Texas utility enters tolling agreement with OCI Energy for 120MW/480MWh BESS

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San Antonio, Texas, utility CPS Energy and developer OCI Energy have entered into a long-term storage capacity agreement (SCA) for a 120MW/480MWh battery energy storage system (BESS).

Announced by OCI Energy last week (6 December) as an event was held (pictured), the project, named Alamo City ESS LLC, will be located in Bexar County, Texas, and is expected operational in late 2026.

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OCI Energy will develop, finance, construct, own and operate the BESS, while CPS Energy will have operational control of the project to provide electricity to the San Antonio, Texas region.

The Alamo City BESS’ 4-hour duration is rare for ERCOT, evidenced by projects such as Element Energy’s 53MWh second life BESS, Energy Vault’s 57MW/114MWh BESS in Scurry County and Gridstor’s 220MW/440MWh BESS in Galveston County.

In August, IPP Eolian entered into SCAs with CPS Energy for two 4-hour duration BESS projects totalling 350MW of power capacity. These projects will also be located in Bexar County, expected operational in the first half of 2026.

Tolling agreements, where a company pays an asset owner a fixed fee to rent and trade a BESS in the energy market have also been rare for ERCOT storage projects.

These deals can decrease risk through long-term commitments between the company and asset owner, providing a guaranteed source of revenue for an agreed upon, fixed amount of time.

Earlier this year, IPP Ormat Technologies signed two seven-year tolling agreements with optimiser Equilibrium Energy for the 60MW/120MWh Lower Rio BESS and the 60MW/120MWh Bird Dog Bess, both located within ERCOT.

Market intelligence firm Modo Energy noted that battery storage revenues have been falling in ERCOT recently. Revenues for battery storage have largely been highest in just a few days of each year when the most volatility is recorded in electricity pricing.

Emerging tolling agreements could signal a recognition of the changes to the ERCOT market. Speaking at Solar Media’s Energy Storage Summit USA in March, developer Available Power’s president, Ben Gregory said that the tolling agreement options in part increased the company’s interest in selling the 100MW/200MWh Greenport BESS located in Austin, Texas (Premium access).

CPS Energy is the largest municipally owned electric and natural gas utility in the US, and can take advantage of the Investment Tax Credit (ITC) for clean energy projects, through the Inflation Reduction Act.

This follows the utility’s request for proposals (RFP) for up to 500MW of energy storage projects in 2023.

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