Texas battery rush: Oil state's power woes fuel energy storage boom

Battery Energy Storage System

DALLAS -

BlackRock, Korea's SK, Switzerland's UBS and other companies are chasing an investment boom in battery storage plants in Texas, lured by the prospect of earning double-digit returns from the power grid problems plaguing the state, according to project owners, developers and suppliers.

Projects coming online are generating returns of around 20%, compared with single digit returns for solar and wind projects, according to Rhett Bennett, CEO of Black Mountain Energy Storage, one of the top developers in the state.

"Resolving grid issues with utility-scale energy storage is probably the hottest thing out there,” he said.

The rapid expansion of battery storage could help prevent a repeat of the February 2021 ice storm and grid collapse which killed 246 people and left millions of Texans without power for days.

The battery rush also puts the Republican-controlled state at the forefront of President Joe Biden's push to expand renewable energy use.

Power prices in Texas can swing from highs of about $90 per megawatt hour (MWh) on a normal summer day to nearly $3,000 per MWh when demand surges on a day with less wind power, according to a simulation by the federal government's U.S. Energy Information Administration.

That volatility, a product of demand and higher reliance on intermittent wind and solar energy, has fueled a rush to install battery plants that store electricity when it is cheap and abundant and sell when supplies tighten and prices soar.

Texas last year accounted for 31% of new U.S. grid-scale energy storage, according to energy research firm Wood Mackenzie, second only to California which has had a state mandate for battery development for a decade.

And Texas is expected to account for nearly a quarter of the U.S. grid-scale storage market over the next five years, according to Wood Mackenzie projections shared with Reuters.

Developers and energy traders said locations offering the highest returns -- in strapped areas of the grid -- will become increasingly scarce as more storage comes online and electricity prices stabilize.

Texas lawmakers this week voted to provide new subsidies for natural gas power plants in a bid to shore up reliability. But the legislation also contains provisions that industry groups said could encourage investment in battery storage.

Amid the battery rush, BlackRock acquired developer Jupiter Power from private equity firm EnCap Investments late last year. Korea's SK E&S acquired Key Capture Energy from Vision Ridge Partners in 2021 and UBS bought five Texas projects from Black Mountain last year for a combined 700 megawatts (MW) of energy storage. None of the sales' prices were disclosed.

SK E&S said its acquisition of Key Capture was part of a strategy to invest in U.S. grid resiliency.

"SK E&S views energy storage solutions in Texas and across the U.S. as a core technology that supports a new energy infrastructure system to ensure American homes and businesses have affordable power," the company said in a statement.

Related News

China To Generate Electricity From Compressed Air

China To Generate Electricity From Compressed Air

BEIJING - China is set to connect its first commercial compressed-air energy storage plant to the grid as it seeks more ways to harness fast-growing clean power resources for around-the-clock use.

China Huaneng Group Co. said its Jiangsu Jintan Salt Cave project recently underwent four days of successful trials and is now ready for commercial operations. The 60-megawatt plant will be the largest compressed air energy storage plant built anywhere in the world since 1991, and the first in China outside of small-scale technology demonstration projects, according to BloombergNEF.

The plant will use electricity at night when demand is low to pump…

READ MORE
az ev boom

AZ goes EV: Rate of electric car ownership relatively high in Arizona

READ MORE

solar power

Ukraine's Green Fightback: Rising from the Ashes with Renewable Energy

READ MORE

abb charger

ABB claims its Terra 360 is the "world's fastest electric car charger"

READ MORE

california revenue meter

California introduces new net metering regime

READ MORE