Batteries Begin to Turn the Tide on Ramp Rates

Throughout the United States, utilities and grid operators continue to pivot from an era of flat electrical demand to one in which data centers require more electricity to meet growing AI demand. These utilities are increasingly turning to natural gas, however the growth in solar generation shows little sign of letting up. This leaves grid operators with another problem. The sun sets while demand is increasing, leaving a shortfall that needs to be met. Two remedies are often pointed to: natural gas plants that can ramp up quickly, and battery storage. Today, we will look at how batteries are addressing this issue.

An important metric for this problem is a grid's ramp rate. The ramp rate, illustrated below, is the amount of generation needed in the evening after solar generation falls off.

Since 2018, over 73 GW of new solar projects and 17 GW of battery storage projects have come online nationwide. Among all ISOs, CAISO has consistently shown to have the highest ramp rates, which have been steadily increasing in that time. For example, CAISO reported an average ramp rate just shy of 10 GW in May 2020. As of May 2024, CAISO's average ramp rate jumped more than 50% to over 16 GW. This phenomenon is not exclusive to California; ERCOT has also observed rising ramp rates, aligning with the continued integration of new solar generation into its market.

When looking into average hourly generation in CAISO from 2021 to 2024 for May, there is a noticeable increase in the contribution of battery storage to the ramp rate profile. In 2021, battery storage contributed only 462 MWh of energy from 5 PM to 8 PM. By 2024, this contribution had risen dramatically to 11,914 MWh, representing an increase of approximately 2,478%, replacing generation that historically had been served by gas.

Additionally, there has been a significant midday dip in net load this year compared to previous years, further demonstrating that the increased deployment of solar energy has allowed for a significant reduction in generation from traditional fuel sources. Moreover, despite the 8 PM net load for 2024 being lower than in previous years, the substantial midday dip results in the largest ramp rate observed since 2018.

If we turn back to ramp rates and adjust them for the impacts of energy storage, we actually see that storage-adjusted peak ramp rates have been declining in CAISO. In other words, energy storage is reducing the call on other forms of generation, like natural gas, when the grid is most stressed.

With ERCOT expected to surpass CAISO's installed solar capacity in the coming months, ERCOT's accelerating ramp rates are expected to continue to rise as well. And while ERCOT and CAISO have distinct differences in their respective generation mixes, topologies, and constraints, ERCOT's rising ramp rate is an indication of the shared struggles arising from solar generation growth. How will ERCOT's grid respond? Be sure to check back for future Insights, as we will continue to watch the changing energy landscape and the role renewables play within it.

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