Dive Brief:
- Battery operators in the Electric Reliability Council of Texas market say a new rule adopted by the grid operator could leave storage assets sidelined when they are needed most and threatens penalties that are more harsh than those potentially faced by other resources.
- ERCOT’s board of directors on Oct. 17 unanimously approved the new rule, known as NPRR 1186, requiring batteries to maintain a certain state of charge, or SOC, depending on which ancillary services they are providing. The Public Utility Commission of Texas must still finalize the rule.
- Batteries helped keep the Texas grid operating reliably this summer, even as new power demand records were set, grid officials said at the Oct. 17 board meeting. There were 49 days this summer when ERCOT saw load surpass 80 GW — while in 2022 that benchmark was reached just once.
Dive Insight:
Energy demand is rising in Texas as the state attracts new businesses and residents, and struggles with extreme weather. Batteries are a key to keeping the grid operating reliably, and grid officials are crafting market rules to ensure they can operate effectively.
ERCOT’s decision is designed to allow the grid operator to “confidently evaluate the capability of these [energy storage resources] for the key hours in which the need for dispatchable generation is needed,” according to the proposal approved Thursday.
But some battery proponents say the new rules will discourage their development, even as storage is rapidly growing in ERCOT.
As of June there were approximately 3,300 MW of batteries on the ERCOT system, and according to the SOC proposal, that total is estimated to reach 9,500 MW by October 2024.
Battery developer Eolian opposed the new rule, which will require storage resources to maintain an SOC “that slopes linearly from the top of the Operating Hour to 0 MWh, which precludes flexible dispatch across all Ancillary Service products,” the company said in comments.
Eolian also said that batteries providing ERCOT’s Regulation Up and Regulation Down ancillary services — which increase or decrease generation output to maintain system frequency — will be required to have the maximum state of charge it bid for the Reg-Up product, “rather than operating at optimal flexibility with a lower SOC at the top of an Operating Hour, which would allow it to act as a sponge to immediately charge and discharge as needed to maintain the stability of the grid.”
“Unintended consequences” of NPRR 1186 “are likely to administratively limit access to energy” held by energy storage resources during an ERCOT emergency, the company warned.
The new rule “will substantially reduce energy storage participation in the ancillary markets and reduce competition,” Eolian CEO Aaron Zubaty said in an email. “The proposed changes are inherently discriminatory, holding energy storage resources to different and more punitive performance penalties than the rest of the participants in the ERCOT market.”
Zubaty added that ERCOT’s decision “is particularly ironic” following a request for proposals the grid operator issued on Oct. 2 for 3 GW of additional resources, which he said would be “primarily mothballed and shuttered coal units, that can be brought back online for this winter.”
The Texas grid operator “is not projecting energy emergency conditions this winter season” but issued the RFP “to be prepared and ensure all available tools are readily available if needed,” ERCOT President and CEO Pablo Vegas said in a statement.
ERCOT adopted SOC requirements last winter that were developed through updates to its business practices, a process that is non-binding, said David Miller, vice president of business development at battery operator GridMatic.
Those initial SOC rules were more stringent, Miller said, with greater potential to leave energy stranded in batteries. NPRR 1186 is a formal rule and it fixes some of the issues created in the December 2022 update, he said.
A GridMatic analysis of the initial December SOC rules found ERCOT would “forfeit key storage reserves during peak demand periods.”
“The previous rules definitely made things a bit more tight,” Miller said. “The [new] rules should improve that a little.”
The decision will now head to the Public Utility Commission of Texas for a final approval, possibly in November. Parties can appeal the ERCOT board’s decision to the commission ahead of the vote.
