A federal appeals court has cleared the way for large-scale energy storage projects to have similar access to the power grid as electric generators do. State regulators had brought the case to limit FERC’s regulation of interstate electricity markets. The court (again) ruled in favor of FERC’s authority. The July decision is a big win for independent, merchant battery companies and renewable energy proponents, and a blow to entrenched legacy generators that have worked to stall independent battery stations by complaining that these are not generation facilities and cannot perform the same way as a legacy generation station on the grid. In particular, they were concerned that their own electricity would be used against them—bought low and sold high the next day while depressing prices. The legacy plants would lose both ways! But that’s nonsense.
Advanced battery technologies and decreasing battery costs have encouraged the development of utility-scale (really big) electricity storage stations on the grid. Tesla TSLA and AES Energy Storage have led the way with two such batteries. These address the greatest handicap wind and solar energy have in their push to eliminate fossil fuels from the generation market: intermittency. Batteries will also solve a second limitation of wind and solar energy, that peak renewable energy production is not always coincident with peak demand. Electricity demand varies over a day and over a season. It is this peak-and-trough wave that energy planners want to address with electricity storage facilities.
Today, most markets require electricity generation fleets sized to meet demand on the hottest day in August or coldest day in winter. Using the Electricity Reliability Council of Texas, ERCOT, market as an example, peak demand is forecast to reach 75,000 megawatt hours (mWh) in August 2020. ERCOT is charged with making sure that there are sufficient supplies. However, the average electricity demand in ERCOT throughout the year is approximately 45,000 mWh. Battery storage would help reduce the need for a portion of the generation fleet and hasten the retirement of older high-cost generators.
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