PG&E Issues Findings on Battery Storage in Wholesale Markets

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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 Elisa Wood

Elisa Wood is the chief editor of She has been writing about energy for more than three decades for top industry publications. Her work also has been picked up by CNN, the New York Times, Reuters, the Wall Street Journal Online and the Washington Post.