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President-Designate Mukhtar Babayev kicked off the climate diplomatic year in Berlin.
As if one set of energy policy announcements wasn’t enough.
Utilities in the Southeast, especially, may have to rethink.
Manufacturers and installers have different opinions on tariffs.
On the new auction schedule, Tesla earnings, and the Mercedes G-Class EV
The Solar For All program is the final piece of the $27 billion Greenhouse Gas Reduction Fund.
The great promise of solar panels — in addition to their being carbon-free — is the democratization of energy. Anyone can produce their own power, typically for less than the going utility rate. The problem is that those who stand to benefit the most from this opportunity haven’t been able to access it.
That pattern could change, however, with Solar for All, a $7 billion program under the Environmental Protection Agency to support solar in low- to moderate-income communities. On Monday, the Biden administration announced it was awarding the funds to 60 state and local governments, tribes, and national and regional nonprofits, at an average grant size of more than $80 million.
The funding will be used to design new programs and bolster existing ones that subsidize the cost of rooftop solar installations, community solar projects and battery storage. During a press call on Friday, the administration said the awardees have committed to deliver at least 20% utility bill savings to the households they serve.
To get a sense of how transformative Solar for All could be, it’s helpful to look at the numbers. According to Department of Energy data, low- to moderate-income households spend an average of 6% of their income on energy, with some paying as much as 30%, whereas households at higher income levels spend an average of just 2%. As much as a quarter of the country reports having struggled to pay electric bills, sacrificing basic needs like food and medicine or keeping their homes at unsafe temperatures because of energy concerns.
The number of these households installing rooftop solar has been increasing steadily year over year, but in 2022, they still made up only about 22% of installations, though they represent about 43% of the population.
The disparity is largely due to the high up-front cost of a solar installation, plus the fact that lower-income Americans are less likely to own their homes. While there’s a federal tax incentive to bring down the cost, low-income households may not have the tax liability to take advantage of it. They also are more likely to live in older homes that require roof repairs, the cost of which are often not covered by incentive programs.
Solar for All represents a potential step change. In at least 25 of the states and territories awarded through the program, there are no pre-existing low-income solar programs. The EPA estimates that the funds will help more than 900,000 households see the benefits of solar. It will also increase resilience in low-income communities during power outages by giving more households access to backup batteries.
Biden and his cabinet are taking a victory lap this week in honor of Earth Day, with a national tour of events and announcements related to the president’s climate and environmental record. In addition to Solar For All, the administration also launched a new web portal for the American Climate Corps on Monday, which lists nearly 2,000 training and job opportunities in fields like solar installation and mangrove restoration.
With this $7 billion heading out the door this summer, Biden will soon have distributed the full $27 billion that Congress allocated to a program called the Greenhouse Gas Reduction Fund two years ago when it passed the Inflation Reduction Act. The initial $20 billion was awarded in early April to launch a national network of green banks that will provide low-cost loans and other affordable finance options for climate adaptation and mitigation initiatives.
Texas and California offered intriguing, opposing examples of what batteries can do for the grid.
While cold winters in the south and hot summers across the country are the most dramatic times for electricity usage — with air conditioners blasting as weary workers return home or inefficient electric heaters strain to keep toes warm from Chattanooga to El Paso before the sun is up — it may be early spring that gives us the most insight into the lower-emitting grid of the future.
In California, America’s longtime leader in clean energy deployment, the combination of mild temperatures and longer days means that solar power can do most of the heavy lifting. And in Texas — whose uniquely isolated, market-based and permissive grid is fast becoming the source of much of the country’s clean power growth — regulators allow the state’s vast fleet of natural gas power (and some coal) power plants to shut down for maintenance during the mild weather, giving renewables time to shine.
And not just renewables: Both Texas and California saw remarkable usage of batteries on the grid this week. If the whole country’s grid is ever going to be decarbonized, other grids will have to start looking at what's happening in America’s two largest states.
At 7:30 p.m. Central Time on Tuesday, with 20,000 megawatts of power unavailable due to planned outages of thermal power plants, batteries were providing 1.7 gigawatts of power to the Texas grid, slightly more than solar, while wind was providing 5.5 gigawatts. Four hours earlier, solar and wind combined for almost 25 gigawatts. Real-time prices Tuesday evening topped out at over $4,000 per megawatt hour, getting close to the $5,000 cap imposed after blackouts and price spikes of Winter Storm Uri in 2021.
“There was a substantial amount of physical capacity available still,” Connor Waldoch, co-founder of the electricity monitoring company Grid Status, told me, referring to generation that was capable of selling power to the grid but was being kept off in case of an emergency. “ERCOT,” the organization that governs the Texas grid, “has been operating conservatively for the last few years,” he said. Temperatures were also high late in the day, with temperatures in the 80s in the evening parts of Texas, leading ERCOT to ask some plants to delay their scheduled maintenance.
According to Grid Status,there was more battery storage on the Texas grid Tuesday than at any point since high temperatures tested its stability last September. That combined with high prices in the real-time energy market meant a huge payday for battery storage operators. When there are more planned outages for natural gas, Waldoch explained, batteries are bidding “at the very tippity top” and likely earning huge revenues in just a few a hours.
But all those batteries are not necessarily helping decarbonize Texas’ electricity system by charging when there’s a lot of cheap solar and discharging when renewables are scarce and prices are high.
That’s because battery systems in Texas make the lion’s share of their revenues by providing what’s known in Texas as “ancillary services.” ERCOT pays battery operators to be available if the grid needs power quickly — and then they get paid again for the power they provide when called upon.
The spike in prices and battery operators' response be a sign that the battery market is maturing. In 2023, according to the battery storage data service Modo Energy, Texas battery operators earned around 85% of their revenuefrom providing ancillary services. For battery developers, earning money this way is ideal because it means less wear and tear on battery systems as they charge and discharge.
That said, the portion of revenue that battery systems earn from selling actual energy almost tripled from 2022 to 2023; Brandt Vermillion, Modo’s ERCOT lead, estimated that installed battery capacity would double in ERCOT in 2024, while the amount of ancillary services would stay “more or less fixed.” As the supply of battery capacity gets closer to and possibly exceeds demand for ancillary services, those prices will fall, Vermillion said. Over time, “energy arbitrage” — charging when prices are low and discharging when prices are high — will become a more and more attractive way to earn revenue.
To get a sense of what that will look like, Texas battery storage operators should look west.
In California this week, conditions were more, well, pacific. At 8 p.m. Pacific Time on Tuesday night, there were around 6 gigawatts of battery storage discharging onto the grid, more than the 5 gigawatts of natural gas or the 4.5 gigawatts of hydro power at the time. Batteries were the largest source of power on the grid.
This was a signal moment for California, which has been procuring and deploying grid batteries at a breakneck pace, and even retooled its residential solar program to encourage home battery storage. California’s grid has over 7 gigawatts of installed battery storage, according to the Energy Information Administration, the most of any state, while Texas, in second place, has just over 3 gigawatts. (There are another 300 utility-scale battery projects in the pipeline for 2024, according to the EIA, with about half of them planned for Texas.)
In California, the so-called “saturation” of ancillary services by batteries is far more advanced, and the portion of revenues earned by battery systems by providing them has decreased.
“Ancillary services have gone from taking up the majority of battery capacity to only a small fraction,” according to a report by the California Independent System Operator. By the end of 2022, the majority of battery revenue came from the energy markets, not ancillary services, the report said.
Thanks to the magnitude of solar in California, Grid Status’ Waldoch explained, “almost every day there’s a long negative- or low-price period” — an ideal time for carbon-abating energy arbitrage.
Batteries that are most carbon-abating tend to power themselves when transmission is congested, which essentially “strands” renewables on the grid, or when they would otherwise be curtailed, when there’s too much renewable power available compared to demand, explained Emma Konet, co-founder of Tierra Climate, which is working to set up a voluntary carbon market to encourage carbon-abating battery usage. When the company examined Texas’ battery market in 2022, it found that only about a fifth of batteries were actually abating carbon.
In fact, the most carbon-intensive battery system in Texas that Tierra Climate looked at was also its most profitable, making the lion’s share of its revenue in the ancillary services markets; the most carbon-abating didn’t participate in the ancillary services markets at all, and was paired directly with a solar project.
Texas's energy market is simply not structured in a way such that there's a good correlation between low prices and low emissions for charging and high prices and high emissions when batteries discharge, Konet told me. (The best way to align batteries with lower emissions, she added, would be a carbon tax of at least $50 a ton.) While Tierra Climate hasn’t looked in detail at California, Konet said California’s battery systems are more likely to be carbon-abating because of the prevalence of storage projects paired with renewable generation.
There’s probably no worse way to encourage Texas to do something than by pointing to California as a positive example. Still, if Texas’ battery storage industry is ever going to turn into something more than an adjuster pedal for its existing grid mix, it’s going to have to get a little more Left Coast — or at least move a little closer to those solar panels.
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