Texas consumes more energy than any other state in the U.S. Because of its large industrial base, Texas is highly energy-intensive. It uses 30 percent more electric power than California even though it has 30 percent less population. More than 10,000 megawatts of intermittent wind generation has been installed so far, and $6.7 billion of investment in new transmission infrastructure is expected to allow that to nearly double by 2020.
The Texas PUC and ERCOT realize that storage may be critical to integrating these new levels of nondispatchable power into the ERCOT grid. In 2005, energy storage was made eligible for electric utility rebates under Standard Offer Programs, which pay incentives based upon the amount of capacity actually reduced. In 2009, the New Technology Implementation Grant program was established at the Texas Commission on Environmental Quality. This grant includes funding for energy storage projects related to renewable energy.
As noted, market rules have been revised to facilitate storage interconnections and reduce the cost of operating a storage facility by allowing storage to charge at cheaper wholesale energy rates. ERCOT also initiated a pilot program for Fast Responding Regulation Service (FRRS), ERCOT’s version of FERC Order 755.
In 2011, the Texas Energy Storage Association (TESA) helped get a bill passed to clarify that storage resources participating in the wholesale market have the same rights as generators with regard to interconnection and transmission access. This law, SB 943, is critical to energy storage project developers because in ERCOT territory, transmission utilities are responsible for the cost of interconnection, not project developers.
In 2013, TESA successfully advocated for a bill to establish energy storage projects in non-attainment areas as a form of pollution-control property. That designation would allow local taxing entities to grant a property tax exemption for storage projects. HB 2712 passed, but was narrowed in scope to cover one proposed project. As more storage projects are proposed, TESA plans to lobby for expansion of the exemption to those new projects.
Unlike most parts of the United States, Texas is chronically short on reserve capacity. The ERCOT ISO forecasts that Texas will fall below its target reserve capacity margin in 2014 or 2015. In combination with the positive market rule and legislative changes mentioned, this reserve capacity shortage should drive many attractive opportunities for both thermal and electricity storage to help shift loads from on-peak to off-peak in order to reduce summer air conditioning loads.