Last November Oncor Electric, the state’s largest transmission and distribution utility, floated an ambitious plan to invest up to $5.2 billion in battery storage technology. In theory the new batteries would bolster the state’s main power grid and — at least potentially — lower costs for electric consumers.
But now, nearly a year later, there’s been no statutory change to clear the way for the plan and no proceeding at the Texas Public Utility Commission to move it forward.
So what went wrong?
In a word: politics.
Oncor’s proposal was to deploy up to 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. Oncor commissioned a report from the Brattle Group consulting firm to support its plan.
The sticking point is that under the Texas electric deregulation law, transmission and distribution electric utilities like Oncor cannot own generation assets. That prohibition creates a legal barrier for Oncor because batteries, besides storing power, also act like generators by releasing energy.
Oncor sought to unstick this sticking point by changing the law. And that’s where its plan fizzled.
“The competitive market participants, especially the generators — they really dislike the storage idea because they feel this is more competition,” noted Hannes Pfeifenberger, co-author of The Brattle Group report, quoted on the Utility Dive website. “The large industrials didn’t like [it either] because it’s not benefitting large industrial customers. So the combination … kind of torpedoed the hope of legislative changes.”
Oncor lobbied extensively in Austin but without success: the 2015 legislative session ended in June with no changes to relevant market rules. Likewise the Public Utility Commission has not thus far embarked on any proceeding to allow Oncor or other electric utilities to go forward with such plans.
Is this good news or bad news for consumers? That’s hard to say.
The consultants hired by Oncor touted the reliability benefits of battery storage and its potential to increase grid stability. They said Oncor’s plan could have saved customers 34 cents off an average $180 household bill.
But without more detailed plans, clarity regarding future statutory changes and an impartial cost-benefit analysis, it’s impossible to judge the accuracy of such forecasts.
Is a policy analyst consultant for TCAP, a coalition of political subdivisions in Texas that purchase electricity in the deregulated market for their own governmental use. Because energy costs are typically a significant budget item to our members, TCAP is consistently looking for ways to save our members money, through cost-saving contracts, energy efficiency or demand response programs.