Borden County, Texas, is set to become the home of the world’s largest battery storage system in 2021.

IP Juno, a unit of Intersect Power LLC, has recently outlined plans to build a 495-MW storage system together with a solar farm of the same size in Borden County, a small community in West Texas in the very heart of the most important U.S. oil field, the Permian.

It’s hard to miss the ironic interrelation between the booming Texas oil production and the rise of renewables in the most prolific U.S. shale basin. As the West Texas electricity grid strains under surging demand to power oil and gas operations, some of the new capacity installations in the coming years, including the world’s biggest battery according to Bloomberg, will help provide more electricity to the grid from solar power.

Soaring oil production is set to help the case for renewables in Texas, while wind and solar are set to help meet growing electricity demand for oil and gas drilling.

According to the Electric Reliability Council of Texas (ERCOT), the operator of most of the Texas grid, the planned 495-MW solar plus storage system will boost the Texas cumulative battery capacity from 89 MW currently to 584 MW in 2021, when the project is expected to be ready.

The new solar-and-storage facility could help raise the Texas capacity and ease the pressure on the grid at a time when booming oil production continues to drive power demand in the oil patch.

Permian oil producers need a lot more electricity to power well production than they did just a few years ago. And the West Texas electricity grid—which wasn’t planned for so heavy a load—is straining to catch up with power demand. While drillers have flocked again to the hottest U.S. shale play, electricity infrastructure and transmission grids in West Texas need years to expand to keep reliable power supply on. Related: U.S.-China Trade Deal Could Boost Gasoline Prices

“Significant oil and gas development in far West Texas continues to drive increasing electricity demand in Texas. The annual growth rate in peak demand in West Texas is forecasted to be around 8 percent through 2023, whereas ERCOT’s annual system-wide load growth rate is 2 percent during the same time,” ERCOT said at the end of last year.

The planning reserve margin for the summer of 2019 is expected to be 8.1 percent—lower than in previous years, “primarily driven by a higher summer peak load forecast and delays and cancellations of planned generation projects,” according to ERCOT.

Until new power generation and transmission projects come online, oil companies in the Permian have started to look for alternative solutions to power their oil production operations—electrification projects, gas-powered compressors, solar, and wind power.

ExxonMobil, for example, has entered into two power purchase agreements (PPAs), under which the U.S. major will buy 500 MW of solar and wind power from the U.S. unit of Denmark’s Ørsted in the Permian, Ørsted said in November 2018. According to Bloomberg NEF, this is the biggest renewable power contract an oil firm has ever signed.

Although it is mostly known for oil and gas, Texas is the U.S. leader in terms of installed wind capacity. According to data from the American Wind Energy Association (AWEA), with over 24 GW of wind in the state, only four countries in the world have more wind power than Texas. As of Q4 2018, Texas had a total of 144 wind projects online, of which 133 projects with over 10 MW capacity. Wind capacity under construction was 5,322 MW, while wind capacity in advanced development was 1,660 MW. In 2017, wind energy provided 14.8 percent of all in-state electricity production, AWEA data shows.

Texas is also sixth in the top ten U.S. solar states, according to the Solar Energy Industry Association (SEIA).

In 2018, wind power provided 18.6 percent of the energy use in Texas, while wind will make up 23.4 percent of the 2019 generation capacity, according to ERCOT estimates from last month. Solar power is expected to account for 2.1 percent of the 2019 generation capacity in Texas.

Renewable energy and battery storage in Texas is set to increase in coming years. So is oil and gas production in the fastest-growing U.S. shale basin. Booming oil drilling will require more power to the grid and some of it, as odd as it may seem, will be coming from solar and wind power.



By Tsvetana Paraskova for Oilprice.com

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