Quinbrook-backed developer will fill batteries with wind power during times of negative pricing in the Southwest Power Pool.
Batteries paired with solar plants have gained momentum in sunny locales, but a market for shifting wind generation using battery storage has so far failed to materialize.
Developer GlidePath Power Solutions, however, sees a path forward for wind-plus-storage in one of the country’s most competitive power markets, announcing the acquisition of 149 megawatts of north Texas wind capacity with the intent to pair it with batteries.
GlidePath, with the financial backing of low-carbon investment manager Quinbrook Infrastructure Partners, aims to use the eight distributed wind sites it bought from Exelon Generation as a base for developing storage and proving that batteries and wind can make money together.
Storage development will commence now that the acquisition has closed, Chief Operating Officer Chris McKissack said in an email Tuesday. The projects, north of Amarillo, will participate in the Southwest Power Pool wholesale market.
“SPP includes some of the most robust wind resources in the country, but development has stagnated due to uncertainty and unsustainably low prices,” McKissack explained. “Energy storage provides additional flexibility that we believe adds significant value to the market, as well as to local and regional ratepayers.”
GlidePath believes it can match each wind farm with up to an equivalent megawatt capacity of energy storage, with the megawatt-hour capacity to be refined as the first projects come online, he noted.
Such capacity would allow GlidePath to divert its wind production into the batteries when an abundance of wind generation triggers negative pricing, rather than pay to bring it to market. Then, it could release that energy when prices have climbed, turning a potential loss into a profit via arbitrage.
Executing that procedure, though, requires a sophisticated view of wholesale market movements, said Daniel Finn-Foley, head of energy storage research at Wood Mackenzie Power & Renewables.
“GlidePath is not the only one looking at these markets — SPP’s interconnection queue is full of projects,” said Finn-Foley, who tracks the emergence of hybrid storage plants. “If they’re the first movers in this market, that’s fantastic, but it all depends on how they’re modeling out their revenue.”
That modeling will need to capture, among other things, which nodes offer the best profits for storage and how revenues will change as new resources enter the grid.
Then again, GlidePath has already demonstrated a willingness to take on merchant risk with energy storage, first in PJM territory back in 2014 and most recently with a pioneering 10-megawatt plant in Texas. Storage developers have largely steered clear of the highly competitive ERCOT market.
Storage financiers typically demand solid, contracted revenue streams. That would rule out the sorts of projects that GlidePath is looking at in north Texas. Having a well-capitalized infrastructure fund as a corporate parent liberates GlidePath from the industry’s conventional constraints.
“GlidePath continues to pride ourselves on being an early mover in the storage space across multiple markets,” McKissack said. “We take a long view of the market, and our overarching thesis is that this is the right time for storage.”
A long view may be the only way to make wind-plus-storage make sense right now. Whereas solar-plus-storage benefits from the federal investment tax credit, wind plants prefer taking the federal Production Tax Credit, and storage has not been able to monetize that. That means the benefits of co-locating storage have to come from operations alone.
Finn-Foley predicts that Massachusetts will be the first major wind-plus-storage market, because the state has enacted a Clean Peak Standard to require a growing portion of peak hour electricity come from clean sources.
That regulatory change creates a driver for wind (and solar) plants to add storage and become more dispatchable. Elsewhere, wholesale markets could drive development if the arbitrage spreads become lucrative enough.
Transmission congestion offers another incentive, because project owners can use storage to make better use of their interconnection during times when the wind is not blowing.