EMERGING ISSUES: IN EARLY TRANSITION
“Energy storage is hot. Energy storage is gaining huge momentum with rapidly expanding companies, full commercialization of technologies, declining costs and increasing customer adaptation. These signal its growing impact on the energy transition.” EURELECTRIC Conference, December 2017¹
In this fast-moving field of energy storage at the cusp of a technology transition, there are emerging issues that we have not addressed in the first part of this report. Some are too new to understand the implications fully, while others might not turn out to be issues at all.
We list some of those here. And having done so, we are likely still missing some items that others might find need attention; while for others, such as advocates involved in these areas, likely have more nuanced responses—or flat-out opposition—to how we have addressed these topics. All of which argues for engaged, coordinated advocacy on storage where these issues can be explored.
For now, at least, here are some remaining challenges and opportunities we see arising in the future regarding the development of the battery storage market. We don’t address them in the same way as the other trends we’ve covered earlier, with issues and actions, but rather simply flag them for future consideration and analysis.
Updated August 2018.
This report has not yet addressed what often first comes to mind among people thinking about battery storage: can I use it in my home? We have not written in any detail about residential battery storage for several reasons.
For the most part, battery storage is not economical today in the U.S. in most residential applications; people in individual homes are not typically subject to utility demand charges or time-of-use rates that would justify the added expense of storage (although this is starting to change in some parts of the country). Moreover, as noted here, the most common purpose for batteries might be resiliency, but it’s not factored into any economic analysis, and people tend to go for lower cost generators if outages are the primary concern.
But this could all change soon, based on some current trends. There were over 4,000 residential storage units in place, mainly off-grid, as of mid-2017 (2). In the first quarter of 2018, residential storage surpassed commercial installations and rivaled utility-scale numbers in term of megawatts deployed (3). According to a recent IRS ruling, homeowners can take advantage of the 30 percent investment tax credit for battery storage paired with new or existing solar systems, as long as the storage system is 100 percent charged by solar (which could be a problem for some uses) (4).
In addition to individual home solar+storage applications, developers are starting to install battery storage with solar PV in huge housing developments, where economies of scale can result in cost savings across hundreds of new homes (5). Telsa has plans to install battery storage systems in 50,000 homes in Australia and operate the independent systems together as a “virtual power plant” (6).
Some utilities in the U.S. are offering leased battery systems in homes that could be used for resiliency but where a utility can call on the system to reduce grid costs (7). Some already think residential solar+storage is “ready for prime time” based on several new business models (8). Notably, several northeastern utilities, such as Green Mountain Power in Vermont and Liberty Utilities in New Hampshire, have proposed or are rolling out residential battery programs; and National Grid has announced that battery owners in Massachusetts and Rhode Island may now participate in its residential wireless thermostat program (9). Typically, these programs offer a customer incentive in exchange for allowing the utility to remotely discharge the batteries during peak demand hours.
One new development is the potential eligibility of behind-the-meter residential battery systems in state energy efficiency programs. In Massachusetts, a leading state in both energy efficiency and energy storage policy, the state Energy Efficiency Advisory Committee has recommended that battery storage be included in a new “active demand management” part of the state’s three-year energy efficiency plans. The state’s efficiency program includes peak demand reduction as a goal, and storage is one of the primary technologies expected to help meet that goal. And a recent white paper commissioned by CEG shows that behind-the-meter battery storage meets the state’s cost-effectiveness screens, meaning it would be eligible to be included in the energy efficiency offerings (10). If Massachusetts moves forward with storage in its efficiency plans, other states might be expected to do the same.
Also, as noted above, there is some indication that residential customers, at least those that have behind-the-meter energy systems like rooftop solar, could become subject to demand charges or similar “reliability” charges, which could make residential energy storage more attractive. The reason for this concerns a controversy about whether customers who “net meter” excess electricity are paying their fair share of the costs of maintaining the grid.
Traditionally, the value of solar has been provided, in large part, by net metering excess generation to the grid. But recently, net metering rates have begun to drop in some areas of the country, and utilities have started to push for extra “reliability” charges on net metering customers. In 2016, Massachusetts granted the utility Eversource the right to assess a monthly reliability charge on all net metering customers, and in its recent rate case, the utility did exactly that. As a result, Eversource solar customers are now subject to residential demand charges, among the first in the nation.
If the future value of net-metered home solar PV systems continues to decline, pairing those systems with storage would be a way to preserve their value, because it allows the homeowner to increase self-consumption by storing excess solar generation in the battery and using it when the sun is not shining, thereby offsetting purchases of electricity from the grid at retail rates.
This reduced use of the grid power is sometimes called “grid defection” and has been identified by some observers as a first step in a predicted “utility death spiral.” Essentially, these observers say that utilities will continue to raise rates to make up for grid defection, but higher rates will only push more customers to self-generate electricity—thereby creating a downward spiral of electricity demand for utilities.
In addition to traditional housing, battery storage is also coming to manufactured modular housing, which when paired with solar can significantly reduce low-income residents’ electric bills and keep homes powered during an outage; such homes could be a key part of rural development in remote places subject to periodic hurricanes and outages (11).
Zero Net Energy
There is a growing movement toward buildings and, at a larger scale, cities that produce as much energy as they consume, known as zero net energy (ZNE).
California is currently leading the way on ZNE, with some cities already mandating ZNE development and the state requiring near ZNE for all new residential construction by 2020 and new commercial buildings by 2030. In 2018, California updated its Building Energy Efficiency Standards to requirement solar on nearly all new homes, getting the state closer to its ZNE goals. The new standards also offer a credit for solar systems combined with energy storage, recognizing the added benefit of storage to the overall energy system (12).
Unfortunately, many other well-intentioned ZNE goals and policies are being put in place without recognizing that ZNE buildings can still have a significant impact on the electric grid.
Simply producing or procuring an amount of renewable energy equal to total energy consumption in no way ensures that power supply will match demand.
A study prepared for the California Public Utilities Commission accessing the grid integration costs of residential ZNE development, found that, at a certain level of ZNE penetration, energy storage would be required to mitigate the negative grid impacts of increasing levels of distributed solar (13). The California Energy Commission noted this in their support documents for the new building standards, stating that the most important outcome will be for a building to produce and consume energy “at times that are appropriate and responds to the needs of the grid, which reduces the building’s emissions” (14).
As ZNE policies are developed and implemented, the real-world impacts to the grid must be evaluated and the incorporation of storage should be considered and encouraged for its ability to mitigate integration issues.
Wind and Storage
Like solar, wind is an intermittent, non-dispatchable resource. But unlike solar, wind (at least onshore wind) tends to generate more electricity overnight, when demand for electricity is often lower, and less during the day, when demand tends to be higher. This has led to wind curtailment and the under-development of high wind resource areas; because there has been no good way to store nighttime generation for use the next day, the utility of building additional wind farms has been limited.
Nevertheless, traditional wind turbines have been paired with battery storage, such as the 153-megawatt Notrees wind facility in Texas, which recently upgraded its batteries to a 36-megawatt lithium-ion system (15).
Now, we’re beginning to see energy storage play a major role in new offshore wind development as well in Europe and in the U.S., with several projects proposing to incorporate batteries to boost project economics and improve grid stability and reliability (16).
With prices for lithium-ion batteries dropping, longer duration lithium-ion systems are now feasible and are beginning to be deployed; an example is the new 8 megawatt/ 6-hour duration lithium-ion battery system being developed by National Grid in Nantucket, MA (17).
Longer duration storage systems may be a better fit with wind energy; and the evolution of battery storage for this purpose will not only reduce curtailment of wind generation, but it could help to move storage from a short-term “peaker” function to a longer-term “baseload” function.
Indeed, leading turbine manufacturers, such as Siemens Gamesa, have expressed increasing interest in “hybrid” wind systems combined with solar PV and various types of storage, including not only lithium ion batteries, but also thermal storage and flow batteries (18).
And some battery companies are finding that they can reduce infrastructure costs by co-locating with wind farms, even if the batteries and the wind turbines are operated independently. Vattenfall’s new 22 MW battery installation in the UK, which is paired with a 228 MW wind farm, is an example of this. The batteries will provide frequency regulation to the grid, while the wind turbines provide power – but by sharing land and transmission capacity, both enjoy reduced operational costs (19).
Developing state-level policy regimes to encourage further development of the wind+storage combination seems a worthwhile goal of future work (20).
Recent comments by former Department of Energy Secretary Steven Chu noted the limitations of battery storage technologies. In response, the head of the Energy Storage Association, Kelly Speakes-Backman, while defending batteries on several fronts, agreed that batteries are capable of providing daily storage but that long-term, seasonal storage will require different technologies, like power-to-gas (P2G) (21).
P2G, along with batteries, was also included as an essential component to the global 100 percent renewables analysis by Energy Watch Group (22).
P2G is a technology process that converts electrical power to a gas fuel for storage or transportation through existing gas infrastructure. This conversion is done through electrolysis, which splits water into hydrogen and oxygen. The resulting hydrogen can then be directly used as a fuel source or turned into a form of natural gas through a process of methanation.
Because renewable generation can vary greatly by season or experience fluctuations in generation lasting multiple days or even weeks, longer duration energy storage is seen by many as an essential component in achieving high renewable penetration goals.
Some experts believe that P2G could fill the long-term storage gap that is unlikely to be met by existing battery technologies. Such long-term storage will be key to allowing renewables to fully replace what is considered baseload generation today.
However, P2G technologies have suffered from poor conversion efficiencies, meaning that much of the original energy is lost in the process of converting energy to gas and back again. And, as Ms. Speakes-Backman pointed out in her response, “under present market designs and public policy, there is not a market for seasonal storage.”
Several efforts are working toward finding a solution to these issues. In 2018, Advanced Research Projects Agency – Energy (ARPA-E) announced up to $30 million in funding to develop long-duration energy storage capable of delivering 10 to 100 hours or more of storage capacity at a levelized cost of around five cents per kilowatt-hour (23). A Swedish company has constructed a small-scale system that deploys a combination of solar PV and battery storage to continuously produce hydrogen. The company claims that the hybrid method can conserve about 60 percent of the original solar power generated (24).
Transmission & Distribution (T&D) Deferral
In a recent press release announcing an aggressive energy storage procurement target and the investment of public funds, New York’s Governor Cuomo notes, “New York faces a number of energy-related challenges including upgrading its aging energy infrastructure, which carries with it an estimated $30 billion price tag over the next 10 years.” Given the nation’s aging energy infrastructure, similar costs may be faced in many states.
Energy storage has long been noted for its ability to take the place of traditional substation and poles-and-wires upgrades. A Brattle Group report for a Texas utility draws a direct connection between lowering peak load on the grid—an increasingly common use of storage—and achieving T&D investment deferrals (25). The estimated value of this service varies, but the scale of the opportunity is large: for example, a single substation upgrade in ConEd’s Brooklyn-Queens service territory was slated to cost $1.2 billion. Instead, the utility elected to solve the problem using a combination of storage, distributed generation and demand response, at one-fifth the cost. The program has been successful enough that ConEd is now expanding it into other neighborhoods.
While individual projects such as the Brooklyn-Queens Demand Management project offer savings in the millions, what has not been calculated is the scale of this savings opportunity for energy storage nationwide. So, although we have not dedicated a separate section of this paper to the topic of T&D deferral, it represents a major potential energy storage market, which should be characterized and quantified.
As with any new energy technology installed in a building or near population centers, energy storage fire and safety considerations must be addressed. To date, codes and standards, along with such basic needs as information and training, have lagged behind the development of energy storage technology, and this has created barriers to deployment in some jurisdictions. However, there are now significant efforts at the municipal, state, and federal levels to address this need.
At the state and municipal levels, New York City’s Fire Department (FDNY) has taken the lead on developing new fire and safety codes for installation of lithium-ion batteries within buildings. FDNY is collaborating with the New York State Energy Research and Development Authority (NYSERDA), the National Fire Protection Association, insurance companies and utility Consolidated Edison (26).
At the federal level, Pacific Northwest National Laboratory and Sandia National Laboratories are leading the effort to develop codes and standards for battery safety. The two labs have held conferences and onsite training workshops, and have published reports such as the Energy Storage System Guide for Compliance with Safety Codes and Standards (27) and the Energy Storage System Safety: Plan Review and Inspection Checklist (28). And the National Fire Protection Association has just completed a draft version of NFPA 855, Standard for the Installation of Stationary Energy Storage Systems (29). The draft, which is available for public comment, is scheduled for release in its final version in 2020.
From the industry standpoint, battery vendors have incorporated safety measures into their products, from physical barriers to chemical fire suppression systems. Numerous studies are being undertaken to determine the most effective systems for various battery chemistries and configurations.
Battery storage is typically deployed close to energy consumers—think of batteries in cell phones, computers, and cars. As battery storage scales up and is used to address increasing numbers of applications in homes, communities and on the grid, it will be important for safety practices, codes, and standards to grow in tandem. Safety concerns should not be a barrier preventing the widespread adoption of energy storage.
Portable Emergency Generators
This report has devoted considerable time to discussing stationary solar+storage for resiliency and disaster recovery, but given that one cannot prepare for every possible disaster in every location, it may be sensible for disaster recovery agencies to keep a stock of portable solar+storage emergency generators that can be easily transported wherever there is need.
Indeed, FEMA and similar regional/state agencies typically have such a store of portable diesel generators on wheels. However, as already noted, diesel may no longer be the technology of choice for such applications, especially in remote areas or during prolonged grid outages, when local fuel supplies will be swiftly depleted and fuel deliveries may not be possible.
An example is the predicted Cascadia Subduction earthquake: studies have indicated that a major quake in the Pacific Northwest could leave coastal cities without power and cut off from overland fuel deliveries for months (30).
Under such circumstances, self-powering, portable solar+storage generators might be the only viable technology that could supply long-term, temporary power to these communities. Small versions of portable solar+storage generators are already commercially available for niche markets such as camping, and the U.S. military has experimented with larger portable solar+storage generators for use in forward operating bases.
Since the components and technical knowledge already exist, it shouldn’t be difficult to design a portable solar+storage system that could be airlifted in to serve remote communities and those struck by natural disasters. This is a niche market that deserves more attention from emergency planners and the storage industry.
Supply Chains and Recycling
Lithium-ion batteries are made with precious metals that may include cobalt, nickel, and graphite. Of course, these materials are not limited to stationary battery storage, with lithium-ion batteries now playing a central role in much of modern society, from phones to computers to vehicles.
The environmental integrity of materials extraction and battery manufacturing processes for these applications is a valid concern to many.
A central issue is the environmental impact and labor injustices related to the mining of raw battery materials around the world.
For lithium-ion batteries that use cobalt, the mineral typically represents the most expensive raw material component of a battery (31). Sixty percent of the world’s cobalt supply is originally sourced from The Democratic Republic of the Congo, where thousands of miners, some of them children, work in so called “artisanal” mines with little oversight and few safety measures.
CBS News ran a recent report that showed the truly deplorable conditions where underage children mine cobalt in The Congo by hand (32).
With cobalt prices skyrocketing as the demand for batteries increases, many battery companies are exploring way to reduce or eliminate cobalt from their products. Tesla has reported that the company has seen significant cost declines as they have worked to reduce cobalt usage. Elon Musk stated in a 2018 quarterly earning call that Tesla believes they can “get the cobalt [in their batteries] to almost nothing (33).
Some companies, such as Apple, BMW, Volkswagon and Tesla, have reportedly made efforts to improve the ethical sourcing of materials used in their batteries, but the process has proved to be challenging (34). It goes without saying that more needs to be done to improve the conditions of miners in The Congo and other impoverished regions of the world. It is not clear that the companies have a serious or enforceable plan to eliminate these sourcing problems at this point.
Batteries can also benefit from reuse and recycling. The European Union and China have rules and regulations in place to make manufacturers responsible for expired batteries in an effort to keep them out of landfills. Industry experts expect the U.S. to develop similar standards as electric vehicles and stationary storage become more prevalent.
Several electric vehicle manufacturers, including Daimler and Nissan, are exploring the second-life use of EV batteries in stationary storage applications, to lower waste and emissions by extending the useful life of their batteries (35).
Recycling is another alternative to battery disposal. While lithium-ion recycling is still in its early stages, there’s optimism that recycling could significantly reduce the total lifetime emissions of batteries. Umicore, which acts as Tesla’s European partner for battery recycling, has reported that it can recover 70 percent of the greenhouse-gas emissions produced during the original battery material extraction and refining stages (36).
Tesla is also constructing a recycling facility at its massive Gigafactory in Nevada, which will “safely reprocess all types of Tesla battery cells, modules, and packs, into various metal products for reuse in new cells” (37). Along with reducing waste, recycling of battery materials will result in less need for new raw materials extraction and processing.
The bottom line is that there is much more work that must be done by advocates and policymakers to reduce the environmental footprint of batteries used in all applications, from cars to laptops to phones to stationary storage. Cleaning up this supply chain should be a top environmental and moral priority of all affected electronics manufacturers.
In this new energy storage industry, there is a pervasive sense that the dominant technology has not yet been developed. Every day it seems there is a new battery chemistry announced that will challenge the presumptive dominance of the lithium-ion battery, whose position is based on its ubiquitous use across all sectors, including electric vehicles, energy production, and home use.
It could be that other chemistries will survive the competition with lithium-ion technology. But lithium-ion’s cross-cutting presence, with economies of scale driving down production costs, is hard to beat.
At present, lithium-ion technology occupies a 94 percent battery market share (38). That’s why it is difficult to bet on the competition, especially for general purpose applications in the utility and BTM power markets.
Lithium-ion is not a perfect technology by any means, but it needn’t be; like solar PV—which has only reached energy efficiencies of about 20 percent—lithium-ion technology doesn’t have to be perfect. It only must be good enough, and cheap enough, to seize the dominant position in the market.
Once it has achieved critical mass, as the incumbent technology, it will be hard to dislodge. Many market observers now feel that lithium-ion is fast approaching this dominant position, and that the window of opportunity for other chemistries is closing quickly. (Many people close to this issue use the following as a standard: as soon as the banks learn how to finance a new technology like lithium-ion batteries in power generation, it is hard to beat. Once the financing risks are addressed by banks, the path to the dominant position becomes much easier.)
Having said this, it could well be that other chemistries will compete in niche markets that require special storage attributes. For example, flow batteries offer a unique decoupling of power and energy attributes, along with other advantages, such as long-duration discharge and a high level of safety.
However, even established battery technologies such as sodium-sulfur are struggling to compete with the market dominance of lithium-ion. According to the U.S. Department of Energy, sodium-based chemistries accounted for only 4.8 megawatts announced, contracted or under construction in 2017, as compared with more than 333 megawatts of lithium-ion batteries. Flow batteries accounted for less than one percent.
In the end, it is not always the case that the best technologies win, but rather that the dominant technologies generally win if they outcompete on performance and cost and establish a strong first mover position in multiple markets. That’s what lithium-ion and its supporters have done quite successfully in the last decade.
Electric Vehicles and Grid Support
One of the early arguments in favor of electric vehicles is that it would be possible to use the combined storage capacity of cars to support utility grid operations, either through managed charging or discharging, as known as “vehicle to grid.” That the utilities would be able to call on those siting EVs and use their batteries in aggregate to provide grid support and other services.
Based on some recent criticism and industry comments, it might be wise to temper the enthusiasm for that approach. It is generally recognized that using car batteries to discharge storied energy to the grid could violate the car’s existing warranties. Indeed, some warranties already expressly preclude such use; for instance, the Nissan Leaf’s warranty has disclaimed coverage for “misuse, such as overloading, using the vehicle to tow, driving over curbs, or using the vehicle as a power source” (39). A federal advisory committee has called on DOE to study the conditions under which manufacturers’ warrantees might be waived to facilitate the use of EV batteries during an emergency (40).
There are also serious degradation and interconnection costs that make it likely unfeasible (41). A recent study suggested that vehicle-to-grid powering would degrade the battery life down to five years (42). That could be an insurmountable obstacle to this proposition. Perhaps that will change, but it’s worth taking the obstacles to this proposition seriously.
Having said that, there is a healthy debate about whether used EV batteries could be deployed for grid and building storage purposes after a car battery’s useful life had ended, as they might well have about 70 percent of their useful life remaining then. Whether they could compete with newer and better suited energy storage options at that time is one of the issues.
Electrified Air Transportation
Another form of transportation other than car that might be electrified in the future is the airplane. The future of air flight might also be electric. As a recent article noted, “in the French Alps last summer, a plane set seven new world records” (43).
The two-seater aircraft climbed more than 20,000 feet in under two minutes and reached speeds of 142 miles per hour. It flew nonstop for 300 miles.” And the cost was surprising: “during a 62-mile stretch of its historic flight, the plane used about 25 kilowatts of electricity for a total energy cost of just over $3.”
As the same article noted, “airplanes release around 500 million tons of carbon dioxide into the atmosphere each year.” This plane burned no fuel and produced no emissions. This is important: it might be possible to complete avoid transport emissions by using batteries to propel planes.
But some say this future is more than 30 years away, as getting batteries to an acceptable flying weight is more challenging than in cars (44).
Of course, the air safety of batteries also would have to be resolved before this fully is adopted as a future path for storage (45).
In states with vertically integrated utility monopolies, customers typically have few options to purchase power or acquire energy resources from non-utility parties. This has represented a major obstacle to the development of non-utility-owned solar and other renewable markets in such states.
The same issue applies to battery storage, a technology that frequently depends on customer access to a third-party provider where the utility has no interest in selling storage assets to their customers.
One of the few ways for customers to acquire energy storage in such monopoly states could be through the Public Utility Regulatory Policy Act or PURPA, a 1970s era law that slightly opened markets for third-party providers to sell renewable energy systems directly to customers (46). Under PURPA, the utility is required to enter into long-term contracts to buy renewable power from third-party “qualified facilities” (QF), if their rates are just and reasonable as approved by a utility commission. But, oddly enough, after almost forty years, there is an open question whether PURPA applies to stand alone energy storage or only to storage powered by renewables. In 1990, FERC issued a decision that suggested storage is a “renewable resource” eligible for PURPA “must purchase” requirements under the law (47).
But a law firm working on these issues questions that decision and notes that “there is no definitive precedent to date on whether battery storage satisfies the requirements for QF status, either alone or as part of a solar system. FERC staff has informally provided mixed guidance” (48).
In any case, whether PURPA provides for storage, either as a stand-alone resource or when powered by renewables, is yet another open issue requiring resolution if this storage market is to scale.
Not to be confused with its application for Bitcoin, blockchain is a new idea in an emerging consumer energy world (49). In this “peer-to-peer” future, power generated and stored by local renewables and battery storage could be traded and exchanged with other local customers. Put simply, blockchain is the exchange method where customers ocould buy and sell PV power to each other in a peer-to-peer energy market.
Some early blockchain pilots involving solar+storage are in place in the U.S. and in Europe. In a Brooklyn microgrid pilot, people log on to an app to see who is producing solar and then purchase that output directly from the local producers. In some cases, the PV system is integrated with battery storage, allowing output to be shifted to expensive peak pricing times of day (50).
The international battery company sonnen is working on a similar solar+storage blockchain project in Germany. The system allows PV producers to sell their excess solar power that is stored in sonnen batteries to other customers (51). The blockchain network already has thousands of customers signed on the exchange. A similar pilot is underway in the UK at a community housing project. Forty houses are hooked up to the system for energy trading. Although no price details are available, it is designed to provide low cost energy to address fuel poverty in the UK (52).
Many are optimistic that blockchain with renewables and storage could transform the way energy is managed on the grid, and change its structure over time to be more accommodating to distributed power (53). The economics and market uptake of these trading regimes is really at its infancy, with many new startups in this space (54).
The trend is worth watching in real time to find out its long-term significance, especially whether the complex world of energy trading can be converted into a financially sound community-level business of multiple transactions among local producers and consumers.
The Federal Role
Thus far, the federal role in supporting and promoting changes in the way electricity systems work has been limited. Because of this, states have taken the lead on battery storage, with some early-adopter states moving quickly to adopt new policy and programs, while others do little. The result is a patchwork quilt of state incentives, policy and regulatory structures, which presents a difficult landscape for developers and technology innovators.
There are some areas in which federal intervention has been crucial. For example, a series of FERC orders, from 2011 to the present, have helped to open ISO/RTO markets to energy storage, require equitable pay for performance, and knock down interconnection barriers (55). These orders have had outsized market impacts in some regions; for example, FERC Order 755, which required that grid operators pay more for faster, more accurate frequency regulation services, resulted in a short-term boom in grid-scale energy storage installations in the PJM territory, the wholesale energy market that serves much of the mid-Atlantic region, from Washington, DC to Illinois. There are now more than 265 megawatts of grid-connected energy storage in PJM.
FERC continues to be an important player in the way regulated markets treat energy storage. In 2018, it finalized the long-awaited Order 841, which directs independent grid operators to update market rules that may present barriers to storage (56). Under Order 841, as noted earlier, grid operators must now take the characteristics of storage resources into account and adjust market rules to facilitate their participation. This is anticipated to open wholesale markets to much greater participation by energy storage resources, in that it applies in many areas of the country and across many different electricity services markets (57). However, it will depend on how the Order is implemented by wholesale market grid operators.
Another area where federal support has been critical has been the extension of the federal Investment Tax Credit (ITC), traditionally used to support solar installations, to include energy storage paired with solar. So long as the storage device is primarily charged with renewably generated energy, it can receive the ITC and accelerated depreciation, both very valuable tax benefits. However, the ITC is scheduled to sunset over the coming years, and an effort to establish a separate, dedicated federal tax incentive for energy storage recently failed to gain the support of Congress.
A third area of federal activity is direct federal support for project deployment, technical support and basic R&D, which is conducted at national laboratories. Support for demonstration projects has been provided by the U.S. Department of Energy–Office of Electricity through the Sandia, PNNL and ORNL national labs, while other labs such as NREL have engaged in market analysis. In 2012, DOE created the Joint Center for Energy Storage Research, an energy innovation hub, led by the Argonne National Laboratory, that is exclusively devoted to researching next-generation batteries (beyond lithium-ion).
While all these activities are important, the federal government could do much more to support the use of new technologies such as battery storage to transform the nation’s energy systems. A dedicated federal tax credit for storage remains an elusive policy tool.
The Right to Storage
In March of 2018, the Colorado legislature passed what could be historic legislation on energy storage. It enacted a “right to storage” law. The law would give every consumer a statutory right to own and operate battery storage without the interference of utilities or others to prevent the exercise of that right. The utility commission is ordered to issue rules to implement the law (58).
To our knowledge, this is the first state in the country to create such a statutory right to energy storage technologies. It is a simple legislative solution that could have significant implications for storage and other clean energy technologies, if implemented well and broadly.
First, the legislation acknowledges the importance of energy technology, and why utility customers of all kinds should have an equal right of access to the benefits of energy storage. It comes down squarely on the side of consumers, rather than utilities, in the inevitable conflict of who owns, operates and controls energy storage technology going forward.
Second, it’s a clever and efficient way to overcome the many obstacles that we have seen utilities create for solar, such as hindering net metering and applying unfavorable time-of-use-rates. With a right to storage, the consumers’ needs should predominate in any future rule setting around storage markets.
Third, this could have implications for environmental justice and equity. If read broadly, as it should, laws like this providing equal access should apply to all consumers, not just those well-off who can afford to buy the technology. Rights to storage should mean that all public programs in support of storage incorporate energy justice provisions to ensure that low-income and diverse populations have equal access to the benefits of energy storage technologies.
Finally, this law gets at one of the fundamental challenges in modern society—the growing technology divide between the haves and the have nots—as well as the basic need to have access to technological innovations that can help the vulnerable to survive and prosper. Some have said that access to information technology should be a right (59). The United Nations has declared that internet access—or the “freedom to connect”— is a basic human right (60). Others argue that cybersecurity should be a basic human right (61).
There have been numerous proposals to make clean energy more just and equitable, with various recommendations to implement those goals at the state and local level. There have been state efforts for “equal access” to solar (62). And there have been some strong efforts to ensure that public funding programs be equitable in nature, that there be an allocation of clean energy funding targeted specifically to low-income communities, as California energy storage programs have done, which was detailed earlier in this report.
However, the right to storage concept has not yet made much statutory progress in the field of clean energy, which is why this approach could be significant. This could be a fundamentally new way to ensure the clean energy benefits of new technology are equally shared, and not undermined by utility or other interests. It is an area worth further advocacy and action.
(1) EURELECTRIC Conference, “The Value of Storage for the Clean Energy Transition,” Eurelectric, Brussels, Belgium, December 7, 2017, https://www3.eurelectric.org/events/2017/the-value-of-storage-for-the-clean-energy-transition.
(2) Munsell, Mike, “US Residential Grid-Tied Energy Storage Will Overtake Off-Grid Storage in 2017,” Greentech Media, September 26, 2017, www.greentechmedia.com/articles/read/us-residential-grid-tied-energy-storage-is-overtaking-off-grid-storage.
(3) Spector, Julian, “Residential Batteries Almost Beat Out Utility-Scale Deployments Last Quarter,” Greentech Media, June 6, 2018, https://www.greentechmedia.com/articles/read/residential-batteries-almost-beat-utility-scale-deployments-last-quarter.
(4) Weaver, John, “IRS Rules Energy Storage Upgrade to Solar ITC Eligible,” PV Magazine, March 5, 2018, https://pv-magazine-usa.com/2018/03/05/irs-rules-energy-storage-upgrade-to-solar-itc-eligible. See also, St. John, Jeff, “IRS Letter on Home Batteries Could ‘Open Floodgates for Residential Storage Retrofits’,” Greentech Media, March 5, 2018, www.greentechmedia.com/articles/read/irs-says-that-batteries-can-take-the-federal-tax-credit#gs.4QcdMhA.
(5) sonnen, inc., “Mandalay Homes and sonnen Partner to Build “Clean Energy Communities” in Arizona, Establishing the Blueprint for the Electricity Grid of the Future,” Cision PR Newswire, October 12, 2017, www.prnewswire.com/news-releases/mandalay-homes-and-sonnen-partner-to-build-clean-energy-communities-in-arizona-establishing-the-blueprint-for-the-electricity-grid-of-the-future-300536150.html.
(6) Lambert, Fred, “Tesla is installing Powerwalls and Solar Power on 50,000 homes to Create Biggest Virtual Power Plant in the World,” Electrek, February 4, 2018, https://electrek.co/2018/02/04/tesla-powerwall-solar-virtual-power-plant.
(7) Green Mountain Power Press Release, “GMP Launches New Comprehensive Energy Home Solution from Tesla to Lower Costs for Customers,” Green Mountain Power, May 12, 2017, www.greenmountainpower.com/press/gmp-launches-new-comprehensive-energy-home-solution-tesla-lower-costs-customers.
(8) Hoium, Travis, “Residential Energy Storage Systems Ready for Prime Time,” Nasdaq. December 30, 2017, www.nasdaq.com/article/residential-energy-storage-systems-ready-for-prime-time-cm898662.
(9) National Grid, “National Grid Announces Home Batteries Are Now Eligible for ConnectedSolutions Program across Massachusetts and Rhode Island,” June 2018, https://news.nationalgridus.com/2018/06/national-grid-announces-home-batteries-are-now-eligible-for-connectedsolutions-program-across-massachusetts-and-rhode-island/
(10) Clean Energy Group, “Massachusetts Battery Storage Measures: Benefits and Costs,” July 2018 https://www.cleanegroup.org/ceg-resources/resource/massachusetts-battery-storage-measures-benefits-and-costs/
(11) Clean Energy Group, “McKnight Lane Redevelopment Project.” Featured Resilient Power Installations, 2017, www.cleanegroup.org/ceg-projects/resilient-power-project/featured-installations/mcknight-lane.
(12) Mullendore, Seth, “‘Why California’s New Home Solar Requirement Includes Batteries and Not Zero Net Energy,” Clean Energy Group, March 17, 2018, https://www.cleanegroup.org/why-californias-new-home-solar-requirement-includes-batteries-and-not-zero-net-energy/.
(13) California Public Utilities Commission, “Residential Zero Net Energy Building Integration Cost Analysis,” Customer Distributed Energy Resources Grid Integration Study, Document No.: 10007451-HOu-r-02-D, issue: D, Status: Final, October 18, 2017, http://www.cpuc.ca.gov/WorkArea/DownloadAsset.aspx?id=6442455013.
(14) California Energy Commission – Efficiency Division, “2019 Building Energy Efficiency Standards: Frequently Asked Questions,” March 2018, http://www.energy.ca.gov/title24/2019standards/documents/2018_Title_24_2019_Building_Standards_FAQ.pdf.
(15) Colthorpe, Andy, “‘Minimal Downtime’: Younicos Swaps Out Lead-Acid for Lithium at Texas’ Notrees Wind Farm,” Energy Storage News, December 14, 2017, www.energy-storage.news/news/minimal-downtime-younicos-swaps-out-lead-acid-for-lithium-at-texas-notrees.
(16) Statoil already has one such offshore wind and battery storage system up and running in the UK. See: Runyon, Jennifer, “UK’s First Floating Offshore Wind Turbine Up and Running,” Renewable Energy World, October 18, 2017, http://www.renewableenergyworld.com/articles/pt/2017/10/uk-s-first-floating-offshore-wind-turbine-up-and-running.html. Proposals are also coming to the U.S. See also, Delony, Jennifer, “Bids Are in for Massachusetts Offshore Wind Procurement; Storage included,” Renewable Energy World, December 20, 2017, http://www.renewableenergyworld.com/articles/2017/12/bids-are-in-for-massachusetts-offshore-wind-procurement-storage-included.html.
(17) Press release, “National Grid Develops Innovative Solution for an Island Community’s Unique Energy Challenges,” National Grid, Massachusetts, November 2017, https://news.nationalgridus.com/2017/11/national-grid-develops-innovative-solution-island-communitys-unique-energy-challenges/.
(18) Deign, Jason. “Siemens Gamesa Pursues Hybrid Wind and Solar Projects With Energy Storage,” Greentech Media, May 18, 2018. https://www.greentechmedia.com/articles/read/the-siemens-gamesa-energy-storage-roadmap
(19) Deign, Jason. “Vattenfall’s Formula for Low-Cost Energy Storage Deployment,” Greentech Media, June 4, 2018. https://www.greentechmedia.com/articles/read/vattenfall-formula-for-low-cost-energy-storage-deployment
(20) See, Kuser, Michael and Rick Heidorn, Jr., “Mass Receives Three OSW Proposals, Including Storage,” RTO Insider, December 22, 2017, www.rtoinsider.com/massachusetts-offshore-wind-energy-82937.
(21) Williams, Diarmaid, “Energy Storage Association Chief Responds to Former US Energy Secretary Comments,” Power Engineering International, February 1, 2018, www.powerengineeringint.com/articles/2018/02/energy-storage-association-chief-responds-to-former-us-energy-secretary-comments.html.
(22) Ram, Manish et al, “Global Energy System Based on 100% Renewable Energy – Power Sector,” Power Engineering International, February 1, 2018, www.powerengineeringint.com/articles/2018/02/energy-storage-association-chief-responds-to-former-us-energy-secretary-comments.html.
(23) Weaver, John, “100 hours and longer: ARPA-E seeks 5¢/kWh energy storage,” PV Magazine, May 3, 2018, https://pv-magazine-usa.com/2018/05/03/100-hours-and-longer-as-arpa-e-seeks-5%C2%A2-kwh-energy-storage/.
(24) Enkhardt, Sandra, “AT Solar builds innovative storage project based on hydrogen in Sweden,” PV Magazine, May 3, 2018, https://www.pv-magazine.com/2018/05/03/at-solar-builds-innovative-storage-project-based-on-hydrogen-in-sweden/.
(25) Chang, Julie et al., “The Value of Distributed Electricity Storage in Texas: Proposed Policy for Enabling Grid-Integrated Storage Investments,” The Brattle Group, March 2015, http://files.brattle.com/files/7924_the_value_of_distributed_electricity_storage_in_texas_-_proposed_policy_for_enabling_grid-integrated_storage_investments_full_technical_report.pdf.
(26) Det Norske Veritas (U.S.A.), inc. (DNV GL), “Final Report: Considerations for ESS Fire Safety,” Report no.: OAPuS301WiKO(PP151894), Rev. 4, Consolidated Edison and NYSERDA, February 9, 2017, https://www.nyserda.ny.gov/-/media/Files/Publications/Research/Energy-Storage/20170118-ConEd-NYSERDA-Battery-Testing-Report.pdf.
(27) Cole, PC and DR Conover, “Energy Storage System Guide for Compliance with Safety Codes and Standards,” Pacific Northwest National Laboratory and Sandia National Laboratories, June 2016, https://energymaterials.pnnl.gov/pdf/PNNL-SA-118870.pdf.
(29) Codes and Standards, “NFPA 855: Standard for the Installation of Stationary Energy Storage Systems,” National Fire Protection Association, www.nfpa.org/codes-and-standards/all-codes-and-standards/list-of-codes-and-standards/detail?code=855.
(30) Cascadia Region Earthquake Workgroup (CREW), “Cascadia Subduction Zone Earthquakes: A Magnitude 9.0 Earthquake Scenario,” Update 2013, www.ci.florence.or.us/sites/default/files/fileattachments/community/page/581/cascadia_subduction_zone_scenario_update_2013_final.pdf; http://www.oregon.gov/oem/Documents/01_ORP_Cascadia.pdf.
(31) Many lithium-ion chemistries do not depend on cobalt, for instance lithium-iron phosphate and lithium-manganese oxide batteries. These chemistries tend to have lower energy densities than batteries utilizing cobalt, which may limit their application as vehicle batteries but may not pose a barrier for stationary applications. See Deign, Jason and Pyper, Julia, “11 Lithium-Ion Battery Makers That Don’t Need Cobalt,” Greentech Media, July 9, 2018, https://www.greentechmedia.com/articles/read/11-lithium-ion-battery-makers-that-dont-need-cobalt.
(32) “What’s Life Like for Kids Mining Cobalt for Our Gadgets?” CBS News, March 6, 2018, www.cbsnews.com/news/children-cobalt-mining-congo-cbsnews-investigation-ziki-swaze.
(33) Gerdes, Justin, “With Focus on the Model 3, What’s Up With Tesla’s Storage and Solar Businesses?,” Greentech Media, May 11, 2018, https://www.greentechmedia.com/articles/read/the-focus-is-on-the-model-3-whats-going-on-in-teslas-storage-and-solar-bus.
(34) Petroff, Alanna, “Carmakers and big tech struggle to keep batteries free from child labor,” CNN, May 3, 2018, https://money.cnn.com/2018/05/01/technology/cobalt-congo-child-labor-car-smartphone-batteries/index.html.
(35) Press release, “World’s Largest 2nd-Use Battery Storage is Starting Up,” Diamler, September 13, 2016, http://media.daimler.com/marsMediaSite/en/instance/ko/Worlds-largest-2nd-use-battery-storage-is-starting-up.xhtml?oid=13634457. See also, Nissan, “XSTORAGE: Energy Storage Solution,” Nissan: Energy Storage, Accessed March 23, 2018, www.nissan.co.uk/experience-nissan/electric-vehicle-leadership/xstorage-by-nissan.html; and see Field, Kyle, “Nissan Pushes into Energy Storage With Second-Life Battery Initiative,” Clean Technica, March 24, 2018, https://cleantechnica.com/2018/03/24/nissan-pushes-energy-storage-second-life-battery-initiative.
(36) Berndt, Chad, “A Tesla is Greener Than You Think and Getting Greener – a Look at Manufacturing,” Teslarati, July 4, 2017, www.teslarati.com/tesla-greener-think-getting-greener-look-manufacturing.
(37) Lambert, Fred, “Tesla Reveals More Details About ‘Gigafactory 1’: Model 3 Battery Pack, Largest rooftop Solar Array in the World (70MW), & More,” Electrek, January 10, 2017, https://electrek.co/2017/01/10/tesla-gigafactory-1-model-3-battery-pack-rooftop-solar. Researchers also are exploring new ways to recycle lithium-ion batteries by stripping out degraded particles in cathodes and reenergizing them at the same performance levels. See, Nikolewski, Rob, “UCSD Professor Devises Ways to Recycle Lithium-ion Batteries,” The San Diego Union-Tribune, March 16, 2018, http://www.sandiegouniontribune.com/business/energy-green/sd-fi-battery-recycling-20180316-story.html.
(38) Energy Storage Technology Advancement Partnership (ESTAP) Webinar: “State of the U.S. Energy Storage industry: 2017 Year in Review,” Clean Energy States Alliance, February 13, 2014, www.cesa.org/assets/2018-Files/ESTAP-webinar-slides-2.13.2018.pdf. More innovation is coming to lithium-ion batteries. Researchers are working on putting new more efficient materials inside the battery. See, Mims, Christopher, “Battery Life Powers Ahead Toward Sizable Gains,” Wall Street Journal, March 19, 2018, https://www.wsj.com/articles/the-battery-boost-weve-been-waiting-for-is-only-a-few-years-out-1521374401.
(39) A good, though somewhat dated law review article addresses many of the legal and regulatory issues with “vehicle to grid” applications of car batteries, including a discussion of this warranty issue at page 360. See, Hutton, Matthew and Thomas Hutton, “Legal and Regulatory Impediments to Vehicle-to-Grid Aggregation,” William & Mary Environmental Law and Policy Review, Volume 36, issue 2, Article 3. 2012, http://scholarship.law.wm.edu/cgi/viewcontent.cgi?article=1540&context=wmelpr. As with the other emerging issues section topics, we realize advocates and others with a deeper involvement in these issues might well have opposing views or would want to correct our impressions. We welcome those comments.
(40) Sobczak, Blake. “Car warranties pose unexpected hurdle for EV owners,” E&E News, June 26, 2018. https://www.eenews.net/energywire/2018/06/26/stories/1060086439
(41) Shahan, Zachary, “Tesla CTO JB Straubel On Why EVs Selling Electricity to The Grid is Not As Swell As it Sounds,” Clean Technica, August 22, 2016, https://cleantechnica.com/2016/08/22/vehicle-to-grid-used-ev-batteries-grid-storage.
(42) Press Release, “Hawaii Study Finds Vehicle-to-Grid Discharge Detrimental to EV Batteries,” Green Car Congress, May 15, 2017, www.greencarcongress.com/2017/05/20170515-v2g.html.
(43) Thomson Reuters Sponsored Material, “Fly Electric: The Aircraft of the Future Takes Flight.” The Atlantic. 2018, www.theatlantic.com/sponsored/thomson-reuters-why-2025-matters/electric-flight/208.
(44) Adams, Eric, “The Age of Electric Aviation is Just 30 Years Away,” Wired, May 31, 2017, www.wired.com/2017/05/electric-airplanes-2.
(45) Jackman, Frank, “In-Flight Fires” Flight Safety Foundation, June 8, 2015, https://flightsafety.org/asw-article/in-flight-fires.
(46) 16 U.S.C. § 2601. U.S. Government Publishing Office. https://www.gpo.gov/fdsys/granule/USCODE-2010-title16/USCODE-2010-title16-chap46-sec2601.
(47) Luz Development and Finance Corporation, 51 FERC ¶61,078. 1990. See also Raper, Kristine, “Powering America: Reevaluating PURPA’s Objectives and its Effects on Today’s Consumers,” Written testimony before the Subcommittee on Energy, U.S. House of Representatives, September 6, 2017, http://docs.house.gov/meetings/IF/IF03/20170906/106362/HHRG-115-IF03-Wstate-RaperK-20170906.pdf.
(48) Kateri Gamache, Caileen, “Solar + Storage: US Regulatory Issues,” Norton Rose Fulbright, August 2017, www.nortonrosefulbright.com/knowledge/publications/155276/solar-storage-us-regulatory-issues.
(49) Blockchain initially referred to a “block” of records linked cryptographically in a series of boxes to record Bitcoin transactions, an open and linked ledger or database without the need for a middleman to undertake sales. It has now assumed a metaphorical status to refer to protected and secure distributed methods to share and exchange online data among users of a network. See https://en.wikipedia.org/wiki/Blockchain.
(50) Papajak, Urszula, “Can the Brooklyn Microgrid Project Revolutionize the Energy Market?” The Beam, November 27, 2017, https://medium.com/thebeammagazine/can-the-brooklyn-microgrid-project-revolutionise-the-energy-market-ae2c13ec0341.
(51) Colthorpe Andy, “Blockchain and Batteries Will Assist German Grid Operator in Integrating Renewables,” Energy Storage News, May 2, 2017, www.energy-storage.news/news/blockchain-and-batteries-will-assist-german-grid-operator-in-integrating-re.
(52) Stoker, Liam, “Blockchain-Powered P2P Energy Trading on Trial at Britain’s Biggest Social Housing PV Installation,” Energy Storage News, November 22, 2017, www.energy-storage.news/news/blockchain-powered-p2p-energy-trading-on-trial-at-britains-biggest-social-h.
(53) Orcutt, Mike, “How Blockchain Could Give Us a Smarter Energy Grid,” MIT Technology Review, October 16, 2017, www.technologyreview.com/s/609077/how-blockchain-could-give-us-a-smarter-energy-grid.
(54) Deign, Jason, “15 Firms Leading the Way on Energy Blockchain,” Greentech Media, October 27, 2017, www.greentechmedia.com/articles/read/leading-energy-blockchain-firms#gs.25ynTkw.
(55) Interconnection barriers have slowed the adoption of BTM storage in some areas, such as California and Massachusetts, where markets were starting to make significant inroads. The interstate renewable Energy Council (IREC) has published a guide for utility regulators on interconnection for solar+storage systems, which is available online. See: Press release, “New Guide for Utility Regulators: Priority Considerations for Interconnection Standards,” Interstate Renewable Energy Council, August 2017, https://irecusa.org/2017/08/new-guide-for-utility-regulators-priority-considerations-for-interconnection-standards.
(56) ERRATA Notice, “Electric Storage Participation in Markets Operated by Regional Transmission Organizations and independent System Operators,” Federal Energy Regulatory Commission, Docket Nos. RM16-23-000 AD16-20-000, February 28, 2018, www.ferc.gov/whats-new/comm-meet/2018/021518/E-1.pdf.
(57) Maloney, Peter, “FERC Order Opens ‘Floodgates’ for Energy Storage in Wholesale Markets,” Utility Dive, February 20, 2018, www.utilitydive.com/news/ferc-order-opens-floodgates-for-energy-storage-in-wholesale-markets/517326.
(58) See SB 18-009, “Allow Electric Utility Customers Install Energy Storage Equipment,” Colorado General Assembly. 2018, https://leg.colorado.gov/bills/sb18-009; See Svaldi, Aldo, “Colorado Among First States to Give Customers the Right to Store Energy from Alternative Sources,” Denver Post, March 22, 2018, https://www.denverpost.com/2018/03/22/colorado-alternative-energy-storage.
(59) Ward, John, “Information Technology is a Basic Human Right,” Forbes, March 11, 2014, https://www.forbes.com/sites/sap/2014/03/11/information-technology-is-a-basic-human-right/#7716864648de.
(60) Alexander, Leigh, “Internet Access is Now a Basic Human Right: Part 1—Chips with Everything Tech Podcast,” The Guardian, July 29, 2016, https://www.theguardian.com/technology/audio/2016/jul/29/internet-access-human-right-tech-podcast.
(61) Shackelford, Scott, “Why Cybersecurity Needs to be Considered an Absolute Human Right,” Futurism, February 18, 2017, https://futurism.com/why-cybersecurity-needs-to-be-considered-as-an-absolute-human-right.
(62) Institute for Energy and Environmental Research, “Energy Justice in Maryland’s residential and renewable Energy Sectors,” Renewable Maryland, October 2015, https://ieer.org/resource/climate-change/energy-justice-marylands-residential.
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