Part I: Texas assumes a leading role in defining the value of storage
This first of four posts examining energy storage in Texas provides an introduction to storage technologies and describes the numerous utility-scale battery technologies currently operating in the state. The storage of electric energy is often called the “holy grail” of the future electric grid. While Massachusetts, California and Oregon have led in storage development through mandates and financial incentives, Texas is assuming a lead role in the nation through its innovative application of storage that further defines the vital role storage can play in enhancing grid reliability and lowering rates.
The combination of geology, climate, regulated and unregulated electric utilities, an independent system operator (ERCOT), Federal tax incentives that encourage intermittent wind and solar generation, and importantly, a business-friendly environment makes Texas an ideal test bed for storage technology. The diverse range of storage applications —now operating, and those in the pipeline — are defining how, when, and where storage will thrive in the future Texas market.
Storage Basics
Storage is not achieved through just a single technology. Different mechanisms include flywheels; compressed air energy, thermal, and pumped hydro storage; supercapacitors; and batteries, including solid state and flow batteries. All of these technologies except pumped hydro are active in Texas as either a research and demonstration project, a behind-the-meter end-user resource not connected to the grid, a resource to improve generator efficiency, or an active or planned third-party owned system connected to a utility distribution or transmission system. Including storage in the Texas market structure has been difficult because storage can function as both generation and load and can serve multiple functions. The language of the age-old electric market structure with clear separation of generation, transmission, distribution, and end-use does not comfortably accommodate the storage asset. Add to this ambiguity a diverse market structure and the complexity grows.
A structure that fits storage into Texas’s both restructured and vertically integrated market is now in place save for one major issue: The establishment of conditions under which regulated “wires” companies can own and operate storage and include the cost of the investment in the rate base. This issue is now squarely in front of the Texas Public Utility Commission (PUC). Under current rules, storage projects 10 MW or greater that are connected to the ERCOT grid require an Interconnection Agreement (IA) as specified in a standard protocol set up by ERCOT. Co-ops and municipally owned utilities (MUNIs) are exempt from the ERCOT IA requirement but must follow a separate PUC rule for distributed generation resources (DER). All projects smaller than 10 MW, if connected to a utility grid, need an IA between the utility and the storage provider.
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