U.S. solar photovoltaic and battery energy storage developers are well positioned to serve unprecedented electric load growth spurred by data centers, putting the people and companies who spearhead power projects in the driver’s seat- or so you’d think. The reality is a little more complicated than that.
On this episode of the Factor This podcast, Sabah Bayatli, president and CEO of San Antonio-based OCI Energy, lends insights into what it’s like to develop utility-scale solar and battery energy storage projects in Texas and beyond. In a conversation with host Paul Gerke of Factor This, Bayatli shares OCI Energy’s growth story and what makes it different from other independent power producers, leaning on what he has learned through collaboration with utilities, financial institutions, technology providers, and infrastructure investors.
Bayatli outlines OCI Energy’s development strategy and argues that interconnection remains the biggest bottleneck to getting projects online. He weighs in on how grid operators are managing their queues and opines on how developers can continue to advance projects amid policy, permitting, and market uncertainty. Plus: Bayatli’s perspective on the future of energy storage, grid reliability, and energy growth over the next five years.
Listen to the audio version of the podcast:
In this Episode
Interconnection is critical
Generator interconnection, or the process by which projects like the ones OCI Energy develops connect to the electricity grid, remains problematic almost everywhere in the United States. Except Texas. Since ERCOT’s grid doesn’t cross state lines, it isn’t subject to the same federal oversight as others, and its Connect and Manage approach to interconnection has enabled rapid saturation of solar, wind, and storage, now totaling 102 gigawatts (GW). At the behest of the Federal Energy Regulatory Commission (FERC), other regional transmission operators are adopting similar frameworks.
“From the interconnection perspective, there is ERCOT, and there is everybody else,” Bayatli told Gerke on the Factor This podcast. “Across the board, outside ERCOT, interconnection is the number one challenge for any developer.”
“It’s not moving, that’s the problem,” Bayatli explained. “If a project takes eight years just for interconnection to be studied, then I think there is no way you can bring supply to that market. It just does not work.”
The downside to the way ERCOT handles interconnection is that assets will be exposed to curtailment down the road, OCI’s CEO cautioned. But that’s better than not having a project at all, he figures.
Eggs and baskets
To best navigate changing market conditions, Bayatli recommends developers leverage a strategy that has tendrils in multiple power markets.
“You strategize, and you lay your eggs and say: ‘I will have this number of eggs in this market. I will have this number of eggs in this market. You study the queue perfectly. You study what they are struggling with today. You make a judgment call on their next steps,” he detailed.
As challenges arise in each dynamic market, you reevaluate what that means for the eggs. A few will break, but the idea is that your investments are diverse enough to pivot accordingly.
Eyes on policy and regulation
Over the past few years in particular, Bayatli has noticed changing legislation and tariffs critically impact the renewables industry. He admits the resulting uncertainty is a challenge, but it can be managed with solid partnerships.
“No single party will say, ‘I will take the entire tariff risk.’ It’s a huge risk,” Bayatli said. “The market needs to find a solution to navigate through these uncertainties. Otherwise, you will have to wait for every single tariff to be cleared up, which really means that no project will be built, and so you have to find a way to make it work with your partners.”
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