April 24, 2020
Energy Storage Goals, Targets, Mandates: What’s the Difference?
What do California, Oregon, Massachusetts, New York, New Jersey, Nevada, and now Virginia share in common? Each state is driving long-term investment in energy storage with a vision and a timeline. Some have declared goals, some targets, and some have gone as far as mandates—and those differences are critical to effective energy storage market development.
For some time now, state public policy has been a primary driver of energy storage deployment in the United States. Energy storage targets are the most direct and visible tool that state officials have used to jumpstart their in-state storage industries. Since California established the first state energy storage targets in 2013, altogether targets on the books total more than 11,000 MW of new energy storage, mostly over the next decade.
Because energy storage is still a new electric system resource in most places, targets drive learning-by-doing among utilities, regulators, and agencies and help orchestrate updates to rules and processes that are often required to bring energy storage onto the electric grid. State energy storage targets can also provide a stable, long-term demand signal to storage developers. Especially in states without experience procuring storage, a target can overcome hurdles to longer-term investment and hiring that might otherwise be considered too risky, as well as accelerate learning-by-doing in business processes and construction that drives costs lower.
Storage targets are necessary complements to state clean energy and environmental policies such as clean energy standards and renewable portfolio standards. With increased deployment of variable generation, energy storage ensures system reliability and allows for timing the delivery of clean electricity to maximize greenhouse gas emissions reductions.
Deployment targets can transform state grid and economies. For example:
- Following legislation enacted in 2010, California state regulators devised a deployment target of 1,325 MW of additional energy storage by 2020. According to the state’s utility commission, that target is being met, with 506 MW of new storage operational and an additional 1,027 MW under contract. Additionally, a pipeline of over 24,000 MW storage interconnection requests are pending, and an estimated 16,000 people now work in California’s energy storage industry.
- Following legislation enacted in 2017, New York state regulators devised a deployment target of 3,000 MW of additional energy storage by 2030. According to the first annual State of Storage report, New York counts 706 MW of storage under contract with a pipeline of 9,779 MW of interconnection requests. 32 MW of new storage has started operations, and an estimated 1,200 people now work in the New York’s growing energy storage industry.
Goals vs. Targets vs. Mandates
We at ESA use the term energy storage target intentionally to describe (1) a defined goal with (2) measures for follow-through. A goal is a number without defined accountability. A mandate, on the other hand, is a goal with legal liability for non-attainment—akin to what Oregon and Virginia have put forward. But between the bookends of a goal and a mandate are a range of options for states to create accountability and follow-through.
On one end of the spectrum of follow-through measures are those that create transparency. For example, Massachusetts and Oregon implemented a requirement that their utilities present public plans for attaining energy storage targets, while New York publishes an annual report tracking progress toward targets. These informational measures inform policymakers and prompt decisions on whether adjustments are needed to achieve the target.
In the middle of the spectrum are those measures that direct specific activities to meet the target. For example, California directed its utilities to create regular, biennial solicitations so procurement decisions could be informed with timely commercial information, and so utilities could make a good deal if they found one. Nevada implemented interim targets, which motivate utilities to begin sooner toward the target deadline.
Additionally, state direction to utilities and agencies to set up programs or reform rules can provide follow-through. For example, New York created an incentive program to drive early deployments and lower costs. Massachusetts incorporated storage into its solar incentive programs and developed a first-in-the-nation Clean Peak Standard. California has facilitated storage market entry as a preferred resource in solicitations. Virginia and Nevada are reforming integrated resource planning rules for storage.
At the other end of the spectrum is accountability for non-compliance, which can either be legal or financial. For example, legislation passed in Oregon and Virginia establishing storage targets creates statutory requirements of its utilities, presenting them with at least legal liability in the event that targets are not achieved. At present, no state targets have associated financial penalties for non-compliance, although precedent exists in programs such as Massachusetts’ Alternative Compliance Payments instituted for non-attainment of its Clean Peak Standard, which is programmatic support for its storage targets.
Follow-Through Mechanisms for Energy Storage Targets
Energy storage target design includes more than follow-through measures, of course. States have incorporated various other criteria into target design—be that using MWh instead of MW in Massachusetts, creating carve-outs by market segment in California, or introducing competitive procurement requirements in Virginia. In some states, the legislature has delegated authority to utility commissions to develop targets, while in other states the legislature has specified the target; other states may include interim targets. In some states the target is a utility procurement requirement, while in other states the target is expanded to include deployment efforts among customers and third parties.
Regardless of the flavor of each approach, the essential ingredient for making energy storage targets meaningful is follow-through, in which state regulators play a critical role. To date, most laws establishing storage targets have delegated target development and implementation to state regulators. Even when state legislatures are prescriptive in setting storage targets, utility commissions and their staff are key actors for determining the follow-through measures to meet statutory direction. It is an important balance of power between legislative direction and regulatory implementation which will make goals, targets, and mandates meaningful.
State Energy Storage Targets as of April 2020
|State||Goal / Target / Mandate||Follow-through||Other components|
|1,325 MW by 2020|
|Required solicitations, programmatic support, progress reporting||Carve-outs by segment (Tx-connected, Dx-connected, BTM)|
|Minimum 10 MWh, up to 1% peak load by 2020|
|Legal mandate, utility plan required, planning reforms|
|200 MWh by 2020, 1,000 MWh by 2025|
|Utility plan required, programmatic support||Denotes target in MWh|
|1,500 MW by 2025, 3,000 MW by 2030|
|Legal mandate, progress reporting, programmatic support|
|600 MW by 2021, 2,000 MW by 2030|
|1,000 MW by 2030|
|Utility plan required, planning reforms||Biennial interim targets|
|3,100 MW by 2035|
|Legal mandate, other measures TBD||Requirement of >35% procured from 3rd parties; interim targets TBD|
Formalizing ESA’s Approach to Targets
ESA has engaged with all seven states on enacting energy storage targets and is currently convening a formal Policy Working Group on State Deployment Target Design this year to develop our template and recommended approach for states. If your company wishes to join ESA as a Policy Partner or Leadership Circle member, please contact Brenda Lovell, Membership Director, at firstname.lastname@example.org.