And all the while, the grid has been stable, which is by no means guaranteed in Texas.
The state’s grid operator, ERCOT, has not issued a single “conservation appeal” so far this summer, asking Texans to voluntarily reduce electricity consumption to support the grid. By contrast, in 2023, the grid manager issued six between August 24 and August 30.
Those conservation appeals were almost always given for the late afternoon and early evening, when demand typically peaks thanks to demand from workers returning home and cranking up their air conditioning. That’s also when the grid has to ramp up dispatchable resources quickly to compensate for solar falling off the grid as the sun sets.
“We’re really seeing peak demand divorced from peak prices,” Joshua Rhodes, research scientist at the University of Texas, told me. This means that when demand is at its highest on a summer day — say around 4 p.m. this past Monday, when load was over 90 gigawatts — real-time prices were about $46 per megawatt-hour, according to Grid Status. At that time, natural gas made up about 42% of the grid and solar 36%. Compare that to the same time in 2023, when real-time prices were $85 per megawatt-hour during peak usage times and wind and solar combined made up around 20% of the grid.
As Abby Lestina, principal market analyst at Grid Status, put it to me, “The lack of pricing action would lead to the conclusion that the grid is more stable.”
Another positive side effect of that stability is that batteries on the system can still charge even when demand is at its highest, and then discharge in the evening to help make up for lost solar. “Even when we were setting peak demand records, we’re still on net charging batteries, which at first blush feels so wrong,” Rhodes told me. “We have so much solar on the system that we’re charging batteries when prices are low, getting ready to discharge as the sun goes down before the wind picks back up.”
Let’s take Monday as an example again: At 7:50 p.m., when solar was down to just 1.5% of the mix on the grid, batteries were discharging 11,573 megawatts and real-time prices were around $125 per-megawatt-hour. On the same Monday of 2023, real-time prices at 7:50 p.m. were bouncing up and down from just below the statutory peak of $5,000 per megawatt hour and batteries were putting out just over a gigawatt.
“Because we have so much battery capacity online, it hasn’t been all that exciting,” Olivier Beaufils, head of US central at Aurora Energy Advisors, told me, referring to the hand-off from solar to batteries. “The price action, it’s like 150 bucks, not thousands, and that’s really because of this battery capacity.”
Texas is also aided by friendly geography — there are extensive solar projects in the western part of the state, while the load is largely in the Texas Triangle in the eastern part of the state, giving solar panels an extra hour or so to serve high demand later in the day.
Average electricity bills in Texas, an energy-hungry state, sat at $252 a month in July, according to Heatmap and MIT’s Electricity Price Hub, up just 2.3% in the past year, while rates are virtually unchanged at 16 cents per kilowatt-hour.
Along with California’s CAISO, ERCOT dominates battery deployment in the United States. According to the energy consulting firm GridLab, “ERCOT alone has deployed nearly 10 times more storage than PJM, MISO, SPP, and the Southeast combined.”
If anything, Texas’ solar and grid battery industries have been a victim of their own success. In Texas, where battery projects are brought online by investors seeking profits in the energy markets, generators make money by selling when prices are high. The same lower prices that show batteries are making the grid more stable are also revenues that battery operators are no longer getting.
“We’ve added so much battery capacity that they’ve cannibalized, they’ve eaten their own lunch,” Beaufils told me. “The situation’s a bit difficult for those operators.” California’s battery storage sector, by contrast, originated with a state mandate for utilities, jumpstarting the industry by force.
Of course, these types of cycles are nothing new to the energy business, especially in Texas.
“ERCOT’s characterized by these boom-bust cycles, and so the market’s never perfectly going to be in a supply-demand equilibrium,” Kevin Lee, head of advisory services for the central U.S. at Aurora Energy Research, told me. “Sometimes you have a little bit less capacity than you need, sometimes a little bit more. But generally, whenever you have a little bit less, the price signals go up, and then that’s driving more investment.”
While Texas still leads the country in battery additions so far this year, other states besides California are beginning to catch up, including Arizona. Thankfully, there’s still more sun yet to store.
The Smackover Formation in Arkansas could hold vast lithium reserves.USGS
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