March 23, 2020
COVID-19 and the U.S. Energy Storage Industry
The COVID-19 virus has placed unprecedented stress on the physical and economic health of communities around the world, and in just a few short weeks has upended our daily personal and work lives for an undetermined period ahead. For individuals working in the energy storage industry, the story is no different.
The U.S. Energy Storage Association (ESA) recently conducted a poll of our industry, revealing that the impact has been immediate and potentially devastating to our industry. With so much progress toward making the grid more resilient, efficient, sustainable and affordable in recent years, we can’t just cede that progress. We must ask Congress to act to support the more than 60,000 professionals in the energy storage industry across the U.S. to continue their work and continue to expand this quickly growing sector in the electricity industry.
The U.S. energy storage industry employs more than 60,000 professionals, according to the 2019 U.S. Energy and Employment Report. New and grid energy storage systems account for approximately $1 billion annually in economic activity. Both statistics are growing fast: That 2018 storage employment estimate was more than 14% above 2017 jobs and characterized by the Energy Futures Initiative as the one of the fastest growing employment sectors among U.S. energy technology. Similarly, the latest Wood Mackenzie Energy Storage Monitor 2019 Year in Review projected a 7.3 GW annual storage market in 2025, worth $7.2 billion in that year. Energy storage is truly one of America’s great new jobs and economic engines. Given the current crisis, that number will surely be adjusted downward.
Both grid-scale and distributed energy storage technologies, especially batteries, are critical to America’s resilience and electric system reliability. The benefits of energy storage are numerous and include:
- Increased grid efficiency and lower cost of power supply
- Extended life of our current electric infrastructure
- Enables more clean energy and electric transportation deployment
- Allows backup power during blackouts
As with all sectors of our economy, the current economic shocks present considerable threats to the industry’s health and hiring.
Industry Experiencing Delays, Potential Job Losses
In the power sector, storage projects are solicited and contracted with utilities or end users up to a year or more ahead of deployment. ESA surveyed stakeholder representatives across the industry, who conduct business critical to the energy economy and supply chains. The online survey of ESA members and the wider energy storage community was conducted in March 2020 and reflects a sample size of 173. The responses below reveal data and trends such as:
- 62% of respondents reported they are already experiencing delays in project deployment
- 66% expect to incur delays soon. Of those delays, 44% are currently experiencing short-term (one month) impacts
- 37% are anticipating six-month or longer delays in project deployment
- Many respondents simply didn’t know what the length of their delays might be
What’s Driving Delays?
Several challenges are driving the delays, such as delayed or canceled shipments of project components, travel restrictions on personnel that hinders project site visits, ceasing direct customer contact, and other dependencies such as closed government permitting agencies.
Moreover, in the third of the market focused on “Behind the Meter” (retail-facing) customers, some storage companies are concerned that the significant economy-wide disruptions will substantially reduce demand from end users. These businesses and consumers are also using storage to reduce energy costs, support onsite renewable generation, improve power quality, and improve their backup resilience to wildfires and storms.
These results portend immediate and significant risks of job losses and economic damage. These delays upend grid reliability and resilience efforts, just as the U.S. enters a new season of hurricanes and wildfires and as states, towns, and utilities are beginning to incorporate energy storage systems as backup power to prevent power system disruptions for critical healthcare facilities.
Near-Term Economic Stimulus Options
Congress must act swiftly and decisively to modify energy investment tax credits (ITC) to allow businesses to monetize them directly, including for energy storage technologies.
The policies with the fastest impact include:
- Modify energy investment tax credits (ITC) to allow businesses to monetize them directly, including for energy storage technologies.
- Make energy storage technologies eligible for the ITC under IRC Sec. 48 and 25D, with the option to elect “direct payment.”
- Extend safe harbor provisions for businesses electing the ITC.
- Allow regulated utilities to opt-out from normalization of a Treasury grant or “direct pay” election of the ITC for energy storage.
- Grant an industry-wide exclusion from Sec. 301 tariffs on grid energy storage projects and their components (see USTR Exclusion Request ID USTR-2019-0017-48999).
- Provide grants for distributed energy resources, including energy storage, for resilience and cost-savings.
- Direct the Department of Energy (DOE) to undertake demonstration projects of energy storage across electric systems.
- Incorporate energy storage into immediate relevant funds to state, local governments, and communities and expand those funds.
- Incorporate energy storage as an eligible investment for a renewed version of the DOE’s Energy Efficiency and Conservation Block Grant (EECBG) Program.
- Provide Department of Transportation funds for electric vehicle charging infrastructure and Department of Energy funds for electric vehicle supply equipment, with integrated energy storage as an eligible component.
- Incorporate energy storage as an eligible investment for Department of Education programs that promote school construction and renovation.
- Incorporate energy storage as an eligible investment for Department of Agriculture energy programs.
Energy storage is a dynamic industry that can create jobs and economic returns, while ensuing greater power and transportation sector resilience, efficiency, sustainability and affordability. The time is now to enact low cost, common-sense provisions that can have immediate effect in helping America shore up resilience to meet the COVID-19 and other threats ahead.
To share your company’s Covid-19 experience, please contact firstname.lastname@example.org