A Policymaker’s Guide to the Storage IRP Galaxy

Update Available to ESA’s Integrated Resource Planning (IRP) Primer

Posted by:  Nitzan Goldberger, State Policy Director, Energy Storage Association

Utility resource planning will serve an important role in the march to realizing ESA’s vision of 35 GW of installed energy storage capacity by 2025. Reforming the way in which resource planning is done ensures a level playing field for all technologies, including energy storage, and allows all technologies to compete fairly. Utilities and regulators increasingly recognize the immense opportunity to provide flexibility and drive ratepayer savings, by deploying energy storage and reducing the need for spare capacity.

In 2016 and 2017, increasing numbers of utilities meaningfully incorporated energy storage into their IRPs, and several utilities selected storage as an economic resource for future procurement. These utilities employed a number of best practices and innovative approaches discussed in more detail in ESA’s latest IRP primer. A few highlights include:

  • Hawaiian Electric Company (HECO) employed sub-hourly modeling of their system in the December 2016 update to their Power Supply Improvement Plan and found that energy storage would be an economic resource for a variety of applications, particularly for grid flexibility services like frequency regulation. HECO’s analysis also examined storage on a declining cost curve under a variety of project sizes.
  • Portland General Electric (PGE) utilized a net-cost approach in comparing capacity options. PGE modeled the year 2021 in 15-minute increments, accounting for the variability of expected wind resources in its system. From there, PGE modeled the cost and benefit of different resources for meeting the frequency regulation, load-following, and contingency reserves needs. PGE then compared those two supply options using a net-cost approach, where the flexibility value of each asset was subtracted from its overall capital costs to arrive at a capacity value for comparison.
  • PNM employed a creative approach to addressing flexibility need by examining an LOLE for the greatest change in net load in a single interval, in addition to an LOLE for the greatest level of net load in a single interval. In doing so, PNM determined conditions under which energy storage may be more economical than conventional generation.
  • Arizona Public Service Electric Company (APS) used a novel method for modeling demand resources by identifying customer-sited energy resources as an investment option, rather than integrate projections of customer-sited resources into its load forecast. APS then examined the role that customer-sited resources, including storage, could play in providing resource adequacy, as well as mechanisms like programs and tariffs to yield such resources.

State policymakers have also begun to issue guidance on including energy storage in IRPs. Since the first version of this IRP document was released in 2016, 15 states have taken regulatory or legislative action to encourage consideration of storage in long-term planning. In the past year, the utility commissions of Washington, New Mexico, Michigan, and Arizona each released policy guidance on storage in IRPs.

As we cover in more detail in the IRP Primer, storage costs are declining rapidly, and large-scale storage deployments are increasing. With electric utilities planning to invest billions of dollars in new and replacement capacity over the next several years, the time is now to include storage in resource planning to ensure least-cost solutions for ratepayers and prudent long-term investments for reliability.

To read more about how to incorporate energy storage into long-term planning effectively, download the IRP Primer here.