As more intermittent renewables come online - at a faster rate than the transmission network can keep up with - they put a major strain on the grid, in the form of congestion. Battery energy storage systems can help to solve this - and benefit from price spreads that occur due to congestion.
But what is congestion? Why has it become more prevalent in recent years? And what does it mean for battery energy storage systems?
Transmission congestion has become a bigger issue in recent years
Transmission congestion occurs when any element of the bulk electric system is either actively overloaded, or at risk of becoming overloaded - as a result of the loss of another element in the system.
Typically, congestion occurs when there’s not enough transmission capacity to import or export power to or from where it's needed. Battery energy storage systems, which can both import and export power, can help to alleviate this.
In recent years, congestion has gotten worse, for a number of reasons:
- The buildout of transmission infrastructure can’t keep up with the buildout of new generation capacity.
- New renewable resources are often located far from the areas of highest demand.
- Wind and solar are intermittent by nature.
- Demand has increased across the state.
From region to region, congestion affects locational marginal prices
When significant amounts of generation (e.g. hundreds of megawatts or more) need to be re-dispatched to resolve congestion, it causes more price variation across the system.
For example, between 7pm and 8pm, average settlement prices in 2023 were 42% higher in Load Zone West than in Load Zone South.
There were two big drivers of this price variation:
- A lack of transmission capacity meant that excess wind generation in South Texas was unable to be exported elsewhere. When generation was curtailed, prices were suppressed.