Texas may save millions with distributed storage

(July 29, 2020)

Expanding the use of distributed storage in Texas could save money for customers by reducing the need for transmission and distribution infrastructure, according to a new report. The Texas Advanced Energy Business Alliance (TAEBA) concluded approximately $344 million would be saved each year for about 10 years if enough battery storage is installed to cut peak demand by 20 percent.

The calculation is based on the assumption that about 20 percent of all transmission and distribution investments in Texas are designed to deal with load growth. Additional batteries would allow such expenditures to be deferred, the authors argue, because the batteries could supply energy during peak demand.

“Customers would save substantially if non-wires solutions were explicitly considered as competitive options compared to traditional infrastructure build-out,” said TAEBA managing director Suzanne Bertin.

The TAEBA study did not specify which type of storage should be used. Instead, it stressed the importance of having distributed storage capacity capable of meeting demand during the afternoon in the summer and in the early mornings throughout the winter.

In a recent piece co-authored with Claire Alford, Bertin argued that the adoption of batteries and other types of distributed energy resources (DERs) offer an opportunity to modernize energy provision in Texas. The need for “secure, clean, affordable power” will grow in the coming years, they wrote, driven by an increase in population.

Alford and Bertin welcomed SB 1941, a piece of legislation debated last year that would allow utilities to own battery storage. However, the legislative session expired before lawmakers could agree on a version of the bill. Alford and Bertin hope the bill will become law during the 2021 legislative session and be extended to include other forms of DERs, like rooftop solar and electric vehicles.

“For the past 20 years Texas, with its wide open spaces and wide open electricity market, has been a leader in energy innovation,” they wrote. “DERs represent the next step in that leadership, providing cost savings for consumers and more competition in energy markets. These technologies are available now. With the right policies, in law and regulation, DERs can be put to work for the benefit of customers and the power grid.”

A big part of the expansion of DERs called for by Bertin and the TAEBA could come from large scale battery projects. At the end of 2019, the Houston Chronicle reported that the Electric Reliability Council of Texas is considering plans to build 7,200 megawatts of battery storage for the Texas grid within the coming five years. Although it is normal practice for many such projects not to make it beyond the planning stage, they still account for more energy than the new natural gas projects in the pipeline for the same period.

“It’s a stunning development,” Sam Huntington, a battery storage analyst with global consulting firm IHS Markit, told the Chronicle at the time. “(A)nd nothing anyone would have predicted a couple years ago.

Even though the deployment of batteries and other types of DERs may cut costs, that could come at a price if investments in transmission infrastructure falter.

Some advocates of renewable energy in Texas remain convinced that more transmission infrastructure will be required if wind and solar power are to take hold as major energy sources. The problem they see is that large quantities of wind turbines and solar panels are being installed in west Texas, meaning the energy they generate must be transported to market.

“I do think it’s important that people understand that there are trade-offs,” says Russell Gold, a senior energy reporter with the Wall Street Journal. “So if you don’t get behind transmission, you’re going to end up with what we have right now: more coal, more natural gas, more fossil fuel.”

Supporters of Gold’s stance point to the experience in Texas with wind energy in the 2000s. At that time, beginning around 2007, around $7 billion was invested in lines to bring wind power from west Texas to large population centers like Dallas and Houston. These investments in transmission infrastructure helped the Lone Star State emerge as the leading wind power producer in the United States.

Jordan Smith is a freelance journalist and translator covering issues related to energy, the environment, and politics. His work has appeared on the independent news site Opposing Views and at the Canadian Labour Institute.

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