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For wind and solar renewable energy sources to make advances as a more reliable source of power, an energy storage component is necessary to overcome their intermittent nature.    The amount of electricity that wind and solar energy producers are able to provide to the gird fluctuates with the blowing of the wind and shining of the sun, which can make it difficult to stabilize the grid.  Traditionally, the lulls in electricity production have been filled by energy producers that can produce on command, like natural gas plants.  However, recently there has been growth in energy storage.

The Growth of Energy Storage

Energy storage systems are often thought of as batteries, but energy storage can take many forms.  The most common is pumped storage hydropower, which is where excess electricity is used to pump water to a higher elevation, and when more power is needed, the water is released, which produces electricity through a turbine.  However, water storage isn’t always feasible because of its size and cost.

In August 2020, Able Grid Energy Solutions started construction on the largest stand-alone battery storage project in Texas, called The Chisholm Grid project.  When completed, it will be capable of providing 100MW of power to the ERCOT grid.  The Chisolm Grid project illustrates a larger development across the United States and the world to add energy storage. 

The EIA reported that from 2014 to 2019 the storage power capacity of operating utility-scale battery storage facilities in the US quadrupled.  ERCOT and Deloitte predict energy storage to continue to grow at a rapid rate over the foreseeable future.  Globally, battery storage is expected to grow 500 percent by 2025, according to IHS Markit, an energy data analysis and consulting firm.  Many factors are propelling the growth of energy storage, including the falling price of lithium, government and regulatory policy changes, advancement in technology, and participation in wholesale electricity markets.  Conventional wisdom has often paired energy storage and renewables for obvious reasons, but energy storage is now reaching the point where it is valuable on its own as a way to modernize and stabilize the grid, regardless of energy generation sources.

https://www.eia.gov/todayinenergy/detail.php?id=40072

Developers Should Prepare for Storage

Energy storage is increasingly lucrative, because of its growth and acceptance as a major part of the grid.  In ERCOT, the price of electricity is reevaluated every 15 minutes based on supply and demand.  Energy storage allows the storing party to meet energy demand when that energy demand outweighs supply and prices are better for producers.  Accordingly, wind and solar developers are increasingly adding small battery storage projects to wind and solar farms, so that they can take advantage of opportunities to sell energy at optimal prices.

It is important for developers to plan for and contract for the ability to construct storage facilities onsite, specifically when siting their solar and wind projects, even if storage isn’t contemplated at the outset of construction.  Alternatively, for already existing wind or solar farms, producers should consider additional construction of storage systems that can tie into their current site to better provide for continuous energy output. 


Authors

Lauren K. King

John M. Byrom

Table of Sources

Wayne Hicks, Declining Renewable Costs Drive Focus on Energy Storage, NREL (Jan. 2, 2020), https://www.nrel.gov/news/features/2020/declining-renewable-costs-drive-focus-on-energy-storage.html.

Chris Tomlinson, Batteries Begin Storing Wind and Solar Energy for the Texas Grid, Hou. Chron. (Sept. 7, 2020), https://www.houstonchronicle.com/business/columnists/tomlinson/article/Batteries-begin-storing-wind-and-solar-energy-for-15532401.php#photo-18354937.

Marlene Motyka et al., Supercharged: Challenges and Opportunities in Global Battery Storage Markets, Deloitte Center for Energy Solutions, (2018), https://www2.deloitte.com/content/dam/Deloitte/us/Documents/energy-resources/us-energy-and-resources-global-energy-storage-renewable.pdf

Patricia Hutchins, U.S. Utility-scale Battery Storage Power Capacity to Grow Substantially by 2023, U.S. Energy Information Administration, July 10, 2019, https://www.eia.gov/todayinenergy/detail.php?id=40072.

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The information is provided for informational purposes only and is not legal advice, nor does reading anything that we author or post on our website constitute legal advice or create an attorney-client relationship. Additionally, we may periodically update the content of our website, but the content is not necessarily complete or up to date. Likewise, information posted on our website may not be applicable to all jurisdictions.

McCarn & Weir, P.C. is comprised of attorneys and professional staff highly experienced in transactions and litigation involving the Energy, Real Estate, Corporate, Banking and Finance industries. Our firm has multiple attorneys Board Certified in Oil, Gas and Mineral Law by the Texas Board of Legal Specialization, along with attorneys licensed in Texas, Oklahoma, New Mexico and California. Our goal is to provide high quality and cost-effective legal services, while maintaining the flexibility to adapt to the ever-changing needs of the industries we represent.


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