Multiday battery upstart sees alignment with growing focus on grid reliability

Efforts to revamp grid reliability rules in US power markets should account for the unique characteristics of long-duration energy storage assets, according to the head of a leading multiday battery developer.

"We do need to move market designs in the right direction," Form Energy Inc. CEO Mateo Jaramillo said during a recent panel discussion at the CERAWeek by S&P Global conference. "Really, what we're aiming for is a market signal for reliability that is decarbonized. And right now, that doesn't really exist."

Jaramillo co-founded Form Energy in 2017 to address one of the most pressing challenges facing the US power system: how to accommodate large amounts of variable renewable energy generation as extreme weather grows in frequency and severity.

The vast majority of lithium-ion batteries on the US grid today are price arbitrageurs. They are typically capable of discharging for up to three to four hours, a reflection of the number of hours in an operating day where charging and discharging makes economic sense.

In contrast, Form Energy's iron-based batteries can store energy at less than 10% of the cost of lithium-ion battery technology and dispatch electricity for over 100 hours in duration. But existing US wholesale power market rules do not value the carbon-free reliability contributions that multiday battery storage assets can provide, Jaramillo said.

"We need to come to some clear understanding of what value we put on reliability in the first place and then, on top of that, come to a clear understanding for how we value decarbonized reliability," Jaramillo said in an interview.

'Movement in every organized market'

Fortunately, according to Jaramillo, wholesale power market operators across the US are in the midst of revisiting their reliability constructs in ways likely to benefit long-duration storage.

The 15-state Midcontinent ISO, for example, singled out multiday battery storage in a report released in January as part of an ongoing initiative called "The Reliability Imperative."

"These technologies appear to have capabilities and attributes the system needs to remain reliable during tight conditions, such as dispatchability, flexibility, and long duration — while also having the zero-carbon properties that many utilities and states need to achieve their decarbonization goals," MISO said.

The California ISO, meanwhile, is participating in a proceeding launched by the California Public Utilities Commission to explore resource adequacy reforms. Multiple industry groups, including the California Energy Storage Alliance, have urged the commission to take a broader view of energy storage that accounts for differences in duration.

The Electric Reliability Council of Texas Inc. is revisiting its energy-only wholesale power market structure in response to a February 2021 winter storm that knocked out power for millions of customers over multiple days.

ERCOT's proposed framework is aimed at limiting the duration of any single loss of load event, among other considerations, according to a March 15 stakeholder presentation.

Those grid operators, as well as the 13-state PJM Interconnection LLC, six-state ISO New England, and 14-state Southwest Power Pool, are all at various stages of employing a capacity accreditation methodology known as effective load-carrying capability. The methodology is designed to accurately capture the expected reliability contributions of different types of generation technologies, including battery storage.

"We see movement in every organized market," Jaramillo said. "There's a growing awareness that with the weather volatility we're having, we need to be thinking much more precisely about reliability and how we value and price it."

Near-term focus on direct transactions

In its reliability report, MISO noted that long-duration battery storage is not yet commercially viable to be deployed at scale. "MISO is actively engaged in tracking the progress of these technologies and is preparing to incorporate them into the system if/when the opportunity arises," MISO said.

But Jaramillo does not see that as an immediate problem for Form Energy.

"The time frame for getting a market design that is acknowledging these kinds of assets properly is commensurate with the time horizon for us to scale up to make a big difference," Jaramillo said.

The CEO said the company has "a ton" of business to pursue with utilities subject to state-regulated integrated resource plans.

Jaramillo reported Form Energy is on track to break ground this year on a $760 million manufacturing facility at the site of a former steel mill in Weirton, W.Va. Production is expected to begin in 2024.

In January, Form Energy and Xcel Energy Inc. also announced definitive agreements to deploy multiday batteries at two of the utility's retiring coal plants in Minnesota and Colorado. The assets are expected to come online by 2025.

"We'll be announcing deals in regions and states that maybe don't automatically come to mind, and that's because of this reliability question that is really top of mind," Jaramillo said.

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