Weekly Dispatch

How the US battery energy storage map is being redrawn

This week, I've been thinking a lot about how - or, more importantly, where - batteries get built. In theory, the answer should be "wherever the market pays best." In practice, it's often "wherever the statehouse says so."

In PJM, four states are doing nearly all the heavy lifting.

New Jersey, Maryland, and Illinois each run a competitive procurement - albeit through three entirely different mechanisms - and Virginia goes further still, with a mandate for up to 21 GW of batteries by 2045.

But each state's push for more batteries comes with a catch.

New Jersey: A fixed payment stacked on top of the market, so you keep every dollar of energy, capacity, and ancillary upside. However, it's availability-linked - run below 90% of hours in a year and the incentive gets docked.

Maryland: A hedge on PJM's most volatile revenue - your capacity income is swapped for a fixed credit. It steadies the wildest part of the stack, but you hand away the upside on it too.

Illinois: The longest security on the board, 20 years, settled against a modelled reference price - and you keep anything you earn above it. But you're exposed to how you perform against that benchmark, not your actual revenue (plus, just 588 of the 1,038 MW even sits inside PJM's borders).

Virginia: Far and away the most ambitious target, but delivered through the utilities, not an open auction. Most of it is Dominion's to build and rate-base - not an open field to bid into.

But a payment is only any use if you can actually plug in.

And in PJM, the connection has been the hard part - queued projects in the first reformed interconnection cycle waited nearly two years, and paid $206/kW in network upgrades along the way.

There's a way around it. A distribution-connected battery of 20 MW or less can skip PJM's transmission queue altogether - connecting through the local utility and taking a Wholesale Market Participation Agreement (a WMPA) to reach the wholesale market.

The reward for skipping the queue could be significant. Modelled over the past year, a four-hour distributed battery in Dominion - the PJM zone that covers most of Virginia, and home to the densest cluster of data centres in the country - could have earned $449/kW-year from the wholesale market.

But nearly half of that revenue comes from Regulation - a market PJM sizes at just 750 MW. There's already 596 MW of batteries operating, with another 1,900 MW on the way. As that supply lands, the Regulation price will fall - and the fattest part of the stack will start to erode.

So the distributed route is a genuine opening - but it's an early mover's game. Wait, and you're buying into a thinner market.

From where I'm sitting, SPP might be the most exciting market in the country for prospective battery owners and developers right now.

The fundamentals line up in a way few other markets manage, and it has one of the quickest, lowest-attrition routes to interconnection in the US.

It's no surprise SPP just posted its biggest quarter of battery additions on record - eight new batteries, totalling 820 MW of new capacity.

The near-term pipeline is just as busy. 1.3 GW of capacity with signed interconnection agreements is due online by the start of 2027, led by the 594 MW GREC project in Oklahoma.

Behind it, the queue is moving. SPP's Consolidated Planning Process reform unblocked more than 5 GW of new interconnection agreements last quarter alone.

The trajectory is remarkable. Modo Energy's forecast has SPP battery capacity climbing to 21 GW by 2032 - built from the projects already in the queue, plus the extra capacity our model expects to be economically viable.

New England runs on state contracts. A project in ISO-NE's queue tends to get built only if a state is already paying for it.

The active queue holds 14,541 MW of generation (wind, solar, gas) and storage, but Modo Energy projects only 4,395 MW will actually be online by 2029. Everything without an executed interconnection agreement drops out, along with the projects aiming for 2031 or later, and a further chunk once you apply the rates at which projects historically get built.

Offshore wind makes it through because every offshore project in the queue is sitting on a state contract. Merchant gas, with nothing to sell into, feels less feasible.

Batteries are the biggest technology in the queue, but where they'll end up getting built is heavily skewed. More than three-quarters of battery capacity expected to build is in Massachusetts.

That's because Massachusetts pays batteries a Clean Peak premium for charging on renewables and discharging at peak, on top of their energy-market income, and it's contracting 5,000 MW of storage by 2030.