Enel announced on Tuesday a dramatic expansion of its energy storage ambitions in the United States, saying it will add 1 gigawatt of storage capacity to its renewable energy fleet by 2022.
That’s a huge leap since the end of 2019, when the Italian utilities group and the renewable energy plant pledged to build another 14.1 gigawatts of renewable energy capacity globally by 2022 through their Enel Green Power arm, alongside with 300 megawatts of energy storage from your Enel X unit.
While Enel X focuses on smaller customer-located batteries to help businesses with demand charges, backup power, and other needs, the new 1 gigawatt pledge applies to the service-scale renewable development business public of Enel. And it starts in Texas, which has long lagged behind in energy storage development, but has recently begun to heat up.
“North America is at the forefront of Enel’s plans to deploy storage with its renewable generation fleet,” Ryan Prescott, head of energy storage growth and development strategy at Enel Green Power, said in an interview Monday.
The strategic shift from independent renewables to battery-powered hybrids takes advantage of falling battery costs, the federal Investment Tax Credit, and wholesale market opportunities stemming from Order 841 of the Federal Energy Regulatory Commission, which allows that storage competes with other energy sources.
Enel will use firm battery capacity “to compete … apples to apples with those traditional fossil generators,” Prescott said.
Other U.S. renewables giants, such as NextEra Energy Resources and Invenergy, also combine batteries with renewables to acquire gas generators, and began doing so on a larger scale before Enel. But Enel can take advantage of global supply chains on a larger scale than its U.S.-focused competition, Prescott said. “That can help us cut costs in a way that sets us apart.”
Enel’s utility scale storage efforts will also build on Enel X’s in-house battery power management experience, which has years of experience calculating the opportunities and costs of shipping batteries to organized markets.
Betting on the Texas energy storage market
The first entry into battery construction has already begun construction in Texas, for delivery in the summer of 2021. The Lily project, located southeast of Dallas, includes 146 megawatts of bifacial solar panels and a 50 megawatt / 75 battery megawatt-hours of storage capacity. That makes it one of the first to adopt two-sided photovoltaic panels, which increase production by capturing reflected sunlight on the ground.
Storage developers have struggled to enter ERCOT, the competitive energy market that covers most of Texas.
The great battery development to date relies heavily on bilateral contracts with utility companies in places like Hawaii, California, Nevada and Arizona. In comparison, ERCOT lacks a capacity market, and cable utilities in the state generally cannot build batteries, which are considered “generation.” Therefore, batteries must compete face-to-face with other generators in the Texas power market, where there is little history of battery success, a factor that may scare off financial storage potentials.
But Enel is his own financier; The Rome-based company, which belongs in part to the Italian government, claims more than 80 gigawatts of installed generation capacity globally, more than half of those renewables, including hydro. Enel has been one of the largest wind developers in the US in recent years, acquiring developer Tradewind Energy last year, and is a growing player in large-scale solar energy.
“We are a pretty strong entity from a balance sheet perspective,” Prescott said. “We are able to leverage that corporate strength to do things in a market with good fundamentals, but perhaps not with so many long-term takes.”
Some other companies are beginning to take that risk. Vistra Energy built the largest Texan battery by megawatt-hour capacity at its existing Upton 2 solar facility in 2018. It said the battery would save solar production that was “cutting” or blocking export due to interconnection limitations.
Key Capture Energy began operating two 10-megawatt batteries in May, one on the Texas Gulf Coast and one in West Texas. Newly-formed developer Broad Reach Power said it would bring 15 batteries online throughout Texas by the end of the year, each capable of delivering 10 megawatts.
Agile capacity
When Prescott sees strong fundamentals in ERCOT for a project like Lily, he talks about high renewable penetration, low reserve margin, and cargo growth, all of which create volatility in the market.
Lily’s battery will have an unusual power-to-energy ratio: longer life than a typical fast-response auxiliary service battery, but shorter than batteries that meet capacity obligations. The 1.5-hour duration will be enough to shift cheap solar output to the short-lived but lucrative price spikes that characterize the Texas summer season.
“The really high price spikes of $ 9,000 per megawatt-hour are very short-lived, so you don’t necessarily have to have a very long-lasting battery to take advantage of them,” Prescott said. “It was difficult for us to see a justification in the [Texas] markets now, and certainly for the foreseeable future, for a 4-hour battery to profit. “
Enel acquired the Red River Renewable Energy solar development Lily, then began adding a battery component. In addition to energy arbitrage for price spikes, the trimmed solar energy capture helped the calculation of the business, Prescott said, as did the opportunity to cover energy price exposure for solar energy consumption deals. The project also qualifies for the federal Investment Tax Credit.
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