Texas' largest electricity generator is going big on battery power.

Irving-based Luminant announced Tuesday that Texas environmental regulators awarded the company a $1 million grant to build the state's largest electricity storage facility of its kind. To be located adjacent to Luminant's 180-megawatt Upton 2 solar power plant in West Texas, this 10-megawatt battery would be the seventh largest in the U.S., according to Luminant.

The Texas Commission on Environmental Quality grant that will help fund the battery's construction is part of the state's emissions reduction plan. This would be the first large battery installation in Texas for Luminant's parent company Vistra Energy, which has already proposed building the world's largest battery in California.

Such battery installations would help make solar energy a more lucrative source of electricity in Texas, a sunny state which gets less than 1 percent of its commercially-generated electricity from solar panels.

Meranda Cohn, a Vistra spokesman, said the battery would boost the facility's output when electricity is needed, before and after the solar midday peak. In many cases, the battery could be charged from the grid at night when prices are often the lowest.

"There is a big ramp up, and a big ramp down with solar power," she said. "And it does not follow the traditional demand that people are putting on the grid."

The 1,900-acre Upton 2 solar facility near McCamey in Upton County started generating electricity in June. The battery is expected to be installed late this year.

Company officials declined to disclose the cost of the battery project. But a Vistra presentation to analysts this year said the investment in the battery project was expected to generate returns in the mid to high teens.

Over the summer, the Texas grid set multiple electricity demand records. Most of those peak usage were between 4 and 6 p.m.

The Upton 2 plant is one of the largest solar facilities in Texas. At full capacity, it could generate enough electricity to power 56,700 average Texas homes or roughly half of that during hot summer days. Vistra, bought the plant in 2017 while it was still under construction.

Texas has generally been slow to adopt battery storage in a major way, in part due to high cost and abundant availability of cheap electricity from wind and natural gas. Texas' electricity prices are in the bottom third among U.S. states, according to data from U.S. Energy Information Administration.

From 2012 to 2016, ERCOT added barely any battery storage. The state's battery capacity has increased by nearly 250 percent since then.

And Upton 2 suggests Texas' battery storage could be heading in a new direction. So far, storage has mostly been used as either backup power for a remote area with limited infrastructure or for regulating the frequency of the electric grid.

Electricity arbitrage — generating electricity while prices are low and then selling it when prices are high — hasn't been a common practice here. Doing that by storing electricity is now a viable option because lithium-ion battery prices have dropped by 70 percent between 2012 and 2017, according to IHS Markit.

Luminant's largest-in-Texas claim is based on using the Upton 2 battery to send electricity back to the grid like a traditional generator, rather than for a specialty use. The battery will be capable of generating 42-megawatt hours of the electricity when fully charged.

In their analyst presentation, Vistra officials also pointed to tax credits and "integration" with their retail arm as benefits of the new battery project. Vistra-owned TXU Energy offers several electricity plans, including "Free Nights & Solar Days", that promise solar power to its residential and business customers.