Recently, the Massachusetts Department of Energy Resources (DOER) released its long-anticipated report on energy storage, State of Charge. The report forecasts a promising future for the emerging technology, predicting up to 600 megawatts installed in Massachusetts alone by 2025 that could potentially result in $800 million in system benefits to customers.
This report sets the stage for next year’s legislative and regulatory session, where rapid storage adoption will surely be on the agenda. It’s been known for some time that energy storage could be the solution to many of the reliability and cost issues raised by the renewable energy policies of the Commonwealth.
Storage is the linchpin for managing the intermittency of wind and solar. Storage, in the right location, can be used to ride out peaks without higher cost fossil-fueled generation. The challenge is figuring out the where, when, and how much of storage installations. Any incentives should be carefully designed to ensure they make sense operationally and economically.
To capture the full value of the $800 million in benefits, policymakers need to be cautious when making decisions. There is a wide range of questions that we do not yet have the answer to, including: Where is storage most effective (e.g. at substations, residential, etc.)? Should utilities be given the power to decide when residential storage should be deployed to reduce system peak? How can storage work with solar and other renewables to help meet carbon reduction goals?
The DOER study finds that storage is economic in all potential uses but that residential installations were the least economic. Incentives for energy storage could dampen the value of the technology if implemented incorrectly.
The State of Charge report contains a set of policy recommendations. A good first step is to have the utilities include energy storage in their grid modernization plans. This approach would be economically efficient as utilities can best assess the impact of storage on the system holistically instead of at individual customer locations.
Further, the effects of residential solar are best addressed at the distribution level. This is the logical next step not only in grid modernization policy but will inform the current debate about rate design and cost recovery from solar customers.
If storage makes residential solar generation more valuable, that shifts them from being non-contributing users of the system to contributors who enhance the system. The path forward is much clearer from this report. The large amount of solar power on the system today warrants expeditious action to make it more valuable through storage.