Energy Storage Incentive Programs

Posted: February 12, 2019 - 18:06 / Issue Brief

Energy storage is an increasingly cost-effective solution for electricity customers in a growing number of markets across the country, and this trend is expected to carry on as prices continue to fall. Yet regulatory frameworks and market rules in many parts of the country prevent customers from being able to provide or monetize the value their energy storage system can offer, impacting project investment decisions. Recent energy storage cost-benefit studies developed for Massachusetts, New York, and Nevada have revealed the potential value of energy storage systems to customers, utilities, and the electric system. Incentive programs can serve as a bridge on the path towards realizing this value, jumpstarting a state’s storage market while the necessary reforms are finalized to enable customers to secure financial compensation for the value their storage systems provide. The benefits in soft cost reduction of incentivizing the near-term deployment of megawatts can far exceed the costs of an incentive program.

This report is intended to provide policymakers with a guide for developing effective incentive programs for the deployment of energy storage systems. While there are several types of incentives a state can pursue to encourage adoption of energy storage, this report on rebate programs. There are a few existing energy storage incentive programs across the United States that can serve as a resource to glean lessons learned for effective policy design.