard sell.
Grid-scale energy storage systems already out in the field meanwhile continued to operate as planned throughout the storms, Alan Grosse, chief operating officer of FlexGen, a system integrator and one of the largest installers of battery storage in Texas, tells Energy-Storage.news.
Grosse says that while it wouldn’t be appropriate to comment on specific customer sites, “each of our commissioned battery storage sites has performed well for our respective Texas customers. These sites were dispatched in support of this storm, and we have seen over 99% uptime.”
Read more: Energy Storage News