PG&E Issues Findings on Battery Storage in Wholesale Markets

Nov. 14, 2016
Pacific Gas and Electric Company (PG&E) says it sees “great potential” for energy storage after demonstrating use of battery storage in wholesale markets.

Pacific Gas and Electric Company (PG&E) says it sees “great potential” for energy storage after demonstrating use of battery storage in wholesale markets.

The utility recently announced the results of the project, began in 2014. PG&E set out to show how batteries can provide energy and ancillary services in markets run by the California Independent System Operator (CAISO).

PG&E used its 2-MW Vaca-Dixon and 4-MW Yerba Buena battery storage systems. The Vaca-Dixon system is the first battery storage to participate in the California wholesale market. The Yerba Buena system is the first battery storage to both participate in the market and provide reliability for PG&E’s distribution system, according to the utility.

The utility shared results of the project in a comprehensive report, which offers details about what worked – and what didn’t – when operating battery storage in wholesale markets.

The report offered several takeaways about the market.

Among them, from a financial perspective battery storage performs best when providing frequency service. Frequency regulation created significantly higher revenues than day-ahead or real-time energy market participation, the report said.

PG&E also found CAISO day-ahead and real-time revenues were not conducive to energy arbitrage. Arbitrage centers on the difference between the price to charge and the price to discharge the battery. The electricity price differences were not large enough in CAISO on a consistent basis for energy arbitrage, the report said.

Some of the other key takeaways were:

  • Spinning reserve revenues can very modestly add to resource revenues
  • Current market dynamics do not favor long-duration batteries
  • Incentives to charge and discharge depend on the locational marginal price where the unit is located

“We see great potential for energy storage systems to benefit Californians. Through this demonstration PG&E has addressed multiple barriers and gained incredible operational experience with battery storage. We’ve identified and resolved challenging implementation issues, established a new interconnection process, and developed an automated dispatch system that will serve as a platform for continued market participation,” said Kevin Dasso, vice president, electric asset management, PG&E.

Funded through California’s Electric Program Investment Charge, the project was meant to addresses barriers to energy storage that have been identified by the California Public Utilities Commission.

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About the Author

Elisa Wood | Editor-in-Chief

Elisa Wood is an award-winning writer and editor who specializes in the energy industry. She is chief editor and co-founder of Microgrid Knowledge and serves as co-host of the publication’s popular conference series. She also co-founded RealEnergyWriters.com, where she continues to lead a team of energy writers who produce content for energy companies and advocacy organizations.

She has been writing about energy for more than two decades and is published widely. Her work can be found in prominent energy business journals as well as mainstream publications. She has been quoted by NPR, the Wall Street Journal and other notable media outlets.

“For an especially readable voice in the industry, the most consistent interpreter across these years has been the energy journalist Elisa Wood, whose Microgrid Knowledge (and conference) has aggregated more stories better than any other feed of its time,” wrote Malcolm McCullough, in the book, Downtime on the Microgrid, published by MIT Press in 2020.

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