December 8, 2020
Recent announcements in Texas and Alberta are signalling the coming of age of energy storage – particularly battery energy storage systems (BESS) in North American power markets. This is demonstrated by the increasing amount of large, grid-connected BESS being financed and developed on a merchant basis rather than relying on utility off-take agreements. In Texas, Houston-based Independent Power Producer (IPP) Broad Reach Power has begun construction of two separate 100 MW/100 MWh BESS set to reach commercial operation in 2021: Bat Cave Energy Storage in Mason County and North Fork Energy Storage in Williamson County. In Alberta, WCSB Power - a wholly-owned subsidiary of TD Greystone Infrastructure Fund recently began operating Phase I of the eReserve BESS, consisting of 20 MW of Tesla Megapack batteries. WCSB Power additionally holds the rights to expand the eReserve BESS to up to 60 MW (Phases II and III) through 2021.
These projects demonstrate a shift towards an IPP approach to the development and management of BESS, where a fleet of assets is strategically located and operated to provide arbitrage and ancillary services by actively participating in the wholesale markets. Additionally, these IPPs have indicated a strong interest in contracting with commercial and industrial (C&I) customers to provide “risk management products”. However, what is unique to this burgeoning energy storage business model is that these IPPs can provide a physical hedge that is tied to a portfolio of assets rather than a single facility.
It also makes complete sense, and reinforces the maturity of the energy storage market, that these projects are being pursued in jurisdictions with energy-only markets, particularly the Electric Reliability Council of Texas (ERCOT) and the Alberta Electric System Operator (AESO). This is because these markets allow BESS to maximize revenues based on their two key physical and operational characteristics, which is that they are fast-responding and dispatchable (albeit on an energy-limited basis). This is also what makes BESS unique among all other resource types and prompted the former Federal Energy Regulatory Commission (FERC) Commissioner Cheryl LaFleur to hail energy storage a “game-changer” in Order 841. Consider the following:
 “The Race is On to Build the Biggest Batteries in Texas” by Julian Spector, Greentech Media, September 15, 2020: https://www.greentechmedia.com/articles/read/broad-reach-power-starts-building-biggest-batteries-in-texas.
 “TD Greystone Infrastructure Fund Invested in Canada’s Largest Battery Energy Storage System” in NewsWire, October 14, 2020: https://www.newswire.ca/news-releases/td-greystone-infrastructure-fund-invested-in-canada-s-largest-battery-energy-storage-system-818433241.html.
 “FERC Removes Regulatory Barriers to ‘Game-Changer’ Energy Storage Options” in The Energy Mix, February 18, 2018: https://theenergymix.com/2018/02/18/ferc-removes-regulatory-barriers-to-game-changer-energy-storage-options/.
 “Tesla’s giant battery in Australia made around $1 million in just a few days” by Fred Lambert, Electrek, January 23, 2018: https://electrek.co/2018/01/23/tesla-giant-battery-australia-1-million/.