Environmentalists call on PUC to authorize energy storage to expedite Texas’ shift to clean energy

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Environment Texas

AUSTIN – Environment Texas and the Sierra Club called on the Public Utility Commission of Texas (PUCT) to approve a proposal by American Electric Power (AEP) to install two lithium-ion battery systems and to open up a rulemaking to clarify that energy storage technologies may be used by transmission companies for reliability purposes, even as they are also used by other market participants to provide electricity or shift electric demand. The groups pointed to a new Environment Texas report showing that energy storage technologies can be an important part of that electric grid of the future, helping to assure reliable access to electricity while supporting America’s transition to 100 percent renewable energy.

“As renewable energy production rises, energy storage is increasingly becoming a ‘go-to’ option for utilities, businesses and homeowners,” said Luke Metzger, Executive Director of Environment Texas.  “We need the PUC to remove barriers for energy storage so we can make Texas’ transition to clean, renewable energy possible.”

On December 11, the PUCT considered a proposal by AEP to install 1.5 megawatts (MW) of batteries in two west Texas towns as an alternative to traditional transmission upgrades which will save consumers millions of dollars. However, a group of electric generators and manufacturers argued against the proposal, pointing out that the state law does not allow transmission companies in Texas’ deregulated marketplace to own generation. An Administrative Law Judge found that the AEP proposal would not violate state law, but suggested the matter was open to “more than one interpretation.”

The report, Making Sense of Energy Storage: How Storage Technologies Can Support a Renewable Energy Future, shows that concerns over the reliability of renewable energy are fading with the emergence of game-changing energy storage technologies, including batteries, thermal storage, and others. The rapid growth of less expensive wind and solar energy, combined with a 100-fold decline in battery costs since the 1990s, has led to a six-fold increase in energy storage capacity (excluding pumped hydropower) over the past decade.  The report illustrates how energy storage measures have benefited consumers and the electric system by preventing construction of new transmission lines and providing backup power during outages like those caused by Hurricane Harvey and the recent ice storms.

“More than 300 new storage projects were added to the grid over the last decade, and at least 300 more are already being planned or built,” said Elizabeth Berg, a Frontier Group analyst, and co-author of the white paper.  “Our report shows that these technologies cannot only aid our transition to a renewable energy system, but can provide many other benefits to the electric grid as well.”

California is far ahead of other states in deploying energy storage and will continue to be the energy storage leader over the next few years. This is because California was the first state to set a mandate for their utilities to procure energy storage resources and to alter their regulations and policies to be favorable for energy storage. Hawaii, Massachusetts, New York, Arizona and Texas are all vying to develop the second-largest energy storage market in coming years. In recent years, major energy participants like NRG, E.ON, Duke Energy, Austin Energy, CPS Energy and NextEra have all invested in major storage projects, often coupling them with renewable technology like wind or solar, but getting our market rules right could help jumpstart the energy storage industry.

According to the DOE’s Global Energy Storage Database, Texas has more energy storage slated for construction than all but three other states. Bloomberg reported in December that U.S. energy-storage capacity surged 46 percent in the third quarter, mainly due to a 30 MW project in Texas.

A November 2014 report by the Brattle Group found the installation of 8,000 MW of grid-integrated, distributed energy storage by 2020 would be cost-effective, reducing residential electric bills and power outages. But the report warns that “relying only on merchant investors to develop storage in ERCOT would result in under-investment in storage from a state-wide perspective” and recommends allowing transmission companies, like AEP, to also deploy storage.

“Electric storage can work in our energy-only markets and compete with other forms of generation or be added to renewable energy projects to increase their value” said Cyrus Reed, Conservation Director of the Lone Star Chapter of the Sierra Club. “But they also can and must be allowed to be used by transmission companies as a non-wires alternative to traditional reliability measures like substations and transformers. The PUC should open up a rulemaking to help clarify how to allow both uses of storage to be allowed in our market.” 

The Environment Texas report also makes a number of recommendations to policy makers, including:

  • Removing barriers to energy storage by clarifying and improving grid connection and permitting policies;
  • Designing rates and energy markets to capture the full value of energy storage, including grid reliance, avoided transmission and distribution costs and avoided peak demand costs;
  • Adopting programs that incentivize homes and businesses to adopt storage; and
  • Establishing storage targets and benchmarks that encourage utilities to build and utilize energy storage throughout their system.