OncorLogoOncor, the state’s largest electric monopoly, wants to invest billions of dollars in energy storage technology — a proposal that could lead to the placement of refrigerator-sized batteries behind shopping malls and in residential neighborhoods.

But the ambitious plan won’t fly without the cooperation of the Texas Legislature, which convenes in January. Big questions also remain as to how the project would be financed, whether it would lead to customer savings or cost more, and how it would impact the state’s deregulated electricity market.

Oncor is the state’s largest transmission and distribution utility, a company that provides monopoly service to nearly 2 million captive customers. Because it faces no competition, Oncor remains regulated by the Texas Public Utility Commission and by those cities in which it operates.

The Dallas-based company proposes to spend $5.2 billion statewide on the battery installations, which it says could kick-start innovation and potentially lead to lower residential electricity bills. If given the green light, the company would install energy storage devices across its service territory and even elsewhere in Texas.

Oncor says it wants to install approximately 5,000 megawatts of energy storage, or roughly the equivalent of four nuclear generating units. The batteries would be placed where transmission and distribution lines come to dead ends or near feeders that historically have consistent outage problems. The company says its already in discussions with Tesla, the California-based electric car company, about manufacturing.

However, thorny questions remain — mostly involving costs.

For instance the company, citing an expert report that it commissioned, said the batteries could lead to savings. According to the report, renting storage space on the batteries could create extra revenue and the operation of the batteries could help lower power prices and transmission costs. But Oncor, under the state’s electric deregulation law, cannot own generation — and the batteries, technically, could be considered a form of generation.

Speaking to the Dallas Morning News, a top utility official said it was for that reason that the company believes it needs a change in state law. “The generators will hate this,” Oncor CEO Bob Shapard told the newspaper.

Among those generators that apparently “will hate this” is Oncor’s own sister company, Luminant. Both Oncor and Luminant are owned by Energy Future Holdings.  EFH has released a critical statement on behalf of Luminant and TXU Energy (the EFH retail energy subsidiary) that warns Oncor’s proposal could  undermine the competitive wholesale energy market.

“Batteries act like generation resources so they should remain part of the competitive market, which can better handle and appropriately price battery technology risks,” the EFH statement reads.

However, if implemented correctly, such a project could reduce the cost of managing congestion on the state power grid, and improve both reliability and efficiency. And to the extent that it helps drive down the cost of utility-scale batteries, the project could help kick start similar investments by other players.

But that doesn’t mean the proposal is good news for consumers. Without more detailed plans and the completion of an impartial cost-benefit analysis, it’s impossible to forecast whether Oncor’s multi-billion proposal would lead to customer savings or end up costing Texans more.

— R.A. Dyer

What is the Texas Coalition for Affordable Power?

TCAP is a coalition of more than 160 cities and other political subdivisions that purchase electricity in the deregulated market for their own governmental use. Because high energy costs can impact municipal budgets and the ability to fund essential services, TCAP, as part of its mission, actively promotes affordable energy policies. High energy prices also place a burden on local businesses and home consumers.