Energy Storage Transforming the Grid (or Not): RTO’s Shaping Deployment, Cost, and Value of Batteries

• In Event: Coordinating Grid Needs: Demand-Side Innovation Across Institutions, Customers, and Technologies

Abstract

Battery storage is transforming how some U.S. energy systems operate. With over 26 GW of battery storage on the U.S. grid, batteries represent one of the fastest-growing resources. They can be used for arbitrage, load leveling, load following and ramping, reducing solar or wind curtailment, providing ancillary services, deferring transmission or distribution network upgrades, ensuring power quality, and providing black start capabilities. Yet, their deployment across different regional markets is patchy: California Independent System Operator (11 GW) and the Electric Reliability Council of Texas (7.5 GW) dominate grid-connected storage. Like any new technology, batteries must create viable business models, integrate with state policy priorities, and develop new energy market models. These are being shaped by the market rules, interconnection processes, institutional designs, and governance structures negotiated in Regional Transmission Organizations / Independent System Operators (RTOs/ISOs). In light of the rapid growth of battery storage, this paper updates and extends earlier work by Lenhart and Fox (2021) to examine changes in the cost and value of battery technology and variations across RTOs/ISOs in deployment and operations. Using three case studies of RTOs, we identify common mechanisms shaping the evolving relationships between RTO institutional design and market rules, examine the different roles battery storage is playing across the grid, and highlight the cost of institutional designs that are not well aligned for technology innovation.

Authors

• Stephanie Lenhart, Boise State University
  Presenting Author

• Elizabeth J. Wilson, Dartmouth College
  Non-Presenting Co-Author