Battery storage seen as ‘backbone’ of reliable electric grid but adoption uneven across US

SEARCY, Ark. — In the decarbonized future envisioned by many states, utilities and the federal government, expect more power plants like Entergy Arkansas’ facility here, where thousands of gleaming panels and banks of batteries spread across 800 acres about 50 miles northeast of Little Rock.

The Searcy Solar Energy Center, a 100-megawatt solar and storage center, is unique. It’s the only “hybrid asset” in the territory managed by the Midcontinent Independent System Operator, which coordinates the electric grid in all or part of 15 states, said Nick Howell, solar asset team leader at Entergy Services, part of a bigger company that also runs utilities in Texas, Louisiana and Mississippi. The batteries, housed in six containers across the site, can store up to 30 megawatts and are charged by power that’s curtailed from the panels, meaning juice that the grid can’t use at any given time that would have otherwise been wasted. (One megawatt of solar on average can power about 173 homes, according to the Solar Energy Industries Association.)

“We charge the batteries from excess solar power,” Howell said. “That process is very beneficial. You’re not having to pay to charge those batteries.”

Searcy came online in early 2022 and has impressed the company with its performance, Howell said.

“It has surprised me how robust it is,” he said. “When the sun is shining they’re actually very capable facilities and I don’t think a lot of people, especially in my world, believe that they are as capable as they actually are for grid support and grid reliability. … Corporate Entergy’s vision within renewables is definitely more solar and more storage throughout our footprint.”

Energy storage, particularly battery storage, can provide big benefits for the broader grid. It can bank excess power from renewables for when demand spikes, enabling renewable facilities to function more like traditional power plants. And the discharge of the electricity from batteries is nearly instantaneous, providing an attractive degree of flexibility for grid operators who have to match electric demand and supply in real time.

California’s grid operator avoided blackouts during record-setting heat last year thanks in part to the 3,500 megawatts of storage added between 2020 and 2022, the state’s grid operator said. Solar and rapidly growing battery storage has been credited with helping Texas get through punishing summer “heat domes” this year.

So why isn’t there more of it? It’s a combination of headwinds facing the general renewable industry (supply chain, siting and workforce problems, inflation and huge queues for new projects to get connected to the grid, among other snags) and also the thorny issues grid operators face in integrating the technology, experts say.

Determining value to the grid

Battery storage is growing in the U.S., with total capacity climbing to 12.7 gigawatts by the end of the second quarter of 2023, according to S&P Global, up 61% from the year before. (The U.S. had about 1,160 gigawatts of total utility-scale electric generation capacity in 2022, according to the federal Energy Information Administration). But adoption is uneven, with Texas and California leading the nation in storage growth, said Jason Burwen, vice president of policy and strategy at GridStor, a Portland, Oregon, company that builds large-scale battery storage projects.

Storage, Burwen said, is the “backbone of reliability” planning in places like California, which has strong policies that are attempting to push the state away from natural gas electric generation. But battery storage is also growing in Texas’ wide open energy market, where batteries can be a very good investment because of wild price swings.

“They’re different mechanisms but they’re both leading to the same conclusion,” Burwen said. “Batteries are really helpful for system reliability.”

In places where it lags, though, part of the explanation is that electric utilities are only just starting to come around on the technology and include it in their long-term planning. But another hindrance, experts say, is the difficulty grid operators have in fitting battery storage into the complicated models used to assign values for individual power generators’ contributions to the grid, called “capacity accreditation.”

“The factors limiting the expansion of storage are multiple,” said Natalie McIntire, a senior advocate at the Natural Resources Defense Council’s climate and clean energy program. “Accreditation is definitely a piece of that.”

Those accreditation scores help grid operators ensure “resource adequacy,” which broadly means ensuring there’s enough electric supply to meet demand, even during periods of peak usage or outages. The National Association of Regulatory Utility Commissioners called resource adequacy “foundational for providing reliable electric service.”

“There’s a lot of arguments over who should be given what credit for their contributions to resource adequacy,” Burwen said.

In fact, a dearth of battery projects in some parts of the country has contributed to lack of urgency in figuring out how to count their contributions, said Sam Newell, a principal at the Brattle Group and an expert in electric markets and valuing generation assets.

“We’ve now realized that this need to ensure that we have enough resources to always meet demand is more complicated than it used to be with the varying nature of risks throughout the year,” Newell said, adding that grid operators are attempting to find ways for different types of newer power resources — like, wind, solar and storage — to contribute to overall reliability measures. “Places that haven’t had that much storage yet, it hasn’t been that urgent yet to sharpen the way they count them.”

‘It can get super wonky very fast’

In August, the American Clean Power Association, a trade group for utility-scale wind, solar, green hydrogen and electric transmission companies, filed a petition with the Federal Energy Regulatory Commission requesting a technical conference to “explore ways to improve the accreditation of resources’ capacity value” across the country.

“Capacity accreditation rules are oftentimes applied inconsistently within and across resource types, making it more difficult to accurately assess national and regional resource adequacy and to make efficient investment decisions to maintain reliability,” the group said.

The nuts and bolts of capacity accreditation modeling get incredibly complicated quickly. There’s “effective load carrying capability,” which refers to how much extra electric demand can be met by adding a given resource to the grid. There’s “direct loss of load” modeling, which attempts to model the contributions of a given power plant “during times of system scarcity,” MISO says, meaning when power demand exceeds supply. Then, the model compares past performance of different classes of power resources during those periods to come up with a value to assign to all resources of that class.

For wind and solar, for example, grid operators also have to consider when resources will be operating, since an additional megawatt of wind and solar will presumably be producing (and not producing) at the same time as existing wind and solar generation on the system.

“The way you model the system has a driving impact on the outcomes those models shoot out,” Burwen said, noting that grid operators have to make assumptions about when storage resources will discharge the finite amount of power they hold. Will it be at peak demand? Before? Will other battery plants be discharging at the same time?

“It can get super wonky very fast, but how you do that can have very serious impacts,“ Burwen said, noting that ina debate about how MISO should model storage, accreditation scores ranged from 65% (good) to 7% (not so good) depending on the modeling choices and assumptions about dispatch.

There’s also widespread concern that renewables are being undervalued compared to traditional thermal power plants like gas, which suffered widespread failures during recent bouts of severe winter weather but which often get accreditation scores that may not reflect their actual reliability risks, such as freezing equipment or fuel supply failures, critics say.

“While many regions are moving towards improvements in capacity accreditation approaches, there has been little guidance from FERC on this increasingly important issue,” said Gabe Tabak, senior counsel of the American Clean Power Association. “We think the time is right for FERC to have a holistic discussion that can help to identify best practices and inform future capacity accreditation efforts as every region in the country moves to an increasing proportion of renewables and storage on the grid.”

FERC has opened a docket and is accepting comments on the request for a conference.

For battery storage in particular there are “tricky” aspects to modeling, including when the batteries would discharge during emergency situations in relation to other emergency resources (including “demand response” initiatives that encourage customers to shift or cut their usage), how they manage their charge status and how hybrid resources like the Searcy plant interact with the grid, among others, said Newell.

“I do agree with American Clean Power that getting accreditation right is really important for positioning us to have a grid that remains reliable as we go to a very different kind of fleet and accurately signals the resource adequacy contribution of each type of resource in the portfolio,” he said. For batteries, there’s also debate, like is currently playing out in MISO, about whether batteries need so-called long-term firm (or uninterruptible) transmission contracts.

Storage developers are opposed “because it’s costly and they won’t use it all the time,” McIntire said.

A MISO spokesman said the organization is “fuel agnostic and will manage the resources provided by our members and approved by state regulators to ensure the grid is operated reliably and efficiency,” noting that the RTO is weighing several changes to its accreditation process and other requirements “in multiple stakeholder forums.”

There’s also another regulatory challenge posed by battery storage. Depending on how it’s deployed, it can provide both traditional power generation and transmission service by adding power or taking it off the transmission system as the grid might require, perhaps reducing the need for new wires.

“Storage can play in all these markets,” said Paul Denholm, a senior research fellow at the National Renewable Energy Laboratory. “Our regulations are not designed for assets that provide both.”

Why it matters 

It may seem dense and arcane, but how power generating resources are valued is incredibly important in deciding what sources get added to the grid. Utilities and their regulators factor in capacity accreditation into their decisions on what to build.

“If batteries are heavily discounted they might say ‘Never mind,’” Burwen said. Developers looking to sell projects to utilities also need to know how grid operators will value those projects, said McInitire of the NRDC.

“In order to be able to put a proposal on the table for the utility they need to have certainty over all the different values they bring for that proposal,” she said. “Not having certainty on that is a problem.”

Customers also might be paying for electric capacity they may not need if some resources are undervalued.

“We’ll either need to procure more or less depending on how MISO accredits this. … It’s really super in the weeds but it kind of goes to the heart of the issue,” said Beth Soholt, executive director of the Clean Grid Alliance, a nonprofit in St. Paul, Minnesota, that has been following the debate on MISO’s reforms.

With similar wrangling taking place across the country, it’s time for a national conversion, grid experts like Newell and McIntire say.

“In my mind it would be really great as an industry if we could come up with a methodology that we could work out across the board,” McIntire said.