The Smart Electric Power Alliance (SEPA) recently published the results of a survey of electric utilities regarding energy storage installations in SEPA’s first Utility Energy Storage Snapshot. The Snapshot is a particularly important indicator about the current state of energy storage—unlike the usual market projections by various analysts, SEPA asked its utility members what they are actually doing. The statistics are impressive:
- Of the 115 utilities responding to SEPA’s survey, 71 had at least one energy storage installation in their service territories (excluding pumped hydropower), with 31 of those utilities deploying their first project in 2016.
- Of the 44 responding utilities without an energy storage project, 70% are planning, researching, or considering a storage program for residential customers, with 84% similarly focused on a non-residential storage program.
- 14% of the responding utilities have already paired energy storage with a variable distributed energy resource (like solar), with 71% planning, researching or considering those capabilities.
These are striking statistics in a sector where battery storage installations were rare just a few years ago. And the report does a good job of providing an overview of the policy tools that legislators and regulators are using to drive new technologies and create frameworks to capture the potential values of energy storage.
For example, the report highlights developments in what might be called the “march of the mandates”—new state requirements for utilities to actually deploy energy storage systems. Like earlier state renewable portfolio standards (RPSs) that required utilities to procure renewable energy, such mandates can lead directly to utility investment and long-term utility offtake contracts to support the deployment of capital in energy storage assets.
At the forefront of this march is California, which requires investor-owned utilities to procure 1.3GW of energy storage capacity by 2020 (50% of which can be utility-owned). This requirement falls under a 2012 law that added a new requirement for utilities to procure 166 MW of behind-the-meter energy storage resources in 2016.
While California’s requirements are unmatched in other states, some jurisdictions are also setting goals or initiating proceedings to require energy storage installations in the future—including Massachusetts’ “aspirational” goal of 200 MWh of storage and Nevada’s legislative directive for state regulators to study energy storage cost-effectiveness for a future requirement. The report also highlights the significant financial incentives that states are offering to incentivize energy storage: California leads again with a dramatic $200+ million allocated for energy storage through 2019, but other states (including Maryland and New Jersey) are experimenting with tax incentives and direct cash payments.
Beyond the excitement associated with increased energy storage deployments, the growing reliance on the RPS model and financial incentives raise some interesting questions. The development of state RPSs—now in 29 states and the District of Columbia—occurred over more than a decade, with multiple states passing amendments and making refinements to RPSs over time to address different technologies and market developments. And some states that initially embraced direct financial incentives for solar energy subsequently moved to more market-oriented structures over time.
As the RPS model and incentives are developed and tailored for energy storage, policymakers should put particular focus on earlier “lessons learned” as renewables deployment ramped up. California may again be showing the way—just last week, a new law came into effect that requires every California city with more than 200,000 residents to make energy storage permitting forms and documentation available online and allow for electronic signatures, removing a key barrier familiar to many renewable project developers but generally unaddressed in RPSs.
Encouraging stakeholders to revisit and apply those lessons now—instead of learning them again—will help deliver the deployment goals now being crafted across the country.