Charging Ahead: Energy Storage Guide for State Policymakers

Transcription

1 Charging Ahead: Energy Storage Guide for State Policymakers Sara Baldwin Auck IREC s Regulatory Program Director Sky Stanfield & Seph Petta Shute, Mihaly & Weinberger LLP Attorneys for IREC April 26, 2017

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3 Charging Ahead Co-Authors Sara Baldwin Auck Regulatory Director IREC Sky Stanfield Senior Counsel, Shute Mihaly & Weinberger, LLP Attorney for IREC Joseph Seph Petta Associate, Shute Mihaly & Weinberger, LLP Attorney for IREC IREC would like to thank the Energy Foundation for their support of the development of the guide

4 Our Mission: Increase access to sustainable energy and energy efficiency through independent fact-based policy leadership, quality work force development, and consumer empowerment. Our Focus Areas: ü Regulatory: Policies and regulatory reforms that streamline grid integration and increase access to and optimize the widespread benefits of distributed energy resources. ü Workforce & Credentialing: high quality workforce training to ensure energy sector professionals implement reliable, safe, and affordable clean energy. ü Consumer Empowerment: Consumer tools to help inform cleanenergy decision-making and investments IREC Independent 501(c)3 non-profit Est

5 Goal of the Guide Provide state policymakers and regulators with a more comprehensive tool to navigate key regulatory and policy pathways to support the widespread economic deployment of energy storage. Download a FREE copy at

6 Guide Development Process Define Scope Research & Interviews Writing & Draft for Review External Peer Review Final Release April 2017

7 Section I. Introduction Section II. The Current State of Advanced Energy Storage Section III. How States Can Approach Assessing the Cost and Value of Storage Section IV. State Regulatory Approaches to Energy Storage Section V. Foundational State Policy Actions to Address Primary Energy Storage Barriers Section VI. Conclusions Appendices **Each Section ends with Key Takeaways for Policymakers**

8 Advanced Energy Storage Technologies Game-changers in electricity sector with huge potential; Uniquely flexible in their ability to deliver various services interchangeably; Often prevented from offering its multiple capabilities and thus is effectively undervalued and underutilized; Key Takeaway: Widespread deployment remains hampered by the current features of regional, state and federal regulatory frameworks, and electricity markets.

9 Assessing the Cost & Value of Storage Cost of Energy Storage 101 Value Stacking Compensation for energy storage services Assessing storage s value in the policy context

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11 Energy Storage Applications and Services

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13 How to Approach the Value Question? Energy storage can provide significant value to the grid but is unlikely to be strategically deployed to do so if the proper market signals, or regulatory policies, do not exist. The lack of market structures to value and compensate the benefits of energy storage is a greater barrier to deployment than storage technology costs. The cost of energy storage only has meaning relative to the expected services and performance it will provide. Rather than ask Is storage cost-effective? better to ask Is costeffective for the services it can provide? Assessing and compensating energy storage is challenging. Value stacking is critical to capturing the full range of benefits and services.

14 How to Approach the Value Question?, cont. The value of energy storage can have different meanings depending on the policy context in which it is being discussed. It is important to define and understand how the outcome of a valuation effort will be used to inform decision making. Guide high-level policy decisions? Evaluate utility investment decisions? Set a procurement price or rate? There is no widely accepted/adopted tool or method available that accurately captures the full range of benefits still an evolving process that no state, commission nor utility has mastered. Traditional tools lag behind in their ability to assess storage s value. Not necessary to wait until each of storage s myriad uses has a defined value before moving forward on the foundational policies and practices to advance storage.

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16 State Policy & Regulatory Actions on Energy Storage DC Note: Map is not reflective of all state activities on energy storage. Certain early stage policy/regulatory efforts, grant programs and/or pilot projects may not be reflected herein.

17 State Policy & Regulatory Actions on Energy Storage Energize: States that are encouraging storage market growth through procurement targets, demonstration/ pilot project funding, or other mandates or incentives. Plan: States that are addressing storage within a broader context when planning for the energy future through long-term resource planning, resource valuation efforts, grid modernization or distribution system planning. Clarify: States that are clarifying existing rules as they apply to storage, through revising interconnection, net metering, fire and building codes, and others as applicable. Energize the Market Clarify Existing Rules Plan for Storage Investigate Storage Investigate: States that have demonstrated an interest in storage through general investigations, workshops, or briefings.

18 State Actions on Energy Storage Key Findings Given the rapid pace of technological innovation, seek out the most updated information to inform policy decision-making and infrastructure investments. Avoid reinventing the wheel, leverage other states experience with storage, as well as the growing body of reputable evidence about energy storage. Avoid more time- and resource-intensive investigative or exploratory steps that do not have a clear end in mind. Allow energy storage systems to operate effectively under existing regulations, and clarify their role therein (e.g., interconnection). Considerations of energy storage are and should occur in the context of other grid planning efforts.

19 State Energy Storage Policy Foundations Numerous policy and market hurdles need to be overcome to advance energy storage. Charging Ahead identifies four high priority regulatory barriers. Informed by interviews with storage companies, regulators, and IREC s participation in regulatory proceedings across the country. CLASSIFICATION & OWNERSHIP PLANNING GRID ACCESS VALUE STREAM

20 PLANNING The Barrier Traditional planning processes are not designed to take into account flexible resources such as energy storage. Ensuring full consideration of energy storage s capabilities needs to happen at all levels of planning; i.e. in IRPs, transmission planning and distribution system planning.

21 Require Proactive Consideration of Energy Storage in Utility Planning Efforts State regulators can encourage or require investor-owned utilities to evaluate and integrate energy storage more proactively in their planning efforts (IRPs, DRPs, etc.). Be specific about how energy storage should be evaluated and modeled (including requiring the use of up-to-date, accurate cost and performance data) to see the most useful and effective results. Requiring utilities to prepare accurate hosting capacity analyses of their distribution systems, using robust methodologies, and to share the underlying data supporting those assessments in granular and readily accessible formats can help identify optimal grid locations for energy storage. Consider requiring utilities to demonstrate that they have a robust and not overly constrained process for considering non-wires alternatives (which may include energy storage) for distribution system upgrades.

22 The Barrier GRID ACCESS Just like traditional generators, energy storage systems need fair, efficient and non-discriminatory interconnection access. Current interconnection procedures were not written with energy storage s dual load and generation functionality or control capabilities in mind.

23 Ensure Fair, Streamlined, and Cost Effective Grid Access for Energy Storage Systems Establish transparent, non-discriminatory, timely and cost-effective statewide interconnection standards that address energy storage. Clarify the existing definition of eligible generator to include energy storage. Allow applicants to define operating constraints, incorporate them into the binding interconnection agreement. Identify and specify how cost allocation rules apply to energy storage systems, particularly where it is determined that a grid-related upgrade would be required for both the charging (load) and discharging (generator) functions of storage. Clarify when energy storage systems need to submit an interconnection application, and what level of review each type of system will need to undergo. Address non-exporting energy storage systems, which may require minimal review States should work with FERC to ensure a clear answer emerges such that energy storage projects can offer their full range of services without encountering unnecessary jurisdictional hurdles.

24 CLASSIFICATION & OWNERSHIP The Barrier In restructured or deregulated states utilities are typically wires only companies and cannot own generating assets or rate-base assets that participate in the market. Since storage s value is often derived from its ability to flexibly act as either T&D or generation, this may limit opportunities to deploy storage systems in a cost effective manner.

25 Clarify How Energy Storage Systems are Classified to Enable Shared Ownership and Operation Functions in Restructured Markets Reconsider the current limitations on asset ownership that may prevent wires-only utilities from owning storage as assets and, thus, from being able to recover costs through rates. This could be done by explicitly allowing utilities and third-party generation owners to share the ownership and control of storage assets. Accompanying this approach could be the implementation of appropriate regulatory safeguards protect the competitiveness of energy markets, while still ensuring that the grid and ratepayers can benefit from advanced energy storage technologies. In states without explicitly defined limits on ownership, basic uncertainty about how commissions would classify a particular storage service or application can be a barrier to investment in storage projects.

26 VALUE STREAM The Barrier In order to entice energy storage system investment there need to be clearly defined and readily available mechanisms that allow owners to be compensated for the services it can provide. These value streams should also provide appropriate incentives for the energy storage systems to be operated in a manner that provides both individual and system benefits.

27 Create Mechanisms to Capture the Full Value Stream of Storage Services Consider adopting or modifying mechanisms to help create markets for energy storage and capture the full value stream of energy storage services, namely through monetizing the benefits. o Rate structures that enable users to maximize the customer-sited storage s potential (e.g., TVR, DR) o Procurement processes or auctions, where commissions must approve developers or utilities compensation for electricity assets and services; o Incentive programs; o Procurement requirements or targets. Regulators in vertically integrated states could look to examples of neighboring, restructured markets to estimate the value of providing different storage services, and work more closely with utilities to evaluate system economics

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29 Thank you! Q&A Sky Stanfield & Seph Petta Attorneys for IREC Shute, Mihaly & Weinberger LLP Sara Baldwin Auck Regulatory Program Director Full report and Exec Summary at: CONNECT WITH US: Twitter LinkedIN à IREC