by Julian Spector
April 01, 2020

Over the last six weeks, we’ve profiled emerging state markets where energy storage projects are getting built or gaining traction. But there are plenty more where that process is in motion; as we learned from the latest Energy Storage Monitor, only 15 states lack any advanced energy storage in front of the meter.

This week, we’ll catch up with the next tier of markets, ones where developers are gaining interest, or maybe a landmark project is moving forward, or political forces are mobilizing to give storage a boost, but where the pathway is not so clear as in the Arizonas and Massachusettses of the world.

The preceding articles showed that the emergence of a thriving storage market requires strong policy engagement from the executive and legislative branches of state government or clear leadership from utilities that see the value in storage.

This week, we'll examine states that are pulling those elements together. New Jersey has strong executive branch commitments to storage, but they aren’t backed up by serious policymaking and the utilities haven’t seen enough value to lead the way on their own. Colorado has strong executive commitments and utility leadership, but those promising factors have yet to generate actual construction on the ground. Similarly, Florida Power & Light put its state on the storage map with a single announced project, but that alone is not sufficient to make Florida a stop on the storage industry’s itinerary.

Then there’s Texas, which has a policy regime that tends to block storage more than encourage it, and where utilities can’t lead the way because storage must be developed by independent power producers in a rough-and-tumble marketplace. Texas holds great potential if anyone can figure out how to make money there.


Right now, Colorado doesn’t look like much of a storage market. It has just 5 megawatts of utility-scale batteries in operation and nothing much under construction. And yet, this state has had an outsize impact in kick-starting a grid modernization trend that’s launching storage into the field around the country.

It started with Xcel Energy surprising itself and the world with just how cheap solar-plus-batteries had gotten for the arid Plains region. The utility’s solicitation results in early 2018 showed that this type of resource could compete effectively against all other types of power plants — if you baked in five years of estimated cost declines and industry learnings.

Then things really heated up. That November, Jared Polis won the governorship on a platform of 100 percent renewable energy. Within days of that election, Xcel, the largest utility in the state, got out in front of the popular mandate. The company voluntarily committed to a zero-carbon power mix by 2045, kicking off a trend that by now has become near-compulsory among major utilities.

At Greentech Media’s Energy Storage Summit in Denver last December, Gov. Polis affirmed that he feels “pretty bullish on storage” as a vehicle for delivering his ambitious clean energy agenda. The question now is, how does this stuff actually get built?

Xcel holds the keys to the biggest projects. It won regulatory approval in August 2018 for a plan to close 660 megawatts of coal capacity early and replace it with cleaner things. That package includes 275 megawatts of energy storage, with two major solar-plus-storage projects in the Pueblo area. But those are due in 2022.

Otherwise, some of the state’s small utilities and electric cooperatives are procuring their own storage. The Platte River Power Authority, for instance, was on track to finish a 1-megawatt/2-megawatt-hour battery at the Rawhide Prairie Solar plant in Q1 (prior to the coronavirus pandemic). Such projects show that diversity of customers is possible, but the strength of the Colorado storage economy ultimately depends on how regularly Xcel summons the 100 Megawatt Club.


The Sunshine State has 24 megawatts of storage operating in front of the meter, with nothing under construction.

But it soon will be home to the largest grid battery known to humankind, assuming that utility Florida Power & Light follows through on its stated intentions of building a 409-megawatt/900-megawatt-hour behemoth in southwestern Manatee County.

The use case is indicative of where future storage development will go here. The famously sunny state is finally starting to generate a decent amount of solar power as FPL gets on board with building, owning and rate-basing renewable power (its unregulated sister company, NextEra Energy Resources, is one of the largest renewables developers in the world). At the same time, a generation of decades-old thermal plants is heading for retirement. FPL decided it makes more sense to replace a couple of 1970s-era gas plants with this enormous battery and local solar generation rather than new-build gas plants.

If that pioneering project works out in late 2021, it’s easy to envision the utility opting to rinse and repeat across its territory.

It’s also worth noting that FPL has demonstrated an enviable ability to get what it wants from the state’s regulatory and political institutions. What it wants now could be to build lots of large and ambitious batteries, solving grid challenges and banking returns on investment for its shareholders.

Florida won’t be an open marketplace any time soon. But a regulated environment where the lead utilities enthusiastically procure storage still means business for storage manufacturers and integrators. For the industry, the best case here is that Florida goes the way of Arizona or Nevada, where the regulated system generates lots of mega-projects, even if it all flows through a handful of monopolies.

That monopoly has recently crumbled in the arena of home solar, though, and that opens up the possibility of a home storage market. So far, the appeal is almost entirely linked to the promise of clean backup power in the face of extreme weather.

“There's no significant time-of-use rates, no grid services opportunities, etc.,” said Brett Simon, a Wood Mackenzie analyst tracking behind-the-meter storage. “Backup is the only thing pushing people to buy. Hurricane concerns are real.”

New Jersey

In storage matters, as in so many other things, New Jersey pales in comparison to its neighbor across the Hudson River.

New Jersey hosts a respectable 43 megawatts of utility-scale storage, but New York has more. And New Jersey adopted an ambitious storage deployment target — 600 megawatts by 2021 and 2,000 megawatts by 2030 — only to have New York come along with a bigger one.

If anything, New Jersey has become a symbol of the limits of targets as a storage market-creation tool. Though the governor picked a number, that state has yet to develop the supporting policies that would give developers enduring reason to build there.

In New York, projects aren’t getting built because the governor picked a number out of the air; they’re getting built because the executive branch disbursed a block grant to seed the market, regulators adopted a tariff that pays distributed assets like storage for their unique capabilities, and several other regulatory and policy advances occurred.

The corresponding developments in New Jersey simply haven’t happened.

That leaves the development to entrepreneurial folks such as Viridity, which decided to challenge the notion that new projects can’t make money in PJM’s fast frequency market after the cataclysmic rule changes there. Viridity recently built two 20-megawatt projects, packed with slightly longer durations than was typical in PJM. Those projects alone account for nearly all the state’s substantial projects.

Otherwise, big news for the New Jersey storage scene comes along when utility PSE&G installs 2 megawatt-hours of Tesla batteries at a former municipal landfill, as it did in February. “PSE&G also installed a decorative iron fence for security and planted 91 new trees and a mix of perennial plants and shrubs to improve the curb appeal of the project and the neighborhood,” the company explained in its announcement.

The utility has also asked regulators to spend $109 million on 35 megawatts of storage, which it says would “jump-start” the state’s attempt to meet its goal. The goal, again requiring 600 megawatts by 2021, which is the year that comes after this year.


Nobody seems totally sure how to make money with storage in Texas. Given that situation, a surprisingly large amount of storage activity has already happened there.

The state clocks 129 megawatts of grid-scale batteries in operation, more than any other single state besides California. And the interconnection queue counts some 4 gigawatts of storage projects requesting to come online next year.

What exactly they do is another matter. Some have tried batteries as an experimental add-on to wind plants. Others used them to monetize solar production that was getting clipped. A newer crop of developers has strategies for how to tap profits in the wholesale market when peak hours send prices through the roof.

There’s no model for Texas storage, only some forbidden fruits. There’s no capacity market to pay batteries as in other states. And batteries count as generation in Texas, which means wires utilities cannot own them. That pretty much leaves the market to anyone willing to gamble on merchant risk, which is not a lot of storage developers or financiers.

Macro trends point in an alluring direction, though. Wind and solar are pushing down average energy prices, which squeezes the economics for new gas plant investment. At the same time, the peaks are getting peakier. In theory, that creates an opportunity for battery plants that cost less to build than a gas plant, perhaps load up on cheap renewable power when possible, and lap up the money from peak minutes faster than other plants can react.

Once one company shows it's possible, others will follow.