by Julian Spector
April 26, 2018

My first thought upon stepping out of the Boston airport en route to the Energy Storage Association conference last week was how glad I am to live in California.

My second thought was that there’s a lot more happening with energy storage in Massachusetts than I realized.

That started sinking in as I ducked out of the blustery afternoon and into a speech given by Governor Charlie Baker. I’ve seen politicians talk about clean energy in a vague way, leaning on the talking points of “innovation” and “jobs.” This guy actually knew what storage could do.

Beyond the gubernatorial exuberance for storage, I gained an appreciation for the many interlocking strategies that the state has launched to boost storage, which go far beyond just giving grants here and there.

There were also some national developments out of FERC and a surprise move from the biggest name in batteries. 

Also, big thanks to all you Squares who joined us for the first-ever live editorial roundtable this week! We debated whether storage will kill off gas peakers, whether the resilience bump is real and if residential storage has finally reached the big time. The audience asked a ton of questions and kept things lively. If you missed it, you can catch the whole conversation here, and look out for more of these in the months to come.

A governor on your side

Energy storage offers Baker, a Republican governor in generally progressive Massachusetts, a chance to leave his mark on the state’s clean energy evolution.

In his speech, he described how storage would help the state with three goals: to reduce and stabilize the cost of energy for consumers, to assist the shift to cleaner electricity and to keep the state resilient in the face of nature’s various onslaughts.

“Every time you come a little further down the path with respect to storage, you make all these intermittent sources that much more valuable,” he said, referring to the state’s “combo platter” of wind, solar and hydropower.

Beyond that, he gets how expensive peak power can be for ratepayers in a gas-constrained wintry grid, and how storage can cost-effectively take over for gas to serve local peak capacity.

“That is not only when we pay the most for lots of energy sources, but it's also in many cases when we have some of the dirtiest sources that are available, simply because that's all that's there,” he said.

That awareness inspired Baker to propose a clean peak standard in legislation announced last month, to require a certain amount of clean electricity during the state’s peak hours.

Baker has committed himself to this new technology as a means to creating a lower-cost, better-functioning grid. And he understands how disruptive this technology could be.

“As storage becomes something that can solve problems and create strategic opportunities for people at the end of the distribution pipeline, the potential to really turn this game upside down in a good way is enormous,” Baker said.

That puts him among the very few governors in the country who have spoken out about storage and followed up with legislative action.

How fast they grow

The conference reminded me of just how fast certain ideas can spread. The one that really seems to be taking off is the clean peak.

The idea originated from work that Strategen Consultant Lon Huber did for the Arizona ratepayer advocate. I first reported on it back in December 2016, when it went by the name of "RPS 2.0."

Renewable portfolio standards drove a massive build-out of renewables, but don’t address when that energy delivers to the grid. The clean peak standard would sit on top of those renewable procurement goals and stipulate that a share of peak hours also come from clean sources, thus stimulating the growth of dispatchable clean energy. That ensures the clean energy build-out doesn't rely on a pricey natural-gas peaker expansion.

It started as a lone white paper, but the concept took over ESA this year, popping up in the governor’s address, in other main-stage speeches, on panels, in conversations. It’s clearly entered the mainstream of the storage industry’s policy thinking. With good reason: if states adopt it, as Massachusetts and Arizona could soon, it will elevate energy storage to the fore of energy policy planning.

That acceptance happened rapidly. Past efforts, like securing a standalone investment tax credit or streamlining storage interconnection, haven’t achieved that kind of widespread excitement.

Envisioning a brighter grid future that rests on energy storage with a clean peak standard has given the industry something to get amped up about, and given state leaders an intelligible outcome they can support.

Mass appeal

From afar it’s easy to dismiss Massachusetts as a “nascent market” for storage. It now has a deployment target of 200 megawatt-hours by 2020, and it divvied up $20 million in December to 26 demonstration projects. But those two actions don’t constitute a market.

That said, walking the halls of “the Pru,” in the local parlance, it became clear that a deeper effort has begun. The 200 megawatt-hours will not be the endpoint; it’s just to get the utilities moving on the path to the larger deployment envisaged in the State of Charge analysis.

The state grew from three storage projects with 1.5 megawatts in 2015 to a current tally of dozens of projects with 48 megawatts/119 megawatt-hours either procured or in the pipeline.

The initial $20 million grant round will gather data on a number of different business models and applications, to help the state plan for future storage growth. And the forthcoming SMART solar incentive program is working in a storage adder of a few cents per kilowatt-hour generated to encourage residents to invest in dispatchable rather than standalone solar.

The clean peak standard would formalize the growth of storage capacity, concurrent with a massive uptake in offshore wind, solar deployments and Canadian hydropower. There’s more urgency to this than many realize, because the state’s grid has already developed Duck Curve characteristics of its own, and renewable penetration is about to grow precipitously.

The confluence of storage efforts owes its coherence to Judith Judson, the commissioner of the state’s Department of Energy Resources.

She pioneered large-scale storage development for the flywheel company Beacon Power, which broke open some key regulatory barriers. She was effective enough in that role to get flywheels included in the state’s Alternative Energy Portfolio Standard, which has not yet been updated to include energy storage more broadly.

There’s definitely more work to do. The storage adder to the new solar incentive program feels a bit gestural. With full net metering and no time-of-use rates, customers lack a clear price signal to reward them for saving solar generation for the evening system peaks.

“Now you can have that solar stay onsite and be used later in the day and reshape the duck from behind the meter,” Judson said of the storage adder. “That’s what the incentive is designed to do, as a way to bridge the gap until we get rate design that enables that more directly.”

The adder may inspire the purchase of home batteries, but the state still needs a way to organize the behavior of these distributed assets if it wants to maximize grid benefits.

Same same, but more expensive

Tesla built its home battery strategy on blowing the competition out of the water on price. The company voluntarily reduced that lead last week, I reported.

Now, you can purchase the exact same Powerwall, but it costs $400 more. The company explained the change with a typically cryptic statement about evaluating its pricing "based on various factors."

The price hike rebuts the theory (some might say religious tenet) that battery prices are like gravity: They only go down.

If Tesla, with its Gigafactory and years of experience producing residential batteries, has to raise the price, then this battery game can't be as easy as the company tried to make it look.

This could be a premonition of battery costs responding to unprecedented demand. Then again, it might reflect that Tesla was selling at an untenable margin, and has had to right-size its pricing as setbacks in the car business ripple out through the company. Pretty much everyone I spoke to in the industry suspects that latter case.

Faster connection, please

It would be hard to find a group of people who are more excited about the Federal Energy Regulatory Commission these days than the storage industry.

The happy streak continued Thursday with Order 845, a new ruling to streamline interconnection. It's not exclusive to storage, but has some goodies specific to this technology.

For the comprehensive look, I'd direct you to this tweetstorm by Jason Burwen, the ESA’s lead policy wonk.

Perhaps most interesting, the order allows storage interconnection based on intended use of the asset, rather than nameplate capacity. If you want to add batteries to a solar plant to hold onto power and dispatch at night, you no longer have to pay for transmission upgrades sized to the nameplate capacity of the batteries plus the capacity of the solar plant.

"That's really big when combined with Order 845's creation of a new surplus interconnection agreement — an expedited (i.e., non-queued) process to interconnect new facilities with existing generators that aren't using all their capacity all the time," Burwen tweeted.

The upshot here is that we as a society pay a lot of money for peak-sized transmission infrastructure that rarely ever operates at full bore. These new rules make it easier to backfill storage into the transmission system we've already paid for, extracting more value by using the wires at times when they were underutilized.  

"So kudos to FERC and another unanimous vote," said Burwen.