February 17, 2020
Five Years Past, Five Years Forward:
Closing Remarks at the 2020 ESA Policy Forum
On February 12, 2020, the U.S. Energy Storage Association (ESA) held another dynamic annual Policy Forum in Washington DC, gathering 200 policymakers and industry members together to discuss the most important policy issues affecting energy storage markets. If you weren’t there, you missed a terrific one, so be sure to register early for the 2021 Policy Forum.
A Few 2020 ESA Policy Forum Takeaways:
- Storage is forcing a critical distinction of jurisdiction at the intersection of state policy and wholesale markets, particularly in multiple-use of distribution-connected storage for wholesale and local system services;
- All-source Requests For Procurements are expected to have a greater future role in resource planning and authorization, in part due to storage’s declining costs and increasing value; and
- Storage’s game-changing influence on markets nevertheless inspires humor, from Connecticut PUC Chair Gillett’s name for Connecticut’s potential departure from the ISO-NE capacity market (“CONNexit”) to SANTA’s arrival (Storage As Non-Transmission Alternatives).
My Closing Remarks at the ESA Policy Forum
It’s 2020, and we are living the future. Here was the state of storage in 2015 when I started at ESA: Approximately 200 megawatts (MW) of new battery storage, over 95% of which was front-of-meter and most less than one hour duration, almost entirely used for frequency regulation, almost entirely standalone storage, all of which were PJM or ERCOT merchant assets, zero MW of utility Integrated Resource Portfolio (IRP) plans seeking or selecting non-pumped hydro storage, no new procurement outside of California, and 11 Leadership Circle companies at ESA.
Early in 2020, we already have over 1500 MW of new storage installed with a third behind-the-meter, another 8+ gigawatts (GW) contracted of non-pumped hydropower, and durations reaching four to eight hours. Utilities are procuring storage in over a dozen states (some at multiple hundreds of MW). Ownership is diverse among IPPs, utilities, and electric customers. Storage provides Resource Adequacy, transmission and distribution network capacity, ancillary services, rate management, and resilience. Solar+, wind+, hydro+, and gas+, hybrids are operating with geothermal+ and nuclear+ hybrids in the works. ESA now has 33 Leadership Circle companies and a StoragePAC to fund storage-related education in Washington, DC.
Storage costs dropped with unprecedented speed and ESA spearheaded policy designs that drove market development:
- 2015: California executes targets and behind-the-meter incentives, Oregon’s mandate become law, and PJM’s fast frequency regulation market provides the first pure economic case for grid storage.
- 2016: FERC proposes storage wholesale rules, Massachusetts’ first target becomes law, the first utility integrated resource plans (IRPs) begin planning for storage.
- 2017: New York’s storage target becomes law. Incentive bills pass in Maryland, Nevada, and Massachusetts. Washington, New Mexico, and Michigan pass favorable IRP reform rules. Congress holds its first grid storage hearings in a decade while FERC issues a dual-use storage policy statement, and ESA defends against inappropriate PJM regulation market changes. That year, ESA co-produced a comprehensive storage policy framework and toolkit for policymakers, focused primarily on market access, competition, and value.
- 2018: FERC issues its landmark Order 841 and Order 845. Massachusetts passes storage-enabling Clean Peak Standard legislation and increases its storage target, as did California; New Jersey and Nevada pass laws setting and investigating storage targets. NARUC passes a resolution that IRPs include storage, Colorado and Arizona reform IRP rules to include storage, and eight utility IRPs select storage. That year, ESA begins developing member-led Policy Working Groups, developing recommendations on ownership and competition, and non-residential rate design.
- 2019: Congress considers over a dozen bills promoting energy storage, with six including an investment tax credit (ITC). Order 841 compliance plans accepted with revisions, and FERC orders a new proceeding to examine rules for storage in PJM’s capacity market. New York and California pass over $1B in incentive expansions, while Nevada, Maine, and Virginia state studies recommend setting targets. Maryland passes a first-of-a-kind bill on business model innovation, Minnesota passes a utility planning reform bill. Over three-quarters of utility IRPs consider storage, with multi-GW planned in some. Unfortunately, Washington, DC sets the first significant tariffs on imported storage technology. That year, ESA develops new Policy Working Groups, focused on Storage-as-Transmission and Multiple-Use Storage, as well as a robust advocacy push for a Federal Investment Tax Credit for standalone storage.
- And 2020 is already promising: In February, Virginia passed clean energy legislation with a 3100 MW by 2035 storage target!
This year, our focus in Washington, DC is ITC eligibility for standalone storage and the BEST Act’s federal R&D funding for storage. We will continue to seek relief from import tariffs and engage our industry in DOE’s new Energy Storage Grand Challenge, a multi-technology, multi-application grantmaking roadmap.
Sub-nationally, we will help implement Order 841 and defend its intended path to wholesale markets for distributed storage, while improving capacity qualification in PJM. We will fight to remove barriers to hybrid storage + generation resources. We will lead education in six priority states and assist local advocates in others, focusing on deployment targets, incentives, and utility programs, as well as procurement and planning reforms. We continue to expand member-led Policy Working Groups, extending into Storage as Transmission Phase 2, deployment target design, and federal incentive design.
How could the next five years unfold under ESA’s robust vision of 35 GW of new storage deployed by 2025? We anticipate important new trends:
- Storage mainstreams as electric supply and policy shifts to mainstreaming storage as infrastructure, both in the grid and the built environment.
- Storage moves from a parallel procurement track to integrating directly into 100% clean energy policies, whether state- or corporate buyer-driven, driving more hybrid storage + generation resources of all types, innovations in storage technologies, and longer duration storage technologies.
- Distribution-connected storage increases its multiple-use applications, serving utilities, end-users, and bulk market opportunities at the same time.
- State clean energy policies drive regional market and state IRP decisions on storage for resource adequacy, driving new methods of storage capacity valuation to meet the flexibility needs of grids with increasing renewable energy.
- Storage becomes a key resilience tool, a close-at-hand solution to extreme events, aging infrastructure, and long-run uncertainty.
- Transportation electrification—particularly heavy duty vehicles and vessels—increasingly relies on storage as a grid buffer for fast charging while becoming more grid interactive, as fleets begin acting temporarily or seasonally like supply (not just as demand).
There’s much work ahead. States and consumers will continue to demand energy storage, developing new market design and support policies with bipartisan support. Decisions on national support policies and wholesale market rules will be fundamental to those markets. And as a responsible, mature industry, we also need to be proactive on safety and hazard mitigation, end-of-life and recycling, and supply chain integrity. ESA’s Corporate Responsibility Initiative is a tremendous opportunity to get involved there and learn the most up-to-date guidelines.
And ESA will continue to be the industry’s premier voice with the premier educational information, to accelerate markets, connect our members, and educate stakeholders on your behalf.