Typically Peaker Plants fill this role but at much higher cost for electricity and emissions. Batteries just make much more sense for this kind of power.
New battery additions must be banking on limited ancillary services revenue. Unless Texas investors never bothered to learn the lessons of the storage experience in PJM, which seems unlikely to me.
ERCOT is quite different from PJM when it comes to AS - the market is very deep and the operational needs are increasing in a way they aren’t in PJM (yet). Couple that with a vastly easier permitting regime and hugely faster interconnection process for a facility (batteries) that require relatively little land compared to conventional generators, and Texas has enabled ERCOT’s queue to become absolutely stuffed full of battery applications.
PJM was ahead of the ball on market design, but that was a (relatively) long time ago. Now they’re in the midst of their massive backlog queue transition and also revamping (for the nth time) facets of their capacity market.
That is beyond my knowledge; I know that PJM specifically set up a market for ancillary services that allowed battery operators to get paid. I assume ERCOT must have set up some sort of similar market, but I don't know the particulars...
Current lithium batteries are just too expensive, store too little energy and degrade too quickly for true grid-scale storage.
That’s why they typically offer services, other than price arbitrage, that actually makes building them make sense. There’s still no equivalent of a peaker plant using non-hydro storage.
"80-90% of battery revenues have been coming from FCAS and about 10-20% from energy trading."[1]
I would assume the amount of FCAS capacity needed will be fairly limited so the economics of additional batteries won't be as good.
[1] https://www.energy-storage.news/batteries-are-number-one-at-...
Reason: your numbers and assumptions are probably wrong.
Which is to say that the investment numbers may look "right" for a good few years until they suddenly don't and the reality catches up with all those involved.
The only thing under question is whether future long-term agreements will include inflation protection.
When interest rates rise tremendously, long term investment gets pulled way back. That's the entire point of hiking interest rates, to make companies like Orsted slash their growth rates. It does not put Orsted at risk for collapse.
> That's the entire point of hiking interest rates, to make companies like Orsted slash their growth rates.
I highly doubt that that's the discussion being held at the meetings where the rates are being set, i.e. I've never heard the likes of the US Fed or of the ECB saying "we want to slow our most dynamic sector of the economy by increasing interest rates", but I could be wrong on that.
For home use, break-even is an acceptable outcome, but not for commercial use like above. Is the price of battery low enough atm to make a return for such an investment?
If you build a big battery storage system now, by the time it's fully degraded, battery recycling will be a massive and streamlined operation. Given the number of energy storage systems built today you'll have massive quantities of similar and easy-to-recycle cells going to these recycling operations.
So if you're a big grid operator you'll probably be looking at making a streamlined and efficient loop out of getting your old cells recycled and making new cells out of that material. The cost for the replacement storage system will be much lower, and given improvements in cell chemistries, the storage capacity will likely be higher.
Then again, it's possible that grid energy operators will transition to low energy density but cheap and durable chemistries, like Ambri's molten metal batteries.. which essentially last forever.
The storage being installed in Texas is all being done purely for profit. Meaning that the investors have run the numbers and find batteries to be the highest return they think they can get for their money.
Storage in other places (specifically California) is being driven both by the profit motive, but also in some cases by legislation that mandates storage (not specifically batteries) be added as part of the grid mix. California has enough solar now that nearly all new installations include storage, in order to profit during the peak evening hours when electricity prices are highest.
However, the more such systems come online the less peaking power is worth and batteries aren’t competitive with current ultra low nighttime rates.