PUC shoots down new battery rules
Utility regulators question ERCOT’S data suggesting failures affected Texas power grid
State utility regulators shot down efforts by the Electric Reliability Council of Texas to impose new rules on large-scale battery sites, siding with operators who decried the grid operator’s rules as costly and discriminatory.
The unanimous decision by the Public Utility Commission of Texas came after five months of contentious discussion among ERCOT, its regulator and battery operators that reached new heights ahead of Thursday’s meeting. It was touched off by a report from the grid operator intended to show grid-level batteries were unreliable without stricter rules.
Texas battery operators, seven of which wrote letters ahead of the meeting opposing all or parts of the proposal, weren’t the only ones not buying it.
“This presentation that ERCOT put together shows me one thing, really, and that is that every resource fails,” said Commissioner James Glotfelty. “So, singling out ancillary services providers of battery storage is discriminatory. Gas plants fail. Nuclear plants fail. Coal plants fail.”
In its last-ditch effort to persuade regulators its proposed rules were necessary, ERCOT highlighted a day in August and another in September when it said batteries didn’t maintain a high enough state of charge, calling them “real-life examples” of shortfalls by battery systems in deploying power reserves.
In responses filed ahead of the meeting, several companies argued ERCOT cherry-picked the data. And the Sierra Club Lone Star Chapter filed testimony saying traditional generators — gas and coal — had higher rates of failure on the dates ERCOT highlighted based on the grid operator’s own data.
Commissioners ultimately vot
ed 3-0 for an order that allows ERCOT to collect data to learn more about how batteries operate. But it nixed penalizing battery operators over how much juice is in their batteries. The commissioners said existing penalties used when any type of power source fails to deliver on what they promised were sufficient for batteries, as well.
Industry responses
“Today, the Texas PUC took an important step in ensuring batteries will continue to support the grid just as they have through the state’s peak summer heat and the recent winter blast,” said Stephanie Smith, chief operating officer at battery operator Eolian, which operates three battery sites in Texas.
In a letter filed with the commission ahead of Thursday’s meeting, Enel, a company that has 520 megawatts of battery storage on the Texas grid, said it deduced that it was one of the examples ERCOT used but didn’t identify in its presentation.
The reason its battery system’s state of charge dropped? A failure in ERCOT’S system, the company said.
“Enel is able to inform the Commission that what ERCOT’S example and narrative fail to inform the Commission is that the (state of charge) of this Resource was due to an ERCOT system error that Enel previously has discussed with ERCOT,” the company wrote. “To date, ERCOT has provided no solution to its system limitations.”
ERCOT’S report and presentation came in response to questions from the commission when it twice delayed a vote on the issue late last year, with commissioners suggesting ERCOT hadn’t made its case.
The grid operator’s data for Thursday’s meeting pointed to the pair of high-demand days on which it said battery storage systems were short on power “due to insufficient state of charge.” On Aug. 17, it said, five systems were short as much as 113 megawatts. On Sept. 6 — a sweltering latesummer day the grid faced an emergency that batteries helped stave off — seven systems were short by as much as 74 megawatts.
ERCOT pitch
In its presentation, ERCOT said the data show that letting battery operators self-regulate their state of charge “without clear requirements or accountability introduces reliability risk.” It didn’t specify whether any of the systems mentioned belong to one company or exist within the same subgroup on the marketplace, a fact battery operators said is misleading.
ERCOT Vice President of System Operations Dan Woodfin has said the regulations would help grid operators know not just that there is a spare tire to rely on in emergencies but how much air is in the tire.
Commissioner Lori Cobos said Thursday that ERCOT still hadn’t explained how that knowledge would impact reliability.
“We’re wanting to really understand what the reliability risk is, and as I’m looking at this presentation backwards and forwards, I’m seeing the reverse,” Cobos said. “I’m seeing that we’re going to end up potentially in a situation where we’re not going to get the megawatts we need to maintain reliability in the next two years, three or four years.”
Eolian and other battery operators have been vocal about how the regulations could slow battery growth at a time the grid needs every megawatt it can get to meet the demands of extreme weather and the state’s growing population.
The companies argued the new rules could be used to fine storage sites hundreds of thousands of dollars if their batteries fall below ERCOT’S state-of-charge thresholds, even when they deliver the amount of power they promised. They also said the rules held batteries to higher standards than their counterparts running coaland natural gas-powered plants.
In its letter to the commission, the Sierra Club pointed to the two of four days that batteries failed to meet their obligations in ERCOT’S analysis. The environmental group called it a “small number” — 3% of the total.
“But the analysis found that traditional generators that also were providing ancillary services during those challenging hours had slightly higher rates of failure,” it wrote.
One letter was filed in support of the regulations. It was from Shell Energy North America, which, while having batteries in its portfolio, is primarily a natural gas supplier.
What’s next
ERCOT leadership maintained Thursday that the rules were necessary. Woodfin said the nature of ancillary services, which provide back-up power when supply gets tight, requires ERCOT to be sure generators can supply the amount of power it contracts to sell into the market.
“It really is a big deal from a liability perspective to make sure that those ancillary services can provide the products that we need for the duration that we need them to,” he told commissioners in defense of ERCOT’S proposed state-of-charge threshholds.
The grid operator has said part of its reason for the rules is that its technology isn’t yet sophisticated enough to account for a battery system’s charge in its marketplace. ERCOT therefore viewed the rules as a preliminary step until new technology is deployed in the next few years.
At the same time, batteries and solar power are the fastest-growing new source of generation on the Texas grid. Batteries work like a sponge to soak up power when it’s plentiful and push it back to the grid when its needed most.
During this week’s winter freeze, batteries pushed more than 1,000 megawatts onto the grid during each of the chilliest mornings as gas- and coal-plants worked to keep Texans’ heaters humming.
“Sustaining power for Texans in a way that is cost effective and reliable requires all technologies to play a role,” Smith said.