1800 M Street NW Suite 400S Washington DC 20036

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1 1800 M Street NW Suite 400S Washington DC October 28, 2016 Hon. David J. Collins Executive Secretary to the Commission Maryland Public Service Commission 6 St. Paul Street Baltimore MD RE: In the Matter of Transforming Maryland s Electric Distribution Systems to Ensure That Service is Customer-Centered, Affordable, Reliable, and Environmentally Sustainable In Maryland (PC44 Dear Secretary Collins: On behalf of the Energy Storage Association ( ESA, please accept these Comments in response to the Maryland Public Service Commission s ( MD PSC request for comments in the above-referenced matter. Since its inception 26 years ago, the ESA has promoted the development and commercialization of competitive and reliable energy storage delivery systems for use by electricity suppliers and their customers. ESA s over 180 member companies comprise a diverse group of electric sector stakeholders, including utilities, independent power producers, manufacturers of advanced technologies -- such as batteries, flywheels, thermal energy storage, compressed air energy storage, supercapacitors, and other technologies -- component suppliers, and system integrators. ESA members have deployed nearly 1,000 MW of advanced energy storage on the nation s electric grids. ESA looks forward to working with the MD PSC and other interested participants in this and related proceedings to ensure that Maryland continues to promote distribution system planning and market transformation while ensuring least cost to ratepayers. Respectfully submitted, Jason Burwen Policy and Advocacy Director Energy Storage Association 1800 M Street NW, Suite 400S Washington, DC Phone: j.burwen@energystorage.org

2 BEFORE THE PUBLC SERVICE COMMISSION OF MARYLAND In the Matter of Transforming Maryland s Electric Distribution Systems to Ensure That Service is Customer-Centered, Affordable, Reliable, and Environmentally Sustainable In Maryland Public Conference 44 COMMENTS OF THE ENERGY STORAGE ASSOCIATION ESA welcomes the Commission s forward-looking discussion of electric distribution system transformation in Maryland. ESA wishes to acknowledge and commend the Commission for specifically focusing on energy storage as a part of this proceeding. The Commission will best advance the goals of distribution system transformation by giving consideration of issues specific to storage, and ESA strongly supports that effort. Advanced energy storage has a unique role to play in distribution system transformation, owing to its superior flexibility to other resources (see Figure 1. It is capable of both injecting and withdrawing electricity from the system. It is highly controllable, capable of fast response to system needs and nearinstantaneous ramp to full capacity in either charge or discharge mode. It can provide services from either side of the customer meter, and it can provide both wholesale and distribution or end-user services interchangeably. It has minimal direct environmental impacts, and it can be deployed rapidly. This flexibility is critically important during distribution system transformation, as storage can be used to avoid costs of excess system and local capacity; increase system reliability and resiliency; and integrate more variable renewable resources and distributed energy resources (DERs onto the grid. 2

3 Figure 1 Capabilities of Distributed Energy Resources (DERs Source: Smart Electric Power Alliance ESA recommends that the Commission s focus on energy storage include four topics: 1. creating a signal of value for storage; 2. opening competitive procurement to storage; 3. enabling grid access for storage; and 4. including storage in all utility and system planning processes. In the PC44 announcement, the Commission finds classifying storage properly in Commission rules and policies and valuing it appropriately as a distribution or customer-sited resource a topic ripe for further exploration. Similarly, the Commission plans to examine Benefits and Costs of DERs. ESA agrees that both topics merit discussion and looks forward to supporting the Commission in its exploration. The classification discussion is key to enabling grid access for storage and market access in PJM, and the valuation and benefit-cost discussions can both establish a signal of value for storage services and help incorporate storage into planning processes. ESA also recommends that the 3

4 Commission consider that there are several ways to create a signal of value for storage services, including market prices, valuation of storage tariffs, competitive tenders, and incentive programs including whether storage as peak load reduction should qualify for use of energy efficiency funds. Additionally, the Commission mentions Interconnection Process as a topic of concern and plans to discuss implementing rules and policies to promote competitive, efficient and predictable DER markets that maximize customers choices. ESA wishes to add that storage requires specific considerations with respect to interconnection, particularly given that it does not fit the characteristics of either distributed generation or load and can operate in parallel with the grid. Creating considerations specific to storage will remove barriers to grid access for and ensure that DER markets truly maximize choice. The Commission also mentions Distribution System Planning as a topic of interest, citing capability to handle increased DER penetration and evaluating the appropriate level of utility investment in distribution assets. ESA agrees that this topic merits consideration and that the Commission explore the way various technologies, including storage, can be incorporated into analysis methods and planning processes. In addition to discussing the role of various technologies, including storage, in augmenting DER hosting capacity, ESA recommends that the Commission specifically investigate the use of competitive, all-source RFPs to provide that distribution system capacity. This is a topic that merits specific discussion and is critical to ensuring that investments to increase DER hosting capacity minimize cost to ratepayers by opening competitive procurement to resources like storage that may not be traditionally considered a source of that service. Additionally, ESA recommends that the Commission consider the use of demonstration projects for non-traditional distribution infrastructure, such as storage, to drive learning-by-doing and development of a regulatory framework around such investments. In addition to these topics, ESA recommends that the Commission explore whether and how MD PSC rules create barriers to participation of storage in the PJM wholesale market. Fundamentally, as has been observed in other jurisdictions, enabling multiple-use storage to provide both wholesale and retail/end-user services will require some amount of coordination between PJM and the Commission. 4

5 Proactively identifying these areas can accelerate distribution transformation by ensuring storage and other DERs can provide their full value to the grid and maximize value to ratepayers. Finally, ESA recognizes the critical role of Rate Design and AMI in enabling DERs, and agrees with these topics for consideration. ESA recommends that the Commission create opportunities for input from all stakeholders on these topics. For storage issues in particular, ESA recommends that each of the following stakeholder segments be represented: electric distribution utilities; behind-the-meter storage developers; and front-ofmeter storage developers. Additionally, ESA welcomes the participation of load interests and environmental organizations to discuss the role that storage can play in distribution system transformation. ESA also requests that the voice of storage industry members be included in the discussions highlighted above that are not specific to energy storage. ESA appreciates the opportunity to provide comment to the Commission and acknowledges the Commission for its ambitions in this proceeding. Energy storage offers unique and varied value to the electric system that will be a significant part of enabling Maryland to transform its distribution system and achieve sustainability goals while keeping electric service affordable and reliable. ESA looks forward to working with Maryland s utilities, stakeholders, and the Commission to systematically address the barriers to storage as one part in the transformation of the distribution system. DATED October 28 th, Respectfully submitted, Jason Burwen Policy & Advocacy Director Energy Storage Association cc: Service List 5