Thread by @PaulSegal12

1/10 Battery storage in the Texas power market very likely to be a poor investment, but over 100,000 MW is now in the interconnection queue. Let's break down this down.⚡️🔋 #energytransition

2/10 It’s always been easy to develop power generation in Texas. Most battery storage projects are targeting a slim ancillary services market with a total of about 5k MW with over 3k MW already in operation. When supply > demand in power markets prices quickly collapse.

3/10 Long-lived assets to avoid saturating their market and collapsing profitability they need deep and durable markets. Yet in ERCOT, there's no capacity market (the deepest market). What's left is the energy market. But can it provide the necessary support? 🏭💡 #EnergyPolicy

4/10 The day ahead energy market is deep and has the potential to absorb the much more battery storage. But the challenge will be profitability. #EnergyEconomics 📉⏳

5/10 ERCOT boasts an impressive and growing array of renewables, which provide low energy prices to charge a battery. But it's not the cost of charging that's the problem - it's the discharge pricing. 🌿💵 #GreenTech

6/10 Discharge prices are influenced by delivered natural gas and carbon prices. In Texas, there's no carbon price, and with one of the cheapest natural gas resources in the country, the profit margin in the day ahead energy will be slim. ⛽️💰 #EnergyFinance

7/10 This narrow spread between charging and discharge price limits profitability. That leaves real-time energy as another potential market. But once again it's a pretty small market. #EnergyMarkets

8/10 Real-time energy markets handle deviations from expected load cleared in the day-ahead market. However, as more batteries join the grid, they will dampen these prices. ⚖️📊 #PowerSystems

9/10 So, will these projects be financed & built when their very existence could disrupt the price signals they're chasing? It's a paradox that will shape the future of our #EnergyLandscape. 🏗️🔄 #SustainableInvestment

10/10 As we continue to navigate the complexities of the #EnergyTransition, it's clear that our infrastructure, markets, and policies need to adapt. I would love to hear other more optimistic points of view. ⚡️🌎 #CleanEnergyFuture