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September 02, 2015
Brattle Report Cited in Utility Dive Article on Energy Storage in the Texas Market

A November 2014 Brattle report was recently featured in a Utility Dive article discussing the possibility of Texas market rules holding back utilities from deploying cost-effective energy storage.

The Brattle report, “The Value of Distributed Electricity Storage in Texas: Proposed Policy for Enabling Grid-Integrated Storage Investments”, was prepared by Judy Chang, Johannes Pfeifenberger, Kathleen Spees, Matthew Davis, Ioanna Karkatsouli, Lauren Regan, and James Mashal for Oncor Electric Delivery Company, a Transmission and Distribution Service Provider in Texas. The report explores the economics of grid-integrated storage deployment in Texas in the wake of recent developments resulting in lower anticipated storage costs. Findings indicate that up to 5 GW of energy storage could be deployed on the Electric Reliability Council of Texas (ERCOT) electric grid at the price of $350 per kWh.

The Utility Dive article notes that there has hardly been an energy storage boom in the ERCOT market since the report and a more detailed cost assessment were released in March 2015. The article suggests the seemingly slow uptake in battery storage technology is likely due to rules and regulations within the Texas market, which only allow utilities such as Oncor to perform certain functions as a regulated transmission & distribution (T&D) utility. Other functions, such as using batteries for demand management, are not permitted, further explaining possible causes for delay.

Despite various regulatory obstacles, Brattle and Oncor proposed a “workaround” in which T&D utilities could still “own and operate the batteries on the grid, but they would have to auction off capacity not used for grid reliability functions to third parties, allowing them to do with it what they wish.”

Brattle principal and report co-author Johannes Pfeifenberger was cited throughout the Utility Dive article, concluding that storage deployment in Texas will be difficult without some form of market change, because “if you can’t capture all of those value streams, large scale deployment still wouldn’t be cost effective even at the [$350/kWh] price point.”

In the meantime, Oncor and other T&D utilities will concentrate on deploying storage and using it to improve reliability instead of focusing on changing the market structure.

The full Utility Dive article can be read here.