Texas storage deployment saved at least $750M since 2023: ACP
Approximately 5 GW of new capacity added since last year has improved reliability while lowering electricity prices on the ERCOT grid, the American Clean Power Association said Monday.
Dive Brief:
The rapid deployment of energy storage since 2023 has contributed to at least $750 million in electricity cost savings for consumers in Texas while helping the state avoid energy conservation appeals during the 2024 summer, the American Clean Power Association said Monday in a report published Monday.
Despite seeing “near equivalent top demand hours during the summer compared to 2023,” the Electric Reliability Council of Texas issued only two energy conservation appeals in 2024, both during a January cold snap. ERCOT issued 11 appeals in 2024, including seven in a single week in August, ACP said.
The addition of about 5 GW of energy storage capacity in ERCOT since summer 2023, including 4 GW in the first nine months of 2024, resulted in dramatically lower real-time peak power prices, significantly lower ancillary services prices and lower risk of widespread outages, ACP said.
Dive Insight:
Total ERCOT energy consumption was 354 TWh from January to September 2024, up 3% from 2023 and 6% from 2022, according to the ACP report. ERCOT expects about 152 GW of new load by 2030 as the state’s population surges and data centers, industrial electrification, hydrogen production and electric vehicles drive demand, the grid operator said in April.
Renewables and energy storage have provided the vast majority of new generating capacity in Texas and now account for nearly 50% of ERCOT’s power mix, ACP said in the Monday report. Developers deployed more than 30 GW of solar and storage capacity in ERCOT in the past two years — including about 18 GW in the first nine months of 2024 — compared with just 1.5 GW in net new gas generation and a net loss of 0.8 GW of coal generation, according to the report.
Energy storage is particularly well-suited to meeting rapid load growth on a grid prone to weather-related stress, ACP Vice President of Energy Storage Noah Roberts told Utility Dive in an interview.
“You can add energy storage very quickly to the grid, and it performs well with existing generation,” Roberts said.
Texas’s energy storage growth helped reduce ERCOT real-time power pricing by an average of about $31/MWh in 2024 compared with 2023 and by an average of about $160/MWh in August, the peak demand month, ACP said. Lower natural gas prices accounted for only $4/MWh to $6/MWh of the annual reduction, according to the report.
Lower ancillary service prices were responsible for much of the $750 million-plus in energy cost reductions attributable to energy storage, ACP said. In summer 2024, average ancillary service prices were below $5/MWh in ERCOT, compared with $30/MWh to $125/MWh in summer 2023, according to the report.
Storage is “significantly cheaper on an operational basis than alternative technologies in providing ancillary services” and more energy storage facilities on the ERCOT grid means more competition among them in the ancillary service market, ACP said.
“[Storage] is a bit of a shock absorber on price and reliability,” Fluence Americas President John Zahurancik told Utility Dive in an interview. Storage “can smooth out these blip cycles that drive a lot of the cost, ramp things more gently [and avoid turning on a more expensive generation asset] for a relatively short amount of time to deal with a demand spike or some other condition.”
As more energy storage capacity comes online, ACP found batteries providing a greater share of ERCOT’s ancillary services procurement. Storage accounted for 80% of regulation down services in summer 2024, compared with 30% to 40% in the two summers prior. In summer 2024, storage already accounted for nearly 50% of the new ERCOT contingency reserve service, which debuted in June 2023, ACP said.
The rapid expansion of energy storage in Texas means that storage assets can now address the “peakiest peak” situations effectively, creating opportunities for longer-duration deployments as energy storage system costs decline, Zahurancik said. Two years ago, one-hour systems dominated ERCOT, whereas Fluence is now “working with people looking at three- and four-hour systems, he said.
“[Texas is] a great example for the rest of the country where there are markets experiencing substantial growth in energy demand and you’ve seen a rise in capacity prices,” Roberts said.
Expanding energy storage deployment in markets like the PJM Interconnection, Midcontinent Independent System Operator and New York ISO “would deliver similar benefits to those regions,” as vertically integrated markets like Nevada have experienced recently, he added.