Italian energy giant Enel to begin major project in Texas

September 18, 2020   By Jordan Smith

Italian energy giant Enel to begin major project in Texas

Italian energy firm Enel is attempting to break into the Texas energy storage market with a new major hybrid project. Project Lily, which includes a solar facility with a capacity of 146 megawatts alongside 50 megawatts of battery storage, is the spearhead of the company’s ambitious plan to expand its energy storage facilities across the United States by 1 gigawatt by 2022.

The Lily Project, which is scheduled to be completed in 2021, is located southeast of Dallas. It will be the first in Enel’s fleet to use bifacial solar panels, which also catch sunlight reflected off the ground to boost efficiency. The facility’s battery, which will have a 1.5-hour duration, will store cheap solar power in order to take advantage of brief price spikes during periods of high demand, like summer afternoons.

Ryan Prescott, Enel Green Power’s head of growth strategy and energy storage development, argues that longer-life batteries designed for filling capacity shortfalls are not yet viable in the competitive Texas market.

“The really high $9,000 per megawatt hour price spikes are very short in duration, so it’s not necessarily the case that you need to have a very long-duration battery to take advantage of those,” Prescott said. “It was hard for us to see a justification in the [Texas] markets right now, and certainly in the foreseeable future, for a 4-hour battery to pencil out.”

Competitive market makes it tough for storage

The Electric Reliability Council of Texas’ (ERCOT) competitive energy market has historically discouraged battery storage companies. The new Enel project, together with a handful of other initiatives and a large amount of proposed projects in the pipeline, suggest that this may be about to change.

One of the main problems for storage in Texas is that utilities are currently prohibited from owning batteries, which are considered generators of energy in Texas. This cuts battery storage off from a lucrative source of investment that normally supports new technologies in the energy sector. Added to this is the fact that Texas doesn’t have a capacity market, meaning that battery operators can’t conclude long-running contracts to supply a particular utility. The uncertainty this produces has discouraged investors from backing battery projects in Texas.

As a major global player in the energy market controlling around 80 gigawatts of installed generation capacity, Enel is not hindered by these financing challenges. “We’re a fairly strong entity from a balance-sheet perspective,” explained Prescott. “We’re able to leverage that corporate strength to do things in a market with good fundamentals but maybe not as many long-term offtakes.”

One advantage in Texas is that state officials can make their own laws concerning storage, rather than having to wait on rulemaking decisions from the Federal Energy Regulatory Council. Discussions are ongoing as to how to get around the current problem of battery storage being designated as a source of generation.

Signs of improvement

2020 has brought further indications that the battery storage market in Texas is improving. In June, Houston-based Broad Reach Energy announced plans to build 15 utility-scale battery storage sites by the end of the year. Each site will be capable of storing and distributing 10 megawatts of power.

At the end of 2019, 100 megawatts of battery storage were connected to the grid. That figure is expected to rise to 360 megawatts by the end of the year, according to the Houston Chronicle. Texas already comes in fourth place in the country for installed energy storage. ERCOT is considering proposals to build over 7,000 megawatts of storage over the coming five years, although normally a small portion of such proposals ever get built.

According to Michael Lumbley, chief operating officer of Alternative Resources Group, an infrastructure developer for renewables, batteries will be cost effective enough by 2024 to compete with natural gas peaker plants. “By adding storage,” he told the Houston Chronicle, “there’s just no more air left in the room for new natural gas projects.”

Business organizations and private sector advocacy groups are also taking notice. “Energy storage is going to play a key role in our future electric grid, from the largest generator to the smallest consumer,” claimed a recent article by Matt Welch of Conservative Texans for Energy Innovation and Suzanne Bertin of the Texas Advanced Energy Business Alliance. “These systems will allow us to be much more flexible with how we generate, manage, and consume energy, boosting energy security, reducing commodity volatility, and reducing costs for everyone.”

 

Jordan Smith is a freelance journalist and translator covering issues related to energy, the environment, and politics. His work has appeared on the independent news site Opposing Views and at the Canadian Labour Institute.

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