Renewables Projected to Soon Be One-Fourth of US Electricity Generation


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U.S. Renewable Energy Forecast 2024 will see wind and solar power surpass one-fourth of electricity generation, EIA projects, as coal declines, natural gas dips, and clean energy capacity, grid integration, and policy incentives expand.

 

Key Points

EIA outlook: renewables at 26% of U.S. power in 2024, led by wind and solar as coal declines and gas share dips.

✅ Wind and solar hit 18% combined, surpassing coal's 17%.

✅ Natural gas dips to 37% as demand rebounds modestly.

✅ Coal plant closures accelerate amid costs, emissions, and age.

 

Renewable energy is poised to reach a milestone, after a record 28% in April this year, as a new government report projects that wind, solar and other renewable sources will exceed one-fourth of the country’s electricity generation for the first time, in 2024.

This is one of the many takeaways from the federal government’s Short Term Energy Outlook, a monthly report whose new edition is the first to include a forecast for 2024. The report’s authors in the Energy Information Administration are expecting renewables to increase in market share, while natural gas and coal would both decrease.

From 2023 to 2024, renewables would rise from 24 percent to 26 percent of U.S. electricity generation; coal’s share would drop from 18 percent to 17 percent; gas would remain the leader but drop from 38 percent to 37 percent; and nuclear would be unchanged at 19 percent.

It was a big deal in 2020 when generation from renewables passed coal for the first time in 130 years over a full year. Coal made a comeback in 2021 and then retreated again in 2022 as renewables surpassed coal in generation. The ups and downs were largely the result of fluctuations in electricity demand during and then after the Covid-19 pandemic.

The new report indicates that coal doesn’t have another comeback in the works. This fuel, which was the country’s leading electricity source less than a decade ago, is declining as many coal-fired power plants are old and economically uncompetitive. Coal plants continue to close, and developers aren’t building new ones because of concerns about high costs and emissions, a trend underscored when renewables became the second-most prevalent source in 2020 across the U.S.

The growth in renewable energy is coming from wind and solar power, with wind responsible for about one-third of the growth and solar accounting for two-thirds, the report says, and combined output from wind and solar has already exceeded nuclear for the first time in the U.S. Other renewable sources, like hydropower and biomass, would be flat.

In fact, the growth of wind and solar is projected to be so swift that the combination of just those two sources would be 18 percent of the U.S. total by 2024, which would surpass coal’s 17 percent.

A key variable is overall electricity consumption. EIA is projecting that this will fall 1 percent in 2023 compared to 2022, due a mild summer. Then, consumption will increase 1 percent in 2024.

If demand was rising more, then natural gas power would likely gain market share because of gas power plants’ ability to vary their output as needed to respond to changes in demand.

I asked Eric Gimon, a senior fellow at the think tank Energy Innovation, what he thinks of these latest numbers.

He said wind and solar have gotten so big that it almost makes sense to track them as their own categories as opposed to lumping them into the larger category of renewables. He expects that the government will do this sometime soon.

Also, he thinks the projected increases for wind and solar, while substantial, are still smaller than those resources are likely to grow.

“My experience over the last 10 years is that the EIA tends to have flattish forecasts,” he said, meaning the federal office has underestimated the actual growth.

Some energy analysts have criticized EIA for being slow to recognize the growth of renewables. But much of the criticism is about the Annual Energy Outlook, which has numbers going out to mid-century, even as the U.S. is moving toward 30% from wind and solar by the end of the decade. The Short Term Energy Outlook, with numbers going one year into the future, has been more reliable.

Gimon said EIA is “kind of like your conservative uncle” in its forecasts, so it’s notable that the office expects to see a significant uptick in wind and solar.

Even so, he thinks the latest Short Term Energy Outlook should be read as the lower end of the range of potential increase for wind and solar.

For him to be right, the wind and solar industries will need to figure out solutions to the challenges they’ve been having in obtaining parts; they will need to make progress in dealing with local opposition to many projects and in having enough interstate power lines to deliver the electricity. And, new policies like the Inflation Reduction Act will need to have their desired effect of encouraging projects through the use of tax incentives.

It’s not much of a stretch to imagine that clean energy industries will make some progress on all of those fronts.

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BC Hydro electric vehicle fast charging site operational in Lillooet

BC Hydro Lillooet EV fast charging launches a pull-through, DC fast charger hub for electric trucks, trailers, and cars, delivering 50-kW clean hydroelectric power, range-topups, and network expansion across B.C. with reliable public charging.

 

Key Points

A dual 50-kW pull-through DC fast charging site in Lillooet supporting EV charging for larger trucks and trailers.

✅ Dual 50-kW units add ~50 km range in 10 minutes

✅ Pull-through bays fit trucks, trailers, and long-wheelbase EVs

✅ Part of BC Hydro network expansion across B.C.

 

A new BC Hydro electric vehicle fast charging site is now operational in Lillooet with a design that accommodates larger electric trucks and trailers.

'We are working to make it easier for drivers in B.C. to go electric and take advantage of B.C.'s clean, reliable hydroelectricity,' says Bruce Ralston, Minister of Energy, Mines and Low Carbon Innovation. 'Lillooet is a critical junction in BC Hydro's Electric Highway fast charging network and the unique design of this dual station will allow for efficient charging of larger vehicles.'

The Lillooet station opened in early March. It is in the parking lot at Old Mill Plaza at 155 Main Street and includes two 50-kilowatt charging units. Each unit can add 50 kilometres of driving to an average electric vehicle with BC Hydro's faster charging initiatives continuing to improve speeds, in about 10 minutes. The station is one of three in the province that can accommodate large trucks and trailers because of it's 'pull-through' design. The other two are in Powell River and Fraser Lake.

'As the primary fuel supplier for electric vehicles, we are building out more charging stations to ensure we can accommodate the volume and variety of electric vehicles that will be on B.C. roads in the coming years,' says Chris O'Riley, President and CEO of BC Hydro. 'BC Hydro will add 325 charging units to its network at 145 sites, and is piloting vehicle-to-grid technology to support grid flexibility within the next five years.'

Transportation accounts for about 40 per cent of greenhouse gas emissions in B.C. In September, BC Hydro revealed its Electrification Plan, with initiatives to encourage B.C. residents, businesses and industries to switch to hydroelectricity from fossil fuels to help reduce carbon emissions, alongside investments in clean hydrogen development to further decarbonize. The plan encourages switching from gas-powered cars to electric vehicles and is supported by provincial EV charger rebates for homes and workplaces.

BC Hydro's provincewide fast charging network currently includes, as part of B.C.'s expanding EV leadership across the province, 110 fast charging units at 76 sites in communities throughout B.C. The chargers are funded in a partnership with the Province of B.C. and Natural Resources Canada.

 

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Building Energy Celebrates the Beginning of Operations and Electricity Generation

Building Energy Iowa Wind Farm delivers 30 MW of renewable energy near Des Moines, generating 110 GWh annually with wind turbines, a long-term PPA, CO2 reduction, and community benefits like jobs and clean power.

 

Key Points

Building Energy Iowa Wind Farm is a 30 MW project generating 110 GWh a year, cutting CO2 and supporting local jobs.

✅ 30 MW capacity, 10 onshore turbines (3 MW each)

✅ ~110 GWh per year; power for 11,000 households

✅ Long-term PPA; jobs and emissions reductions in Iowa

 

With 110 GWh generated per year, the plant will be beneficial to Iowa's environment, reflecting broader Iowa wind power investment trends, contributing to the reduction of 100,000 tons of CO2 emissions, as well as providing economic benefits to host local communities.

Building Energy SpA, multinational company operating as a global integrated IPP in the Renewable Energy Industry, amid milestones such as Enel's 450 MW U.S. wind project, through its subsidiary Building Energy Wind Iowa LLC, announces the inauguration of its first wind farm in Iowa, which adds up to 30 MW of wind distribution generation capacity. The project, located north of Des Moines, in Story, Boone, Hardin and Poweshiek counties, will generate approximately 110 GWh per year. The beginning of operations has been celebrated on the occasion of the Wind of Life event in Ames, Iowa, in the presence of Andrea Braccialarghe, MD America of Building Energy, Alessandro Bragantini, Chief Operating Officer of Building Energy and Giuseppe Finocchiaro, Italian Consul General.

The overall investment in the construction of the Iowa distribution generation wind farms amounted to $58 million and it sells its energy and related renewable credits under a bundled, long-term power purchase agreement with a local utility, reflecting broader utility investment trends such as WEC Energy's Illinois wind stake in the region.

The wind facility, developed, financed, owned and operated by Building Energy, consists of ten 3.0 MW geared onshore wind turbines, each with a rotor diameter of 125 meters mounted on an 87.5 meter steel tower. The energy generated will satisfy the energy needs of 11,000 U.S. households every year, similar in community impact to North Carolina's first wind farm, while avoiding the emission of about 70,000 tons of CO2 emissions every year, according to US Environmental Protection Agency methodology, which is equivalent to taking 15,000 cars off the road each year.

Besides the environmental benefits, the wind farm also has advantages for the local community, providing it with clean energy and creating jobs for local Iowans. The project involved more than a hundred of local skilled workers during the construction phase. Some of those jobs will be also permanent as necessary for the operation and maintenance activities as well as for additional services such as delivery, transportation, spare parts management, landscape mitigation, and further environmental monitoring studies.

The Company is present in many US states since 2013 with more than 500 MW of projects under development, spread across different renewable energy technologies, and aligning with federal initiatives like DOE wind energy awards that support innovation.

 

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There's Room For Canada-U.S. Collaboration As Companies Turn To Electric Cars

Canada EV Supply Chain aligns electric vehicle manufacturing, batteries, and autonomous tech with cross-border trade, leveraging lithium, cobalt, and rare earths as GM, Ford, and Project Arrow scale zero-emissions innovation and domestic sourcing.

 

Key Points

Canada's integrated resources, battery tech, and manufacturing network supporting EV production and cross-border trade.

✅ Leverages lithium, cobalt, and rare earths for battery supply

✅ Integrates GM, Ford, and Project Arrow manufacturing hubs

✅ Aligns with autonomous tech, hydrogen, and zero-emissions goals

 

The storied North American automotive industry, the ultimate showcase of Canada’s high-tensile trade ties with the United States, is about to navigate a dramatic hairpin turn.

But as the Big Three veer into the all-electric, autonomous era, some Canadians want to seize the moment to capitalize on the U.S. pivot and take the wheel.

“There’s a long shadow between the promise and the execution, but all the pieces are there,” says Flavio Volpe, president of the Automotive Parts Manufacturers’ Association.

“We went from a marriage on the rocks to one that both partners are committed to. It could be the best second chapter ever.”

Volpe is referring specifically to GM, which announced late last month an ambitious plan to convert its entire portfolio of vehicles to an all-electric platform by 2035, even as a 2035 EV mandate debate unfolds.

But that decision is just part of a market inflection point across the industry, with existential ramifications for one of the most tightly integrated cross-border manufacturing and supply-chain relationships in the world.

China is already working hard to become the “source of a new way” to power vehicles, President Joe Biden warned last week.

“We just have to step up.”

Canada has both the resources and expertise to do the same, says Volpe, whose ambitious Project Arrow concept — a homegrown zero-emissions vehicle named for the 1950s-era Avro interceptor jet — is designed to showcase exactly that.

“We’re going to prove to the market, we’re going to prove to the (manufacturers) around the planet, that everything that goes into your zero-emission vehicle can be made or sourced here in Canada,” he says.

“If somebody wants to bring what we did over the line and make 100,000 of them a year, I’ll hand it to them.”

GM earned the ire of Canadian auto workers in 2018 by announcing the closure of its assembly plant in Oshawa, Ont. It later resurrected the facility with a $170-million investment to retool it for autonomous vehicles.

“It was, ‘You closed Oshawa, how dare you?’ And I was one of the ‘How dare you’ people,” Volpe says.

“Well, now that they’ve reopened Oshawa, you sit there and you open your eyes to the commitment that General Motors made.”

Ford, too, has entered the fray, promising $1.8 billion to retool its sprawling landmark facility in Oakville, Ont., to build EVs, as EV assembly deals help put Canada in the race.

‘Range anxiety’
It’s a leap of faith of sorts, considering what market experts say is ongoing consumer doubt about EVs, including shortages and wait times that persist.

“Range anxiety” — the persistent fear of a depleted battery at the side of the road — remains a major concern, even though it’s less of a problem than most people think.

Consulting firm Deloitte Canada, which has been tracking automotive consumer trends for more than a decade, found three-quarters of future EV buyers it surveyed planned to charge their vehicles at home overnight.

“The difference between what is a perceived issue in a consumer’s mind and what is an actual issue is actually quite negligible,” Ryan Robinson, Deloitte’s automotive research leader, says in an interview.

“It’s still an issue, full stop, and that’s something that the industry is going to have to contend with.”

So, too, is price, especially with the end of the COVID-19 pandemic still a long way off. Deloitte’s latest survey, released last month, found 45 per cent of future buyers in Canada hope to spend less than $35,000 — a tall order when most base electric-vehicle models hover between $40,000 and $45,000.

“You put all of that together and there’s still some major challenges that a lot of stakeholders that touch the automotive industry face,” Robinson says.

“It’s not just government, it’s not just automakers, but there are a variety of stakeholders that have a role to play in making sure that Canadians are ready to make the transition over to electric mobility.”

With protectionism no longer a dirty word in the United States and Biden promising to prioritize American workers and suppliers, the Canadian government’s job remains the same as it ever was: making sure the U.S. understands Canada’s mission-critical role in its own economic priorities.

“We’re both going to be better off on both sides of the border, as we have been in the past, if we orient ourselves toward this global competition as one force,” says Gerald Butts, vice-chairman of the political-risk consultancy Eurasia Group and a former principal secretary to Prime Minister Justin Trudeau.

“It served us extraordinarily well in the past ... and I have no reason to believe it won’t serve us well in the future.”

EV battery industry
Last month, GM announced a billion-dollar plan to build its new all-electric BrightDrop EV600 van in Ingersoll, Ont., at Canada’s first large-scale EV manufacturing plant for delivery vehicles.

That investment, Volpe says, assumes Canada will take the steps necessary to help build a homegrown battery industry out of the country’s rare-earth resources like lithium and cobalt that are waiting to be extracted in northern Ontario, Quebec and elsewhere, including projects such as a $1.6B battery plant in Niagara that signal momentum.

Given that the EV industry is still in his infancy, the free market alone won’t be enough to ensure those resources can be extracted and developed, he says.

“General Motors made a billion-dollar bet on Canada because it’s going to assume that the Canadian government — this one or the next one — is going to commit” to building that business.

Such an investment would pay dividends well beyond the auto sector, considering the federal Liberal government’s commitment to lowering greenhouse gas-emissions and meeting targets set out in the Paris climate accord.

“If you make investments in renewable energy and energy storage in Ontario using battery technology, you can build an industry at scale that the auto industry can borrow,” Volpe says.

Major manufacturing, retail and office facilities would be able to use that technology to help “shave the peak” off Canada’s GHG emissions and achieve those targets, all the while paving the way for a self-sufficient electric-vehicle industry.

“You’d be investing in the exact same technology you’d use in a car.”

There’s one problem, says Robinson: the lithium-ion batteries on roads right now might not be where the industry ultimately lands.

“We’re not done with with battery technology,” Robinson says. “What you don’t want to do is invest in a technology that is that is rapidly evolving, and could potentially become obsolete going forward.”

Fuel cells — energy-efficient, hydrogen-powered units that work like batteries, but without the need for constant recharging — continue to be part of the conversation, he adds.

“The amount of investment is huge, and you want to be sure that you’re making the right decision, so you don’t find yourself behind the curve just as all that capacity is coming online.”

 

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What the U.S. can learn from the U.K. about wind power

U.S. Offshore Wind Power Strategy leverages UK offshore wind lessons, contract auctions, and supply chains to scale renewable energy, build wind farms, cut emissions, create jobs, and modernize the grid to meet 2030 climate goals.

 

Key Points

U.S. plan to scale offshore wind via UK-style contracts, turbines, and supply chains to meet 2030 clean energy goals

✅ Contract-for-difference price guarantees de-risk projects

✅ Scale turbines and ports to cut LCOE and boost capacity

✅ Build coastal grids, transmission, and workforce by 2030

 

As President Joe Biden’s administration puts its muscle behind wind power with plans to develop large-scale wind farms along the entire United States coastline, the administration can look at how the windiest nation in Europe is transforming its energy grid for an example of how to proceed.

In the search for renewable sources of energy, the United Kingdom has embraced wind power. In 2020, the country generated as much as 24 percent of its electricity from wind power across the grid — enough to supply 18.5 million homes, according to government statistics. 

With usually reliable winds, the U.K. currently has the highest number of offshore turbines installed in the world, with China at a close second.

Experts and industry leaders say it offers valuable lessons on creating a viable market for wind power at the ambitious scale the Biden administration hopes to meet in order to confront climate change and help transition the U.S. economy to renewable energy.

“The U.S. is going to benefit hugely from the early investment that European governments have put into offshore wind,” said Oliver Metcalfe, a wind power analyst at BloombergNEF in London, an independent research group.

Big American plans
On Oct. 13, the White House announced ambitious offshore wind plans to lease federal waters off of the East and West Coasts and Gulf of Mexico to develop commercial wind farms.

The move is part of Biden’s goal to have 30,000 megawatts of offshore wind power produced in the United States by 2030, with projects such as New York's record-setting approval highlighting the momentum. The White House says that would generate enough electricity to power more than 10 million homes and in the process create 77,000 jobs. 

But there is a chasm between where the U.S. is now and where it wants to be within the next decade when it comes to offshore wind power.

“We’re the first generation to understand the science and implications of climate change and we’re the last generation to be able to do something about it.”

The U.S. is not new to wind power; onshore wind in states such as Texas, Oklahoma and Iowa supplied 8.2 percent of the country’s total electricity generation in 2020, according to the U.S. Department of Energy. 

But despite its long coastlines, offshore wind has been a largely untapped resource in the U.S. With a population of about 332 million people, the U.S. currently has just two operational offshore wind farms — off Rhode Island and Virginia — with the capacity to produce 42 megawatts of electricity between them, far from the 1 gigawatt on-grid milestone many are watching. 

In contrast, the U.K., with a population of 67 million people, has 2,297 offshore wind turbines with the capacity to produce 10,415 megawatts of electricity.

Power station or a park?
Just outside of central Glasgow, the host city for the U.N. climate change conference known as COP26, the fruits of years of effort to move away from fossil fuels can be seen and heard

International financiers, including the World Bank are helping developing countries scale wind projects to meet climate goals.

Whitelee Windfarm, the U.K.’s largest onshore wind farm, spreads across 30 square miles on the Eaglesham Moor and includes more than 80 miles of trails for walking, cycling and horseback riding.

With its 539 megawatt capacity, it generates enough electricity for 350,000 homes — more than half the population of Glasgow. 

On a recent gusty fall day, Ian and Fiona Gardner, both 71, were walking their dogs among the wind farm’s 360-foot-tall turbines  

“This is a major contribution to Scotland, to become independent from oil by 2035,” Ian Gardner, an accountant, said. 

Thanks to the rapid technological advances in turbine technology, this wind farm that was completed in 2009, is now practically old school. The latest crop of onshore turbines typically generate double the current capacity of Whitelee’s turbines.

“It took us 20 years to build 2 gigawatts of power. And we’re going to double that in five  years,” said McQuade, an economist. “We can do that because machines are big, efficient, cheap and the supply chain is there.” 

The biggest operational offshore wind farm in the world right now, Hornsea Project One, is about 75 miles off England’s Yorkshire coast in the North Sea.

Owned and operated by Orsted, a former Danish oil and gas giant, in partnership with Global Infrastructure Partners, its 174 turbines have the capacity to generate 1.2 gigawatts — enough to power over 1 million homes and roughly equivalent to a nuclear power plant. 

Benj Sykes, Vice President of U.K. Offshore Wind at Orsted, called Hornsea One a “game changer” in a recent phone interview, citing it as an example of how the industry has scaled up its output to compete with traditional power plants.

But massive projects like Hornsea One took decades to get up and running, as well as government help. According to Malte Jansen, a research associate at the Centre of Environmental Policy at Imperial College London, the British government helped facilitate a “paradigm shift” in renewable energy in 2013.

The electricity market reform policy set up a framework to incentivize investment in offshore wind farms by creating an auction system that guarantees electricity prices to developers in 15-year contracts, alongside new contract awards that add 10 GW to the U.K. grid. 

This means there is no upside in terms of market price fluctuation, but there is no downside either. The policy essentially “de-risked the investment,” Jansen said.

The state contracts allowed the industry to innovate and learn how to develop even larger and more efficient turbines with blades that stretch as long as 267 feet, about three-quarters the size of a U.S. football field. 

While this approach helped companies and investors, it will also have an unintended beneficiary — the U.S., Metcalfe from BloombergNEF said. 

Developers are “taking the lessons they’ve learned building projects in Europe, the cost reductions that they’ve achieved building projects in Europe and are now bringing those to the U.S. market,” he said.

 

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"Remarkable" New Contract Award Adds 10 GW of Renewables to UK Grid

UK Renewable Energy Auction secures 10 GW for the grid at record-low costs, led by offshore wind, floating wind, solar, and onshore wind, with inflation-indexed CfDs delivering £37/MWh strike prices and enhanced energy security.

 

Key Points

Government CfDs add 10 GW of low-cost renewables to the UK grid via offshore wind, floating wind, and solar.

✅ 10 GW capacity: 7 GW offshore wind, 2.2 GW solar, 0.9 GW onshore wind

✅ Record-low £37/MWh offshore; floating wind at £87/MWh CfD strikes

✅ 15-year indexed contracts cut exposure to volatile gas prices

 

The United Kingdom will add 10 gigawatts (GW) of renewable energy capacity to its power grid at one-quarter the cost of fossil gas after concluding its biggest-ever renewable energy auction for new renewable supplies.

The “remarkable new UK renewable auction” will meet one-eighth of the country’s current electricity demand at record low prices of just £37 per megawatt-hour for offshore wind and £87 for floating offshore systems (a dynamic echoed as wind power gains in Canada across other markets), tweeted Carbon Brief Deputy Editor Simon Evans.

“The government is increasing its reliance on a local supply of renewables amid soaring UK power prices driven by a surge in the cost of natural gas following Russia’s invasion of Ukraine,” Bloomberg Green reports. Offshore wind energy “will add about seven gigawatts of clean power capacity to the nation’s fleet from 2026, bringing Britain closer to its target of installing 50 gigawatts by the end of the decade.”

The awards also include 2.2 gigawatts (that’s 2.2 billion watts) of solar and 900 megawatts of onshore wind, even as the UK faces a renewables backlog on some projects, Bloomberg says.

“Eye-watering gas prices are hitting consumers across Europe,” said UK Business and Energy Secretary Kwasi Kwarteng. “The more cheap, clean power we generate within our own borders, the better protected we will be from volatile gas prices that are pushing up bills.”

Citing government figures, Bloomberg says wind generation costs came in 5.8% lower than the previous auction in 2019, reflecting momentum in a sector set to become a trillion-dollar business this decade. Some of the winning bidders included Ørsted, Iberdrola’s Scottish Power unit, Vattenfall, and a consortium of AB Ignitis Grupe, EDP Renovaveis, and Engie.

Offshore wind power costs have fallen dramatically in recent years as the UK supported the industry to scale up and industrialize production of larger, more efficient turbines,” the news story states. Now, “the decline in price developers are willing to accept comes even after the cost of wind turbines rose in recent months as prices increased for key metals like steel and supply chain disruptions created expensive delays.”

The 15-year, fixed-price contracts will be adjusted for inflation when the turbines are ready to start delivering electricity, offering lessons for the U.S. wind sector on contract design.

 

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

Texas Battery Storage Investment Boom draws BlackRock, SK, and UBS, leveraging ERCOT price volatility, renewable energy growth, and utility-scale energy storage arbitrage to enhance grid reliability, resilience, and double-digit returns across high-demand nodes.

 

Key Points

Texas sees a rush into battery storage, using ERCOT price spreads to bolster grid reliability and earn about 20% returns.

✅ Investors exploit price volatility, peak-demand spreads.

✅ Utility-scale storage enhances ERCOT reliability.

✅ Top players: BlackRock, SK E&S, UBS; 700 MW deals.

 

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, through efforts like a virtual power plant initiative in Texas, 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, a dynamic tied to wind curtailment on the Texas grid 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, aided by falling battery costs, 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, with much of it pairing storage with solar, 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, a trajectory consistent with record U.S. solar-plus-storage growth noted by analysts, 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, as diversifying resources for better projects suggests, 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 by supporting 'unlayering' peak demand approaches.

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.

 

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