Energy Storage Incentive Rate Setting for States

March 14, 2024

Todd Olinsky-Paul | Clean Energy States Alliance (CESA), Clean Energy Group

As states increasingly adopt energy storage targets, develop storage policy and regulation, and seek to drive energy storage markets, state incentive programs are critical to increasing energy storage deployment. These programs can vary greatly, making it difficult to compare incentive rates from one program to another. This issue brief provides recommendations and guidance on incentive rate-setting for states seeking to develop distributed (behind-the-meter) energy storage incentive programs. It is intended to help states decide how to structure incentive programs and how to set incentive rates.

The issue brief covers many topics regarding state energy incentive programs including rate-setting considerations, recommendations for energy storage incentives, equity concerns and best practices, commercial vs. residential battery incentives, and state program examples and outcomes.

This is the first in a series of energy storage issue briefs that cover a range of topics identified as important and timely by CEG, CESA and the state energy agencies they work with. The next issue brief in this series will be on the topic of energy storage program design for peak demand reduction.