During Infocast’s Storage Week 2018, ScottMadden director, Kevin Hernandez, and senior associate, Scott Roulston, served as panel moderators for sessions geared toward behind-the-meter and grid-connected energy storage systems. The following provides a summary of the insights shared during those discussions related to:

• Improving state regulatory policies to reap the benefits of storage
• Determining the locational value of storage and when to deploy storage as a non-wires alternative
• Addressing the maturation of long-duration storage technologies as it relates to their costs, performance characteristics, and applicability

The conversation about storage has shifted significantly in just the last few years. The discussion has moved from talking simply about potential storage technologies to the regulatory barriers of implementation and increasingly on the implementation of projects. It is no longer a question of “if and when” energy storage will be deployed on the grid but “how and where” to deploy it to best meet system needs.

As the benefits of energy storage become more widely accepted, questions remain such as what the locational value of storage is, how can it be leveraged to address grid needs, and what regulatory measures are still needed to level the playing field.

Improving State Regulatory Policies

Although significant advancements have recently been made regarding the regulatory treatment of storage, the question remains whether there a level playing field and what next steps are needed to allow the benefits of energy storage to be fully realized.

With FERC 841, a significant regulatory barrier is being lifted allowing energy storage to participate in wholesale markets. While this action is gaining most of the attention, much more action is being taken at the state level to open markets for storage. This state level progress often goes unnoticed. In states such as Washington and New Mexico, recent changes allow energy storage to be included in integrated resource plans; in California, guidelines have been developed to address dual-participation in wholesale and retail markets; and states such as New York, Massachusetts, and others are mandating energy storage targets aimed at spurring markets. All of these and similar efforts across the country are doing just as much or more to integrate storage as what we’re seeing on the federal level.

Locational Value of Storage and When Storage Can Be Deployed as Non-Wires Alternatives

Deploying storage to meet grid needs and defer traditional infrastructure is a rapidly expanding opportunity for energy storage. We’re seeing more and more examples of storage serving to offset the need for traditional utility capital expenditures. In some areas, implementing an energy storage asset is proving to be much more cost effective than traditional upgrades. For example, in Arizona, APS implemented an energy storage solution to defer a transmission upgrade at a much lower cost than otherwise would have been incurred. In other areas, such as New York, utilities are being challenged to evaluate alternative investments to traditional grid solutions, and energy storage is at the forefront of many of those conversations, often replacing or deferring costly substation upgrades or new build.

Addressing the Maturation of Long-Duration Storage Technologies

We heard from financiers and other developers of utility-scale storage that, in most parts of the country, there is still much greater appetite for and comfort level with mainstream lithium ion, as compared to other storage technologies, due to its established track record. However, as markets for long-duration storage develop, it’s a given that the “beyond lithium” world will mature and play a vital role in solving many use cases. By example, today we are already seeing flow batteries start to compete in the 20-year PPA market.

Concluding Observations

It is apparent from the level of excitement that energy storage is turning yet another corner in its journey to becoming fully integrated into the grid. Energy storage developers, utilities, financiers, and others are showing greater interest and enthusiasm for the opportunities ahead for energy storage—in 2018 and beyond. FERC 841 will undoubtedly create a significant opportunity for storage in wholesale markets. However, that shift will likely be matched by similarly important efforts undertaken by states to level the regulatory playing field.

Energy storage has the potential to reshape the way we approach energy supply. At ScottMadden, we seek to understand the shifting landscape so our clients know where storage can best provide value. For more information about the continued storage market expansion for utilities and financiers and our project work in this space, please contact us.

Additional Contributing Author: Scott Roulston