Traditionally, electricity markets have differed from other commodity markets for one specific reason - because electricity cannot be stored on a large scale. At least, that used to be the case. In 2021, utility-scale battery and storage assets are coming onto the grid at an unprecedented rate. More than 1 GW of battery storage was installed in 2020, which is twice the amount that was installed in 2019. This growth rate is expected to continue. EIA-860 data shows 10.9 GWs of capacity slated for development across 25 states.
Batteries solve the classic electricity problem, and they are expected to help balance supply and demand in real-time. Recently, Plus Power won two bids in the ISO-NE capacity auction for 2024. This suggests new implications for batteries in nodal markets, as new capacity has normally been provided by small, fast-ramping gas units (Utility Dive).
As batteries come onto the grid and participate in the markets in new ways, it’s essential that all market participants understand how batteries are affecting the markets in this period of unprecedented change.
Battery developers need to ensure that they develop and install their assets in locations with significant volatility and an opportunity for arbitrage. In order to maximize profits, batteries should be charged during times when the grid is seeing lower pricing and discharged during times of high demand and increased prices. In order to ensure that this is possible, battery owners and developers will need a holistic view of the grid, including plant-level generation, pricing, congestion, and constraint data.
In order for asset developers, owners, and operators to stay competitive in these evolving markets, they will need to be aware of how batteries are affecting the markets, and how batteries near their assets might affect them in particular. Questions they will need to consider include:
Will batteries cause volatility to drop?
Will batteries bid traditional generation resources out of capacity markets?
Will batteries solve the intermittency issues the grid is experiencing due to renewable penetration and make thermal generation obsolete in the long run?
Financial traders also need to consider how batteries will impact the grid, as they too will be affected by any pricing changes. As the grid evolves, financial participants will have to keep an eye on how volatility is changing:
Will it move to new locations?
Will volatility decrease?
Will the traditional periods of volatility change?
As batteries continue to come onto the grid quickly, changing market dynamics, it will be essential for all nodal market participants to have access to data solutions that can help them monitor specific changes batteries may be causing on the grid. Yes Energy is the industry leader of nodal power market data solutions. With Big Data solutions supporting historical, real-time, and transactional analysis, you can stay ahead of the markets and stay competitive, as batteries and other future technologies come online. We can help you discover where to develop assets to maximize profits, ensure that batteries don’t outsmart you on the grid, and keep an eye on the dynamics of the grid. To learn more about our solutions, and for a complimentary consultation, click here.