July 20, 2021

Renewable Transition Requires Long Duration Energy Storage Policy Support

Bonnie Lamond, Energy Policy and Regulation at Highview Power USA

This is a guest blog post from Highview Power USA. Connect with Highview Power USA at #ESACon21 in Phoenix, AZ, December 1-3. 

We are halfway through 2021 and momentum is rapidly building in the energy storage space. Spurred by policies that support the Biden Administration’s emphasis on a green tech transition, we’re seeing more urgent actions taking place at the federal, regional, and state levels that will help us achieve our aggressive decarbonization goals. 

In particular, we’re seeing a great deal of activity among the Independent System Operators (ISOs). California Independent System Operator (CAISO)’s interconnection queue has reached an unprecedented amount of storage, with thousands of megawatts added. PJM and ISO New England are making progress on eliminating the Minimum Offer Price Rule (MOPR), which currently hinders the development of state subsidized, clean energy resources in the region. New York ISO may finally be considering storage as transmission rather than its usual mantra “storage is storage and transmission is transmission.”  And states out west and in the southeast that do not participate in regional electricity markets are starting to ponder the creation of ISOs, which would further facilitate the deployment of clean energy resources.

On the state level, offshore wind planning efforts have exploded and are driving the deployment of more energy storage. The New Jersey Board of Public Utilities recently approved the nation’s largest combined offshore wind award and claims it plans to be the U.S. leader of offshore wind supply chains. Connecticut, Maine, Maryland, Massachusetts, New Hampshire, New York, and Virginia are pushing forward with their offshore wind planning efforts, and California is engaging stakeholders to create a plan forward for its offshore wind development.

As the penetration of offshore wind increases and conventional resources are retired, overall system reliability can become jeopardized. With the increasing availability of energy storage, especially long duration energy storage, we can achieve the system reliability we’re accustomed to with today’s grid.

All of this activity is based on the new Administration’s aggressive nationwide initiative to increase deployment of renewable energy infrastructure for a carbon-free electric grid. But just how much of this is hype? Fortunately, this momentum has already swayed the pendulum far enough in the right direction, but there must be strong and secure market signals in place for developers and the investment community to turn this level of planning into actual deployment. Current regulations address what is now an outdated electricity market construct, where fossil-fueled generation was the leading generator for the grid. The grid is transitioning from being powered by fossil fuel generation to renewables, and new policies must be adopted to reflect this change.  

On the federal level, the inclusion of energy storage in the Investment Tax Credit language of the Internal Revenue Code will help. On the Regional Transmission Organization (RTO)/ISO level, reforming capacity markets and resource adequacy constructs to accurately value energy storage of varying durations is another area that will help. And on the state level, ensuring there is robust procurement and Integrated Resource Plan process that is inclusive of the varying energy storage resources—and their differing durations and attributes— will be critical.

Many agencies across the federal, regional, and state levels have already started addressing these energy storage barriers. If the first half of 2021 is any sort of indicator, we should expect a lot more activity in the energy storage space for the second half of the year.

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