In July 2024, two new battery energy storage systems reached commercial operations in ERCOT.
Each site is a 9.9 MW/9.9 MWh site in the South Load Zone. This brings the total installed rated power of batteries in ERCOT to 5,305 MW. Total installed energy capacity now sits at 7,437 MWh.
This meant the ratio of installed energy capacity to rated power remained consistent at 1.4.
The buildout of battery energy storage continues to accelerate in ERCOT, with 2.7x growth since the beginning of 2023. But will this acceleration continue across the next 18 months?
How much battery energy storage will there be in ERCOT by the end of 2025?
By the end of 2025, Modo Energy predicts that there could be as much as 18 GW of battery energy storage in ERCOT.
This would represent an incredible 239% growth from the current total of 5.3 GW.
But, let’s compare this to two of the most common sources for buildout data. These are:
- the Energy Information Administration’s (EIA) 860m report, and
- ERCOT’s Generation Interconnection Studies (GIS) Report.
Modo’s projection actually falls between the two. The EIA projects that total rated power will only reach 16.4 GW, while ERCOT has total rated power reaching as high as 20.7 GW.
The EIA projection does not consider every project in the ERCOT interconnection queue. Instead, the EIA 860m report is populated by developer-submitted surveys. Developers are only required to begin providing this information when their project is within twelve months of its projected commercial operations date.
Alternatively, both ERCOT and Modo Energy’s projections are based on the actual interconnection queue.
Furthermore, both ERCOT and the EIA take developer projections of Commercial Operations Dates at face value. However, these projections are - historically - overly optimistic. We examined this in our analysis of Interconnection Queue timelines for battery energy storage in ERCOT.
Armed with this knowledge, we’ve constructed revised projections of Commercial Operations Dates for projects in the ERCOT Interconnection Queue.
Of course, the further away a project is from reaching commercial operations, the harder it is to predict how long it will take to do so.
So, where exactly does 18 GW by the end of 2025 come from?
How can we accurately project the buildout of batteries in ERCOT?
Let’s start with the battery energy storage systems that are closest to reaching commercial operations.
In July, over 600 MW of battery projects received approval to synchronize to the ERCOT grid. In other words, they’ll be fully connected to the grid, with only final communications capabilities and commissioning tests left to complete with ERCOT.
On top of this, nearly 350 MW of projects received approval to energize their substation. These projects are slightly further away, but synchronization is often quick to follow energization.
There are now 3.8 GW worth of projects in development that have at least received approval to energize. This means they’ve finished construction and have been approved by ERCOT to begin the commissioning process.
But how long will it take them to reach commercial operations?
Historically, it takes batteries - on average - around 6 months to reach commercial operations once they’ve received approval to energize. And, 90% of projects take less than a year.
As a result, we’d expect the bare minimum of battery energy storage buildout in the next 12 months to be 3.8 GW.
In reality, given that many of these projects were approved to energize or synchronize prior to July, most should reach commercial operations in the next six months.
This brings the total installed rated power to around 9 GW by the beginning of 2025. However, it’s possible that some battery energy storage systems will end up on the longer end of the commissioning timeline. This could result in a small amount of this 3.8 GW in additional rated power coming online slightly later in 2025.
What about projects that aren’t as far along in development?
Now, let’s also factor in other battery energy storage projects that will potentially gain approval to energize and become commercially operational before the end of 2025.
The projects closest to commercial operations that have yet to receive approval to energize are those that have met all the prerequisites for inclusion in ERCOT’s Quarterly Stability Assessment.
These projects, totaling a further 2.3 GW, are largely awaiting inclusion in the QSA and, subsequently, approval to energize. The majority of them will become commercially operational in the next 18 months.
This means that around 6 GW of new batteries should reach commercial operations by the end of 2025.
And, if we include all projects that have signed an Interconnection Agreement, total installed rated power reaches 18 GW.
Including projects with a signed Interconnection Agreement means projecting buildout from the same pool of resources that ERCOT populates its ‘Planned Monthly Capacity Additions’ report.
In other words, it puts the projections on a level playing field. The primary reason our projection falls below ERCOT’s is that our projected Commercial Operations Dates are generally later than ERCOT’s.
To determine a revised COD projection, we utilize the median time to reach commercial operations from the current stage of development that a given project is in. This is compared to the date at which the project reached that stage of development
However, with more battery energy storage systems in development, development times could become extended. Additionally, the further away a project is from commercial operations, the less certainty there is in predicting a COD.
This could result in some of these projects, particularly those that have not progressed further than signing an Interconnection Agreement, failing to reach commercial operations prior to the end of 2025.
So, how much battery energy storage should we actually expect?
Given the unpredictable nature of project development, we’d expect between 12 and 18 GW of commercially operational storage on the grid by the end of 2025.
Either way, the continued rapid buildout of grid-scale battery energy storage is poised to continue in ERCOT.