Clean energy rivals New England and California are racing toward a new prize: leadership on energy storage. Both coasts have been leaders on energy efficiency, renewables deployment, and electric vehicles (EVs), and storage is the logical next step to improve system efficiency and back up intermittent wind and solar as they are increasingly adopted.
The benefits of storage are clear and increasingly well-recognized. Storage deployed at scale will serve the same purpose as warehouses and refrigerators in our food system by rationalizing an energy grid that is massively overbuilt to match supply and demand every second of every day. This logic is backed up by analysis from the Massachusetts’ Department of Energy Resources (DOER) showing that the top 10% of peak demand hours drive 40% of energy costs, and storing energy to meet these peaks would provide $3 billion in energy system benefits each year. According to a recent study from UC Berkeley, storage can also produce significant public health benefits by avoiding reliance on dirty ‘peaking’ power plants that are often located in marginalized urban areas.
In the race for energy storage in the Northeast, Massachusetts is taking an early lead. Under energy diversity legislation passed this summer, DOER can act to meet the storage target it recommended—600MW by 2025—which proportionately would be far larger than California’s mandate. The legislation also cleared an important practical hurdle by authorizing utilities to own storage, and, so long as third-party owners are protected to ensure competition, political support for energy storage should remain strong.
An overall mandate would build on efforts already underway in the Commonwealth. DOER is offering $10 million for demonstration projects through the Energy Storage Initiative. The Massachusetts Clean Energy Center has invested $9 million in storage-related initiatives and is serving as a match-maker for storage developers and potential customers. Under the new solar incentive mechanism being developed, bonus incentives for storage are being considered in the range of two to seven ¢/kWh, based on storage duration (kWh) and power (kW) relative to solar capacity. Within energy efficiency plans that invest $700 million per year, utilities are piloting demand management programs integrating thermal and battery storage, and attention to demand resources is likely to increase as peak demand flatlines, overall consumption declines, and the focus on improving system efficiency at all levels grows.
New Tool in the Energy Toolbox
Across the Northeast energy storage is gaining favor as an alternative to more expensive and often difficult-to-site transmission and distribution (T&D) system upgrades. In Boothbay Harbor, Maine, cheap energy available at night is stored in ice that is then used to cool buildings on hot summer afternoons. In conjunction with targeted efficiency, solar, and demand response, storage is being deployed instead of an $18 million transmission upgrade. At a larger scale, in New York ConEd is investing $200 million in storage, targeted energy efficiency, distributed generation and demand-response in lieu of a $1.2 billion substation upgrade. The potential for eye-popping T&D savings (in addition to other energy system benefits) contributed to a proposed rule from the Federal Energy Regulatory Commission that would require all Regional Transmission Operators to remove barriers impeding storage from providing energy, capacity, and ancillary services. This clear directive will help drive the grid operator ISO-NE to take necessary steps to enable storage, including compensating storage for rapid response capabilities, opening markets to smaller storage facilities, and allowing storage to provide multiple services simultaneously. Large scale energy storage could additionally help replace retiring nuclear and coal capacity in Southeast Massachusetts/Rhode Island (potentially pairing directly with offshore wind in a coal-to-clean energy conversion at the soon-closing Brayton Point plant) and address expected load growth in the greater Boston area.
Complementing top-down reform, several states are pursuing grid modernization processes in order to capitalize on declining costs and technology advances for energy storage and other distributed energy resources. New York’s Reforming the Energy Vision has received the most attention, but REV does not stand alone. Massachusetts utilities filed Grid Modernization plans including energy storage projects and pilots in August of 2015, and while the plans need improvement to ensure unified progress toward truly modern grids, the process has begun. Meanwhile, Rhode Island is pursuing a truly bottom-up approach by using distributed resources to meet energy system needs, and grid modernization proceedings were recently initiated in New Hampshire.
Resiliency and Preparedness
Because of its resiliency and preparedness, storage is increasingly recognized for its security advantages. The vulnerability of the grid to cyber-attacks was made clear in Ukraine, and physical attacks on critical grid infrastructure have recently increased. Weather-related outages will also increase with climate change-fueled extreme weather. As we grow ever more dependent on electrical devices, the importance of grid security expands accordingly.
Storage alone can provide backup power, and pairing storage distributed generation offers steady supply when the grid is down. In recognition of these benefits, Massachusetts put $40 million into the Community Energy Resiliency Program to support solar plus storage projects at schools that double as emergency shelters, hospitals, and other critical facilities. Following storms that caused major power outages, Connecticut established a microgrid grant and loan program that is currently deploying $30 million in funding.
And the Winner Is…
California receives the most attention for energy storage, and with real progress toward a bold procurement mandate the attention is deserved. However, unique conditions in the Northeast—aggressive renewable energy targets, relatively high energy prices, and difficulty siting traditional infrastructure—make the region ripe for storage.
At this stage the race for energy storage leadership is just getting started, and the ultimate winners will be customers and the climate, as storage deployment ramps up, costs decline, and our entire energy system becomes more efficient and cleaner.
This blog post also appeared as a guest post on UtilityDive.com. See it here.
Peter Shattuck is Director of Acadia Center’s Clean Energy Initiative and Director of the Massachusetts Office. His work focuses on cleaning up the energy supply across all sectors of the economy.