Battery energy storage systems (BESS) as an energy storage application are extremely vital when it comes to large-scale solar energy use. BESS store energy from renewable sources, such as solar and wind, and then are released for when power is needed most.
Different Systems of California & Texas
Energy markets have rules that require different mechanisms to buy and sell energy at the time of use. There are different value streams offered based on the location; for instance, the California Independent System Operator (CAISO) provides different systems to the energy markets than the Electric Reliability Council of Texas (ERCOT).
In California, a lot of solar shifting is used in an effort to flatten out the “duck curve,” or the phenomenon stating the most energy consumption occurs in the evening when the sun has set. The most ideal solution is to store solar energy into a battery during the day, and then release it during the evening when the grid needs it more.
With ERCOT in Texas, there are many solutions involving standalone BESS, frequency regulation, and energy arbitrage. Compared to CAISO, ERCOT offers shorter term, quicker responses with a product called Fast Frequency Response (FFR) to address frequency deviation on the grid. Battery storage facilities can participate in it for full-power output support in Texas. CAISO, on the other hand, doesn't necessarily need as much frequency response because it’s connected within the Western Interconnection grid whereas Texas is not. As you can see, products are tailored to the intricacies of their markets.
On the California side, pairing solar with storage is essentially more of a default as it tends to make more sense financially. Important to this market is the use of Resource Adequacy (RA) contracts, a four-hour market product. For example, if Pacific Gas and Electric Company or Southern California Edison experience some unexpected load consumptions and more time is needed to secure or transfer power from elsewhere, they can call on the battery with that four-hour contract to firm up resources on the grid. Today it is not uncommon to see customers who have dedicated a portion of their land to have a Power Purchase Agreement (PPA) including RA contracts, and then often co-locate a second asset to be a merchant asset, which relates to the next point of energy arbitrage.
The ability for solar plus storage facilities to charge off the grid, take the negative pricing that exists when there is too much solar being produced, and push it back into the grid when the price is favorable describes the art of energy arbitrage. This practice is similar to day-trading or playing the market by “buying low and selling high,” but it is also highly beneficial in helping to balance the grid as a whole. The grid has a constant balancing act between load consumption and energy generation. BESS is a quick-responding solution that provides staying power to aid in this critical balance.
Bottom line: Battery energy storage is an enabler of renewable energy penetration on the grid.
So, it is clear the utilization of BESS as an energy storage application that stores from renewable sources, such as solar and wind, is always going to be essential in the evolution of the grid to replace fossil fuels with renewables energy resources.