Governors' Wind Energy Coalition

Amid policy wins and electricity auction gains, battery storage is slowly carving out a place on the power grid, a long-sought victory for the industry that is finally coming to fruition. While battery deployment across the grid remains small, steep declines in pricing, a renewed demand from solar and wind developers and crucial regulatory decisions are enticing states to make more room for batteries in energy markets.

What’s at play: Large-scale batteries offer utility-scale renewable project developers on the grid the ability to sell their electricity during hours when it can fetch the highest prices, not just during windy or sunny periods, Eric writes. The technology has the power to change the economics for many projects and could create much-need flexibility for grid operators.

How’d we get here? FERC’s February order requires RTOs to treat battery storage the same way they allow other power sources to bid into markets for ancillary or other grid services, a move which will knock down hurdles to storage in the nation’s power markets. A big price drop in batteries that has arrived via a built-up in capacity to serve the market for electric vehicles has also improved the economics of storage projects. Renewable advocates have also hailed a small but significant decision by the IRS that enables homeowners and businesses with solar rooftop systems to add battery capacity and qualify for the 30 percent Investment Tax Credit.

Not so fast: But while storage may make a big play in the near term in New England, California and other markets, it will take longer to penetrate other parts of the country. Places with access to cheap natural gas, like PJM and Texas, will still be good places to run natural gas plants, analysts say. “The battery is the first line of defense,” said Kevin Walsh of U.S. Renewable Energy at GE Energy Financial Services. But he added: “Gas still has a big future.”