by Julian Spector
December 02, 2019

BALTIMORE — If policy is destiny, the Mid-Atlantic states will soon become renewables powerhouses. But they currently lack a pathway to match that development with energy storage.

Maryland raised its renewables target to 50 percent by 2030 earlier this year, with a notable 14.5 percent carve-out for in-state solar. Governor Larry Hogan, a Republican, has been talking up a 100 percent clean energy plan to propose next year.

Virginia Governor Ralph Northam, a Democrat, similarly wants lots of clean energy for his state. And the District of Columbia has already committed to entirely clean power, with a carve-out for solar installed within city limits.

Intermittent renewables are coming to the Chesapeake Bay region. But new energy storage activity, which could help the state nimbly respond to the ups and downs of wind and solar production, is almost entirely absent.

These states’ leaders have defined a particular set of goals; so far, they do not include grid storage as a meaningful element of a highly renewable grid. There’s a case to be made for starting with big-ticket renewables goals and filling in the details later. Then again, holistic planning for the future grid tends to produce better outcomes than piecemeal approaches.

In this week’s Storage Plus, I’ll address what storage activity, if any, is underway in these states. It's not much, so development work really means policy work. I'll discuss policies that could fit the needs of these states.

This is informed by a couple days spent in Baltimore last week for the regional industry group MDV-SEIA’s Solar Focus conference. The geographically targeted event evoked the familiarity and friendliness of a large family reunion. But here, everyone was fired up about recent legislative wins and, in Virginia, the electoral victory for Democrats in the state legislature. The sheer difficulty of siting renewables projects in long-settled territory tempered that excitement.

Maybe a handful of full-time storage professionals attended. For storage to register in this region, a lot will have to change.

Maryland: Money on the table, unclaimed

If renewables interconnect across a big enough swath of territory, they don’t necessarily need new storage to accommodate the booms and busts of generation. Germany, for instance, has not matched its renewables activity with much new storage, in part because it can export to (and import from) so many neighbors.

What’s interesting about Maryland, though, is that it's called specifically for 14.5 percent of its electricity to come from in-state solar. That’s a recipe for certain distribution circuits to run into trouble — trouble that batteries built at substations or behind the meter could ameliorate.

Once renewables approach the required 50 percent, bulk storage will help shift that power to more valuable times and thereby reduce value destruction for the developments that come later. Indeed, Maryland's Environment Secretary Ben Grumbles told me that energy storage is “absolutely identified as a key component of future success” with the state's clean energy plans.

But so far, storage has only materialized at small scales, because that’s where the state has actually crafted policy.

Maryland offers a state tax credit for residential and commercial storage that covers 30 percent of the cost of a system, up to $5,000 for homes or $75,000 for businesses. That program, run by the Maryland Energy Administration, allocated $750,000 for 2019. MEA reports that more than $444,000 of that pot remains unclaimed.

As we know from California, Massachusetts and New York, no respectable storage industry leaves that much free money on the table.

In Maryland, though, storage is hard to sell. For most parts of the state, blackouts do not come frequently or harshly enough to justify even two-thirds the price of a battery for backup. Rates for residences and businesses don’t generate much price signal for energy-shifting.

“Tariffs don't encourage it, and resilience isn't as much of interest,” said Wood Mackenzie storage analyst Brett Simon. “My sense is installers are focusing elsewhere, where they actually see demand.”

There's not much utility-scale solar in Maryland due to concerns over protecting the rural character of the landscape from more economically productive uses. The solar industry has no reason to invest in batteries for firm capacity; pumping out kilowatt-hours and claiming Maryland SRECs works just fine.

Maryland's Power Plant Research Program published an energy storage study in 2018 that identified barriers to growth and suggested policy fixes. But it stopped short of calculating a specific value that storage could provide to the state's grid at large, the sort of number that can justify further storage incentives. Instead, the report concluded that Maryland doesn’t face any near-term pressure to get storage on the grid, so it might as well take its time and avoid any rash expenditures.

In the absence of official urgency, the legislature created a pilot program that compels the investor-owned utilities to experiment with different storage ownership models. They will report back on progress through 2026, which says a lot about when state leaders envision broader adoption becoming necessary or useful.

Looking ahead, the state would do well to establish a pathway for non-wires alternatives before it really needs them, so developers know they can offset conventional grid upgrades with newer grid technologies. That’s the sort of thing that the pilot is designed to explore: how do wires utilities get value from storage without crossing the boundary into generation?

If Maryland is serious about its 100 percent clean goal, it could borrow an idea from Massachusetts and implement a clean peak standard, to require a portion of peak-hour electricity to come from clean sources. That will make things easier down the road, when the remaining fossil fueled peaker plants stand in the way.

Solar for the District

Washington, D.C. has also joined the ranks of states legally demanding a clean grid in the coming years. Its law, passed late last year, includes a 10 percent carve-out for local solar, galvanizing a burst of installations. Companies like New Columbia Solar are grabbing whatever commercial rooftops they can find in the dense urban landscape.

But I couldn’t find any cases of storage entering the deal. Similar to Maryland, people don’t worry too much about blackouts here, and there simply isn’t an economic driver for other uses of batteries.

It’s not clear that will ever change. The nation’s capital maintains a robust grid; the best uses for backup power batteries are rural, woodsy areas in New England or less rural but fire-prone regions in California.

D.C. will never match that description, nor will it host any major renewables installations in need of bulk power-shifting. Next!

Virginia poised to act on storage policy

Things could be heating up in Virginia, though.

Gov. Northam wants clean energy in a big way, and now he has Democratic control of both houses in Richmond, as my colleague Jeff St. John documented for Squared recently. If anyone in the Mid-Atlantic could get a storage target passed, it would be Northam in next year’s legislative session.

Currently, Virginia’s storage industry is virtually nonexistent, with a notable exception. Dominion Energy operates the world’s largest pumped-hydro storage facility, a 3-gigawatt titan in Bath County.

As for new applications of battery storage, Dominion Energy embarked on a bold mission to build a small amount of storage in pilot projects to study basic functions that are already happening on a commercial basis in other states. The plan is to study these systems for five years, to verify if batteries indeed can store solar power, and other such questions. The legislature commanded Dominion to pilot up to 30 megawatts of storage; the utility opted for about half of that capacity.

The state hired Strategen Consulting to run its storage study, and the report concluded that a 1,000-megawatt procurement target by 2030 would optimize benefits for Virginians. If the new legislature wants an easy energy policy win, it could codify that into law next year.

Targets alone don’t make a market, but they give stakeholders a very good reason to get their act together. The states with bustling storage markets today started with targets and then figured out what policies they needed to jump start the industry locally.

The legislature has already decreed that 5,000 megawatts of renewables are in the public interest, streamlining the path to approval for those projects. It’s getting into offshore wind in a big way. Existing pumped hydro will help, but it’s less useful for assuaging grid constraints across the state. Virginia now has the chance to hammer out a proactive plan for deploying energy storage before the massive renewables arrive.