US grid-scale battery storage capacity is expected to nearly double this year, with the largest growth anticipated in California and Texas. Here’s what you need to know.
In the past four years, California has installed more large-scale batteries than any other place in the world, except for China. In April 2024, CAISO crossed the 10 gigawatt (GW) battery storage threshold in total installations (see chart below). This includes behind-the-meter installations as well as utility-scale batteries.
Source: California Energy Commission
Utility-scale batteries operating in the California Independent System Operator (CAISO) help stabilize the grid, prevent outages, and further integrate renewable energy sources like solar and wind, which are intermittent. Large-scale battery energy storage systems (BESS) allow utilities to rapidly respond to fluctuations in supply and demand by storing electricity when prices are low and discharging when prices are high. In this way, batteries are offering energy by responding to real-time price signals.
Batteries also provide the majority of cleared capacity in CAISO’s regulation up/down ancillary services and the majority of cleared capacity in CAISO’s flexible ramp-up product. As battery capacity has grown, clearing these ancillaries started to reach full saturation, and more capacity started offering energy. Currently, the majority of batteries offer energy in CAISO.
In California, power prices typically drop around midday due to an excess of solar power. Prices then surge in the evening when solar power wanes, leading to market dispatch from gas plants, hydroelectric dams/pumped hydro storage, and more recently batteries.
Since batteries can quickly ramp up or down in response to load and generation changes, this makes them valuable assets for flattening thermal stack ramp rates when the sun sets. With growing solar capacity in CAISO, one-hour net load ramp rates have skyrocketed in hour ending (HE) 21 in the summer months.
In contrast, summer battery generation in HE 21 has stalled the corresponding one-hour ramp rates for hydro and thermal facilities. Looking at net load less battery discharge over the past five summers shows that one-hour ramp rates have dropped for hydro and thermal facilities.
Source: Yes Energy’s Time Series Analysis module
The number of batteries is expected to keep growing as California moves toward its ambitious 2045 goal of reaching a 100% carbon-free grid, of which battery capacity is projected to need 52 GW capacity to help meet carbon-free goals. Although there’s a lot of battery production in the pipeline, it’s important to distinguish proposed battery projects – some of which may never come to pass – from those currently in development.
According to Yes Energy®’s Infrastructure Insights Dataset, California currently has 3.3 GW of utility-scale battery storage that’s under construction and anticipated to be complete by the end of 2024. Combined with current battery storage, this will raise the utility-scale storage capacity to 12.7 GW by the end of 2024.
Source: Yes Energy’s Infrastructure Insights Dataset. CAISO utility-scale battery storage by year.
As battery storage continues to expand in California, it will help boost solar power's share of electricity generation by reducing curtailment. It will also help smooth out thermal and hydro ramp rates when the sun sets and solar generation rolls off the grid.
What happens next can help inform other power market participants as they go about greening their grids. That’s important because asset developers and investors need to incorporate infrastructure projects into their analysis in order to better understand upcoming changes to supply and demand. Traders, meanwhile, can use the information to better understand how grid changes may impact long-term positions. And utilities need the information to anticipate how these changes will impact their generation, transmission, and demand.
Although California currently leads the US battery market in installed capacity, Texas is quickly catching up and could pass CAISO in utility-scale battery capacity by the end of 2025.
The Electric Reliability Council of Texas (ERCOT) is expected to install around ~5 GW of utility-scale batteries in 2024, bringing the total grid-scale battery capacity to around 10 GW.
Source: Yes Energy’s Infrastructure Insights Dataset
In ERCOT, batteries have historically cleared the majority of their capacity in the ancillary service market, reaching a peak capacity of 69% in June 2023 with the introduction of ERCOT’s Contingency Reserve Service (ECRS). That trend changed at the start of 2024 when new battery capacity additions shifted the balance in favor of energy offers for the first time.
The majority of revenue for batteries in ERCOT still comes from the ancillary market, since energy offers from batteries remain at ultra-high levels that don’t see real-time dispatch relatively often. Data from ERCOT’s 60-day SCED generation resource report in May 2024 shows that 52% of battery capacity in real-time Security Constrained Economic Dispatch (SCED) cleared in the ancillary market, compared to 62% of battery capacity in May 2023.
Source: ERCOT 60-Day generation resource data pulled through Yes Energy in Snowflake
A growing number of developers are pairing their projects with battery storage to maximize their income. Meanwhile, new tax credits in the 2022 Inflation Reduction Act have encouraged additional growth of stand-alone batteries.
All of this affects battery siting and dispatch optimization. Asset developers, traders, and independent power producers (IPPs) need to understand historic patterns of congestion and how new entrants will affect the grid. Battery optimization, meanwhile, requires insight into the market conditions that drive intraday price volatility so operators can manage their charging and discharging cycle.
Yes Energy’s Infrastructure Insights Dataset is designed to help participants maintain project profitability by gaining insights into the planned generation, transmission, and load center facilities coming online or retiring across the US.
Source: Infrastructure Insights Dataset
The dataset is the deepest and the most thoroughly researched database of energy infrastructure projects in North America, with data from over 2,000 sources. The dataset includes comprehensive data around new projects, retirements, and major upgrades so you can understand upcoming changes to the grid in order to make accurate, forward-looking decisions.
Learn how the Infrastructure Insights Dataset can support your needs by scheduling a demo.