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.

Wholesale Grid Services Projects

There are nine utility-scale battery electric storage systems (BESS) operating currently in Texas, but only two are connected to the ERCOT transmission grid and required to maintain a Standard Interconnection Agreement (IA) defined by ERCOT.

The largest utility-scale battery in the United States is the Notrees Battery Storage Project operated by Duke Energy at Goldsmith, Texas. The 36 MW battery system was originally a lead-acid technology but was converted to a Samsung SDI lithium-ion technology in 2016. The battery system demonstrates how storage helps mitigate the intermittency of variable power by optimizing the joint delivery of energy from the battery and the 153 MW Notrees wind farm while also providing a major source of fast-response power for regulation service by participating in ERCOT’s fast-responding regulation service market (FRRS). ERCOT must maintain a fast response capability to keep the grid at or very near 60 Hz frequency. As wind farm capacity has grown as a share of total grid generation capacity, the need for regulation capacity has increased.

The first utility-scale battery operational in Texas is a sodium-sulfur (NAS) energy storage system technology operated by a joint venture between subsidiaries of Electric Transmission Texas and American Electric Power in Presidio, Texas to provide backup power to the town of Presidio. The 4 MW unit was commissioned in 2010. Due to its quick response, the battery addresses voltage fluctuations and momentary outages. It allows for a transfer of electricity sourcing from the Texas grid to that of neighboring Comisiόn Federal de Electricidad  in Mexico during emergency situations. This project received special attention at the PUC regarding the policy issues around the ability of investor-owned transmission and distribution entities to own batteries. .

Another significant utility-scale battery operating in Texas is a 1.0 MW/1.0 MWh Samsung SDI/Younicos battery electric system developed as a part of a $27M American Recovery and Reinvestment Act (ARRA) project by the Center for the Commercialization of Electric Technologies. The system was commissioned in 2013 and is now owned and operated by South Plains Electric Cooperative (SPEC) in Lubbock, Texas at the Reese Technology Center.  SPEC is a distribution-only utility in the Southwest Power Pool (SPP), the independent system operator for the Texas Panhandle area north of Lubbock. The battery provides a number of services including reduction of SPEC’s summer peak and associated demand charges under an all-requirements contract for generation from Golden Spread Electric Cooperative. During the ARRA project period ending in, 2015 the battery system demonstrated the ability to mitigate intermittent fluctuations of a number of nearby wind turbines by regulating the distribution bus voltage, serving as spinning reserve, and providing frequency support during the loss of generation. The battery is not required to follow ERCOT’s IA protocols since it is in SPP’s footprint and is owned and operated by a Texas cooperative on its own distribution system.

Part 2 of this examination of the Texas energy storage market focuses on microgrid and community storage applications.

About the Author

Dr. Milton L. Holloway is founder of Resource Economics, Inc., an applied-economics consulting firm located in Austin, Texas that specializes in analyses of clients’ problems that help resolve issues and improve decision-making. The firm’s experience, expertise, contact information and related material is summarized on this web site. Milton is also President & COO of the Center for the Commercialization of Electric Technologies (CCET) in Austin. His primary function at CCET is to direct the organization, including the development and oversight of electric technology projects.