Negative energy prices charge up battery growth
XLU•Negative wholesale electricity prices are becoming more common as solar and wind production outstrips demand, making batteries more attractive for storing power until prices rise. U.S. battery storage grew about 70% on average over the past three years, while battery costs have fallen more than 90% in three decades.
1. Negative prices spread
Solar’s falling costs have driven rapid deployment, but abundant daytime generation can push electricity prices below zero when demand is low and transmission lines are constrained. California and South Australia had negative wholesale prices 20% of the time in the first half of the year, while New England also saw them more often.
2. Batteries shift supply
Battery costs have fallen more than 90% in three decades, and the price per kilowatt hour dropped another 8% last year. Storage can charge when electricity is cheap and discharge when prices are higher. U.S. storage grew about 70% on average over the past three years; in Texas, average prices during an eight-day heatwave this summer were below $35 per megawatt hour, compared with nearly $200 during a similarly long period in 2023.
3. Grid uses expand
Batteries can also support grid reliability, replace some peaker plants and help existing transmission lines run more intensively. NextEra Energy plans to deploy as much as 43 gigawatts of new battery storage through 2032. The article says consumers and businesses could benefit from restrained electricity prices and sturdier grids, while battery producers face overinvestment and cutthroat pricing.
