As States Increase Storage Targets, Political Maneuvering Becomes Key

In June 2021, Connecticut launched a new phase of its clean energy transition when Governor Ned Lamont, D, signed an invoice committing the state to deploy 1,000 MW of energy storage by 2030. This made Connecticut the eighth state to set a storage goal, a key marker of potential energy storage growth to supplement generation wind and solar.

Achieving that goal — and intermediate goals of 300 MW of storage by 2024 and 650 MW by 2027 — is a different story, one that states across the country are tackling in their own way. With questions lingering about storage’s unique role in the network and how best to balance emerging technologies, experts say state policies will be crucial in paving the way for broader nationwide deployment.

“These goals define a very clear intent on the part of the state in terms of where and how storage fits into other goals,” said Jason Burwen, vice president of energy storage. at the American Clean Power Association. “Once that goal is set, it’s up to the state to remove the barriers to achieving that goal. This can help show what’s working and where storage fits into the overall mix.”

“We are placing more emphasis on the resiliency that customer-premises storage could provide. In Connecticut, we saw the impact of Tropical Storm Isaias [in 2020] and we know there will be more and more of these storms.”

Josh Ryor

Director of Utilities Programs and Initiatives, Connecticut Public Utilities Regulatory Authority

Connecticut will initially focus on providing battery storage to homeowners and commercial customers, with the goal of reaching historically underserved communities, said Josh Ryor, director of utility programs and initiatives for the Public State Utilities Regulatory Authority (PURA). In one program launched in January, PURA, Connecticut Green Bank, Eversource and United Illuminating will offer upfront incentives of up to $7,500 to residential customers to acquire energy storage, starting at $200 per kWh. Commercial and industrial customers will also be eligible to receive incentives of up to 50% of the cost of a storage facility project. Customers who experience the longest and most frequent outages and those in low-income communities are eligible for additional benefits.

The focus on behind-the-meter deployment is partly due to PURA’s directive to deploy 580 MW of storage under the Connecticut bill (the remaining storage will be procured through public procurement), but also an attempt to distribute storage in a way that maximizes network benefits, Ryor said.

“From a regulators’ perspective, we’re very focused on a program that delivers benefits not just to customers who buy storage,” Ryor said. An analysis of the program found that the peak reduction benefits of widely deployed residential storage would reduce bills across the board. However, added Ryor, there will be additional resilience benefits for participants.

“We’re putting more emphasis on the resiliency that customer-premises storage could provide. In Connecticut, we saw the impact of Tropical Storm Isaias [in 2020] and we know there will be more and more of these storms.”

Connecticut Green Bank says the incentives are modeled in part on the state’s decade-old Residential Solar Investment Program, which has led more than 40,000 households to adopt solar power, with inspiration also coming from programs in New York, California and Vermont. “State incentives are key to driving technology adoption, especially in a nascent market,” Green Bank spokesman Rudy Sturk said.

send a signal

Neighboring New York City has set the nation’s most aggressive stockpiling target, with Governor Kathy Hochul, D, announce a goal of 6 GW of storage by 2030. The state already has 1,200 MW under contract and has spent over $300 million to encourage new developments. However, as utilities strive to meet state-mandated storage targets (despite numerous missing initial deployment targets set in 2018), the New York State Energy Research & Development Authority (NYSERDA) recognized that barriers such as interconnect delays, wholesale market uncertainty, and lack of monetization of some of the broader benefits of storage could have an impact on the deployment.

“You can give an archer a target, but without arrows he won’t hit it.”

Dan Finn Foley

Senior Consultant, PA Consulting

A new energy storage roadmap is expected this summer, which, according to a NYSERDA spokesperson, “will ensure that New York successfully achieves this expanded goal by identifying the research and development needed to further accelerate technological innovation, particularly for long-term energy storage, while outlining ways to incentivize the private market to meet New York’s ambitious clean energy goals.” This could also include recommendations from the New York independent system operator on how to integrate storage into the power grid.

Dan Finn-Foley, a senior consultant at PA Consulting specializing in energy storage, said the extra policy and study – the “logistics of bringing new technology to market” – are what make state-level goals so precious.

“You can give an archer a target, but without arrows he won’t hit it,” Finn-Foley said. “Where we’ve seen energy storage goals lead to some sort of mature business, there are places where the mandate or goal is part of a larger climate or decarbonization goal, often supported by regulation or policy.”

As of 2022, nine states have set energy storage goals, each with different incentive mechanisms and policies. Maine, for example, is targeting 400 MW of storage by the end of 2030 and has launched an investigation in how tariff design might promote this objective. Virginia has mandated 3,100MW of energy storage by 2035 by requiring its investor-owned utilities to seek approval for that total, 10% of which comes from sources behind the meter. 1,000 MW from Nevada goal by 2030 is being pursued largely through utility planning reforms. Massachusetts has been working toward its goal of 1,000 MWh by 2025 through utility plans and a incentive program for customers who allow power to be drawn from the batteries during peak periods.

Other targets and mandates may emerge soon. Illinois Climate and Fair Jobs Act requires a state commission to study storage deployment policies, including deployment goals for two major utilities to be achieved by the end of 2032. The Vermont Public Utilities Commission has a open regulation on storage policies in response to a law passed by the state.

However, programs aimed at achieving these goals are also caught in the uncertain political environment around storage, which plays a unique role on the network. States and power grid operators are still reviewing their tariff and interconnection rules to accommodate energy storage, which may dampen developers’ enthusiasm to install new storage without upfront incentives.

“On the front of the meter, what can be helpful with these incentive and targeted programs is that they allow easier access to a large battery company to gain experience in the market, which to its tower allows for even more development,” mentioned Vanessa Witte, Principal Energy Storage Analyst in front of the US meter at Wood Mackenzie.

This is especially true in the absence of a federal tax credit for stand-alone storage projects. While storage projects can receive credit when paired with solar power, a standalone credit has yet to be approved in Congress. This can cause difficulties in expanding the deployment. For example, Vermont utility Green Mountain Power launched a pair of energy storage incentive programs in 2019 to allow more businesses and residences to purchase and use batteries. However, a proposed extension programs that would also require participants to allow grid charging need to be refined due to their potential impact on federal tax credits available for solar-related storage.

California leads the way

Many experts point to California, which implemented the first storage deployment goal in 2013 and had installed around 2,500 MW of battery storage by the end of 2021. according to Californian ISO. The state is now considering long-term storage that can last at least eight hours, a necessary step to withstand the daily and seasonal variability of solar and wind generation. Governor Gavin Newsom, D, proposed $380 million in the latest state budget to support the early deployment of long-lasting technologywith an eye on 1,000 MW by 2030 and 4,000 MW by 2045. The state Utilities Commission has ordered utilities to procure a total of 11.5 GW of new electrical resources between 2023 and 2026.

Additionally, CAISO continues to explore its own policy incentives, with a straw proposal for a energy storage improvement initiative this would further clarify the role of storage on the network.

California’s initial focus “helped accelerate the market and put California ahead of the game,” Wood Mackenzie’s Witte said. Other states, even those without a defined storage market, could follow suit, she said. “Storage is accelerating relatively well on its own, but there are all those markets that haven’t been tapped. Clearly defined purpose and action helps accelerate deployment even in markets where you don’t see a high levels of deployment.”

Connecticut PURA’s Ryor said he hopes his state’s public goal will have that effect — and acts as a marker of the state’s interest in the burgeoning industry.

“The implementation of this goal and this program should hopefully send an attractive signal to businesses to come to Connecticut and stay in Connecticut without looking across the border,” said Ryor said.

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