Potomac Economics, the Independent Market Monitor (IMM) for the ERCOT market, released its “2017 State of the Market Report for the ERCOT Electricity Markets,” which contains several important insights for market participants and offered seven recommendations for market improvements.

First, the IMM found that energy prices increased 14.7% over 2016, to $28.25 per MWh. This price is still significantly less than 2011’s average annual price of $52.23 per MWh and even 2014’s average annual price of $40.64 per MWh. The 2017 price increase correlates with a 22% increase in the cost of natural gas, the most widely-used fuel in ERCOT, as fuel costs represent the majority of most suppliers’ marginal production costs.  The IMM also found price convergence to be very good in 2017, with the day-ahead and real-time prices both averaging $26 per MWh.  However, the absolute difference between day-ahead and real-time prices still increased from $7.44 per MWh in 2016 to $8.60 per MWh in 2017.

Average demand also increased, rising 1.9% from 2016, with demand in the West Zone seeing the largest average load increase at 8.3% (possibly due to oil and natural gas production activity in that zone). Despite this increase in average demand, peak demand in ERCOT reached 69,512 MW on July 28, 2017, which is lower than the ERCOT-wide coincident peak hourly demand record of 71,100 MW, set on August 11, 2016.  Even with general price and demand increases, market conditions were rarely tight as real-time prices didn’t exceed $3,000 per MWh and exceeded $1,000 per MWh for just 3.5 hours in all of 2017.

Congestion Costs Skyrocket

Surprisingly, the IMM found congestion in the ERCOT real-time market increased considerably, contributing significantly to price increases in 2017 with total congestion costs equaling $967 million – a 95% increase from 2016.  The IMM stated that this increase is due to three main factors: (1) limitations on export capacity from the Panhandle; (2) planned outages associated with the construction of the Houston Import Project; and (3) the aftermath of Hurricane Harvey.

While congestion was more frequent in 2017 than in 2016, congestion on the North to Houston constraint declined after June due to the completion of a new 1,200 MW combined cycle generator located in Houston. The completion of the Houston Import Project in 2018 should reduce congestion in this area even further.

Flexible demand requires robust market design

As California’s investor utilities draw closer to meeting their mandated energy storage targets, work is already underway to up the ante.

One effort involves legislation that calls for an additional 2,000 MW of energy storage in the state. Existing mandates call for California utilities to procure nearly 1,900 MW of energy storage.

Earlier this month, the California Public Utilities Commission approved a proposal by San Diego Gas & Electric (SDG&E) for five new energy storage projects totaling 83.5 MW.

Adding those projects to the utility’s energy storage portfolio “virtually fulfills SDG&E’s energy storage procurement requirement under AB 2514,” spokesman Wes Jones told Utility Dive via email.

California established the first energy storage target in the nation in 2010 with the passage of AB 2514, which established a target of 1,325 MW of energy storage by 2020 for the state’s three investor-owned utilities (IOUs). The state added a new target in 2016 with passage of AB 2868, which calls for 500 MW of behind-the-meter storage, or 166.6 MW for each IOU.

Technology transfer

In the past week, developer RES Group has just got a front-of-meter battery project underway for a utility company in northern Germany, while storage system provider Tesvolt has just signed a deal with another utility in the European country to distribute energy storage behind-the-meter for commercial customers.

The award of RES Deutschland’s 10MW project was announced following a competitive solicitation process from energy supplier Versorgungsbetriebe Bordesholm (VBB) in January. The project in the Schleswig-Holstein municipality of Bordesholm is funded by the EU and supported by the local state. One of the main aims of the system’s deployment is to provide backup to the local grid in the event of power outages.

At the time of the project’s award, RES Group said it will be “demanding” from a technical perspective to provide a closed network infrastructure, as well as the need to add features including synchronous coupling switches and a fibre-optic comms network. The system also joins Germany’s primary control power market. Traditionally and most commonly provided by gas turbines, the grid’s frequency is stabilised by matching generation and consumption on a network within seconds of a signal being received from the grid.

RES announced that a ground-breaking ceremony was held for the Bordesholm battery last Monday, attended by RES Deutschland and VBB executives. Funded as a pilot project by the European Union in supporting continental aims for decarbonisation, VBB hopes the system will help it reach 100% renewables by 2020 – its share is currently already at 75%.

At the beginning of this year, a report from Germany Trade and Invest (GTAI), effectively one of the country’s business development agencies, said around 1,250MW of primary control power was being traded in the coupled markets of Belgium, Germany, Austria, the Netherlands, France and Switzerland out of around 3,000MW in total in Europe. About 144MW of that was being provided in Germany by batteries – mostly lithium-ion – by the end of 2017. Since then, Energy-Storage.news has reported on numerous primary control projects going online in Germany including Enel’s first project in the country and one from Bosch at the site of a coal plant, created in a JV with German utility company EnBW.

The world needs radical new energy technologies to fight climate change. In 2016, Quartz reported that a group of billionaires—including Bill Gates, Jeff Bezos, Jack Ma, Mukesh Ambani, and Richard Branson—launched Breakthrough Energy Ventures (BEV) to invest at least $1 billion in creating those technologies.

Now, 18 months later, Quartz can reveal the first two startups that BEV will be investing in: Form Energy and Quidnet Energy. Both companies are developing new technologies to store energy, but taking completely different approaches to achieve that goal.

Why it matters

The way to reach the world’s climate goals is straightforward: reduce our greenhouse-gas emissions to zero within the next few decades. But the energy technologies that can help us get there tend to need lots of money and long lead times to develop. That’s why many conventional investors, who are looking for quicker returns, have burned their fingers investing in clean tech.

The wealthy investors of BEV want to remedy that. Their $1 billion fund is “patient capital,” to be invested in only companies working on technologies capable of cutting global carbon emissions by at least 500 million metric tons annually, even if they may not provide returns on investment for up to 20 years.

That’s why many of the experts Quartz spoke to have been eager to find out what startups BEV backs. The choices BEV makes will likely shape how others think about energy innovation.

The missing piece

BEV’s first task was to assemble a group of experts, including academics, entrepreneurs, and industry specialists. In 2017, these experts announced a list of energy technologies they believe were both underfunded and extremely promising in emissions reduction: grid-scale energy storage, zero-carbon liquid fuels, micro grids, low-carbon building materials, and geothermal energy.

Quartz saw financial documents indicating BEV’s investment in two energy-storage startups. A BEV spokesperson confirmed the investments and said the company is actively looking to invest in other companies.

Energy storage can overcome the biggest limitation of modern renewable power: Solar panels and wind turbines can only generate energy when the sun is out or the wind is blowing. With better storage technology, that zero-carbon energy could be stored for cloudy or windless days.

A group of solar and energy storage companies, some international in scope, have joined forces to advocate for Puerto Rico as it rebuilds its electric grid.

New Energy, Pura Energía, SRInergy, Windmar, Sunrun, Tabuchi and Sonnen are among the founding members of the Solar and Energy Storage Association of Puerto Rico (SESA-PR).

“I was born and raised in Puerto Rico. Our electric grid was broken when I was growing up and is obviously in even worse condition today,” said Alejandro Uriarte, director of SESA-PR and managing partner at New Energy Consultants. “Rebuilding after the hurricanes provides our island with a unique opportunity to upgrade our grid using better, more reliable technology like solar and battery storage that can make Puerto Rico an energy leader in the United States and across the world.”

The industry group is forming as Puerto Rico struggles to modernize its electric system following its total collapse from Hurricane Maria in September. A recent Harvard study estimated that the hurricane resulted in more than 4,000 deaths on the island, many during the weeks and months afterward when healthcare facilities still lacked electricity.

Puerto Rico also labors under power costs that are the second highest in the nation, a burden that SESA-PR attributes to the grid’s instability and reliance on fossil fuels.

Since the storm, several companies, aid groups and federal workers have been trying to quickly install microgrids and nanogrids to ensure electric service, especially for critical services or remote areas where grid repair is difficult.

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When Vaclav Smil writes about energy, the world pays attention. “I wait for new Smil books the way some people wait for the next Star Wars movie,” Bill Gates once tweeted.

Smil is a professor at the University of Manitoba, and one of his key arguments is that the world is unlikely to transition away from fossil fuels fast enough to avoid catastrophic climate change. His observation is based on previous energy transitions, such as from wood to coal and from coal to oil, which moved very slowly.

But Smil says one technology could change the prevailing trends: energy storage. “Give me mass-scale storage and I don’t worry at all. With my wind and [solar] photovoltaics I can take care of everything,” he told Science. “But we are nowhere close to it.”

Better energy storage could overcome the biggest limitation of renewable power: Instead of using it only when the sun is out or the wind is blowing, electricity generated by renewable sources could be held for when it is most needed.

Mass-scale energy storage already exists, but there is only one mature technology: pumped hydro storage. When there is excess power on the grid, this technology is used to pump water to a dam. When the grid needs more power, the stored water is used to run turbines to generate it.

Other technologies feature electrochemical storage in the form of batteries, electro-mechanical storage in the form of compressed air or flywheels, and thermal storage in the form of hot or cold materials in insulated chambers. These comprise a tiny share of overall energy-storage capacity, according to a new report by policy group REN21.