Battery storage value pools
The ability to deploy battery storage either at solar or wind farms enhances revenue opportunities of each asset, while deploying storage at brownfield asset sites significantly lowers interconnection-related costs. Battery storage is also being deployed as transmission system assets to address grid inefficiencies or localized pockets of congestion that would otherwise require costly infrastructure investments.
To date, however, capturing this opportunity has been limited to participation in wholesale markets, and more specifically to energy and ancillary service participation. The main areas of opportunity include:
- Energy time-shift arbitrage.
- Ancillary services (primarily regulation services and secondarily reserve services).
- Energy vs. ancillary services arbitrage.
- Market settlement arbitrage (day-ahead vs real-time).
Enabling the path to net zero
The starting point describes the limited role storage currently plays across the WECC, highlighting a significant gap against the potential of storage to support the path to net zero. We have identified three imperatives for the power sector to bridge this gap.
- Re-examine regulatory and market structures to better support and incentivize deployment.
- Invest in digital capabilities to optimize storage.
- Integrate storage into a broader system framework to accelerate the path to net zero.
Implications for market participants
Recommendations for regulators
Effective policy is critical to achieving net zero within the timeframes needed to avoid irreversible climate impacts. While regulators should avoid choosing “winners,” they should seek to understand where they are on the path to net zero, the levers with the most impact and where to invest. Continued investment in R&D should follow, as well as continued dialogue with system operators, utilities and asset owners to understand ongoing challenges and enact supporting policy.
They should look for ways to create additional flexibility for different types of assets, including storage, to participate in the market and work to simplify and standardize permitting and deployment regulations. Such efforts could significantly boost creating the appropriate supporting conditions to accelerate storage adoption and deployment.
Recommendations for system operators
System operators will need to redesign for a variable energy system with greater resilience. They should be clear about their vision for the future grid and the architectural implications. Storage has an important role here and system operators and regulators should work together to create flexibility for a range of assets to participate in the market. Looking beyond storage and given the levers system operators will need to achieve net zero, they should also come up with comprehensive digital strategies to support system optimization at the lowest cost.
Recommendations for utilities and asset owners
Utilities and asset owners are on the frontlines of storage deployment. They should continue exploring new opportunities and business cases for storage to fulfill its technological potential and share these learnings as they emerge. These successes, lessons learned, and ongoing challenges would create a source of industry case studies from which regulators, system operators and other utilities or asset owners could learn to accelerate the pace of change.
To enhance revenue of their deployments, digital technologies will be key, empowering utilities and asset owners to enhance individual market participation strategies and integrated asset strategies.