| | JULY 202119CXO INSIGHTSRESOURCE ADEQUACY AND GRID FLEXIBILITY DEPEND ON ANALYTICS FOR ENERGY STORAGEBy Sean Halloran, Co-Founder, NexESS AnalyticsGrid flexibility is a critical piece of today's energy landscape. It is becoming clear that in markets with a high percentage of renewable power, making sure that clean energy is available when and where it is needed, often referred to as `resource adequacy' (RA), is becoming a central issue in evolving utility markets. Nowhere is this more evident than in California, with the recent decision to give the state's two largest utilities an expanded role in the procurement plan for grid reliability and it's affect on how renewable resources can participate in the state's RA requirements. Energy storage has the opportunity to play a significant role in meeting the RA needs of grid operators, whether they have mandated RA requirements like California or there is a market-based approach to capacity like ERCOT.The idea behind RA is simple enough; grid operators want to make sure that there is enough power capacity to meet demand despite potential changes to that demand related to weather, power plant maintenance, or grid emergencies. RA is a form of insurance that can de-risk the grid's operation by essentially paying or otherwise incentivizing power producers to have additional generation capacity on standby. California's RA program was developed in response to the crisis of 2000-01, where rolling blackouts and pricing spikes led to customer dissatisfaction and chaotic markets. The state does not run a capacity market but instead relies on retailers to provide RA. In other markets, like PJM or ISO-NE, reserve margin procurement is driven more by modeling demand curves, and generators bid into a capacity market auction. ERCOT has a market-based approach to RA, whereby pricing is expected to force power producers to make capacity available to the grid when needed. All of these markets have one thing in common, and that is the impact that clean energy goals are having on how to reserve capacity is viewed and what role energy storage will play in the wholesale and retail markets as we advance. Grid-side data combined with operational battery characteristics contribute to an orchestrated set of analytics designed to optimize asset participation in the varied markets
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