by Julian Spector
November 30, 2020

The Biden administration is coming. President-elect Joe Biden is picking his team and getting ready to hit the ground running whenever the current president allows for the peaceful transition of power. That seems to finally be happening.

But Georgia's two Democratic Senate candidates will need to win their runoff elections in January to give their party 50 seats in the U.S. Senate, which would then allow Vice President-elect Kamala Harris to break tie votes on key legislation. Even if this split Senate is achieved, such a thin margin for passing bills means that bold action on climate change would require ironclad party discipline. 

Given those realities, energy storage industry advocates are looking at ways to embed friendly policies in must-pass legislation, such as bills to boost economic recovery from the coronavirus pandemic or build up the country's infrastructure. They're seeking relief from tariffs that have made battery projects more expensive, and procurement guidelines to boost storage deployments in federal buildings and projects. And they're promoting the role of storage as a critical step in increasing the country's share of renewable energy.

Here's an overview of how the storage industry plans to achieve those goals. (And if you're hankering for a deep dive into the Federal Energy Regulatory Commission under Biden, look to Jeff St. John's two-part series at Dispatches From the Grid Edge.)

Deployment and manufacturing assistance

The outcomes in the Senate races dashed the potential for a major climate bill, said Washington, D.C. grid policy expert Katherine Hamilton, chair of 38 North Solutions. But clean energy investment could take another form.

“The Senate does have to do something on economic recovery, and infrastructure is a really good way to do that — and I would argue that energy storage is infrastructure,” she said on a webinar with the Energy Storage Association last week.

Storage is often lumped in when people list potential recipients of stimulus aid. But the particular mechanism for delivering aid could take many forms.

The government could offer tax credits or direct grants to companies that want to manufacture energy storage in the U.S., ESA VP of Policy Jason Burwen noted in an email. Grant money could flow through the Department of Energy's Advanced Manufacturing Office or alongside a Defense Production Act determination to shore up the domestic supply chain for storage as critical infrastructure.

Storage installations today largely depend on foreign supply chains, but a few companies have invested in U.S. production. Idaho-based Kore Power touts a forthcoming 12-gigawatt-hour factory. Zinc battery maker Eos, which went public in November, makes batteries in Pittsburgh. Tesla hosts Panasonic battery manufacturing at its Nevada Gigafactory but recently voiced a desire to manufacture its own cells too.

As for energy storage deployment, Biden has precedent in the American Recovery and Reinvestment Act, passed to stimulate the economy after the Great Recession. That legislation included loan guarantees to support $40 billion of renewable energy construction and other financial tools like cost-sharing, boosting a young industry that now delivers most of the new power getting built today. 

"You can do a lot creatively with the federal government to fund actual projects," Hamilton noted in an interview. Senator Lisa Murkowski (R-Alaska) included grants for storage projects in the energy bill she tried to finalize this year, Hamilton added; one path forward would be attaching that to an omnibus spending bill in the lame-duck session.

Clean energy and fossil fuels took on a political charge in the closing days of the election, but grid batteries have an advantage: They've managed to avoid a partisan valence that could inhibit deal-making.

“There just aren’t many haters out there for energy storage,” Hamilton noted.

Research and development

R&D funding at the Department of Energy has proven resilient to the Trump administration's repeated attempts to eliminate it; Congress kept the money flowing and likely will continue to do so.

Thanks in part to previous government-backed research, lithium-ion batteries are on an impressive cost and scaling trajectory, noted Mike O'Boyle, director of electricity policy at think tank Energy Innovation. 

"Now is the time for DOE to invest in important future storage applications that can help solve renewable integration issues at very high penetrations of variable wind and solar energy," he noted in an email. 

Research efforts should focus on new technologies to tackle the last 5 to 10 percent of grid decarbonization, he added. Government research dollars should also go to better modeling for how storage adds value at all the levels of the power system that it affects.

Tariff relief

The Trump administration's tariffs on Chinese solar cells and modules included lithium-ion batteries as part of the broader trade war with China. 

Installers argued that such policies dampen economic opportunities in the U.S., by raising the price of clean energy projects. The few companies that manufacture these components in the U.S. like the protection. But it's not clear that a Biden administration would automatically undo any tariffs Trump put into place.

As GTM's Emma Foehringer Merchant reported, Biden could employ tariffs as a means to support domestic manufacturing and job growth as part of his clean energy agenda. And the Obama administration imposed solar tariffs of its own.

But Trump's battery cell tariffs had less of a domestic manufacturing calculus and instead were lumped in with $300 billion worth of Chinese goods targeted by the White House. The tariff was announced at 10 percent, upped to 15 percent right before implementation, and subsequently halved to 7.5 percent in February. Chinese cells are becoming an increasingly significant source — the Energy Storage Association noted earlier this year that 40 percent of U.S. lithium-ion projects import from China. Undoing those tariffs could streamline clean energy development without sacrificing much benefit to American manufacturing.

Federal procurement of energy storage

As far as executive powers go, procurement of energy for federal facilities is pretty straightforward. The storage industry benefits from scale, so the ability to request batteries for government buildings or on public lands across the country could make a meaningful difference in national installation numbers.

Biden's platform explicitly discussed buying clean energy through federal procurement as a way to stimulate demand. For instance, "Biden will make a major federal commitment to purchase clean vehicles for federal, state, tribal, postal, and local fleets," a move that would boost demand for electric vehicles, and thus for batteries. 

There's also a "commitment to increase federal procurement by $400 billion in his first term" by "purchasing the key clean energy inputs like batteries and electric vehicles that will help position the U.S. as the world’s clean energy leader." What's less clear is what exactly the federal government would do with all those batteries. 

So far, the military has taken the lead on stationary storage, installing batteries at numerous bases as part of a strategic investment in local resilience. Sites that would otherwise burn a whole lot of diesel to provide backup power may find it cost-effective to offset their fuel needs with solar and batteries. The scale of the military suggests there is ample runway to expand this approach to other bases.

Things get more complicated when it comes to imagining a use for storage at other federal facilities.

Batteries for commercial customers originally centered on demand-charge management. That use case got several hundred batteries installed in California, aided by storage incentives and high power prices. But companies have had a hard time pitching standalone batteries for bill savings elsewhere in the U.S., and these days commercial storage is largely a game of pairing with solar.

But federal facilities regularly finance contracts for energy savings, Hamilton noted. If the Biden administration reprises a social cost of carbon and starts valuing resilience, for instance, those metrics could justify batteries as part of a broader suite of tools like solar, combined heat and power, and energy efficiency.

"It would be a meaningful market share — there [are] lots and lots of federal buildings all over," Hamilton said.

It’s possible that government facilities could accept longer payback periods than private investors are able to tolerate, reducing barriers to battery adoption. Biden’s team could also identify federal buildings in regions with time-of-use rates, high demand charges and pathways for monetizing distributed energy, and start with the most promising proposals. 

"You’re going to want to tap into whatever value streams you can in order to justify the cost," Hamilton said.

Tax credits

Did you know that the clean-energy industries like tax credits? It’s true!

But energy storage has never had a chance to enjoy standalone tax credits. They are allowed to be considered part of the tax credit-eligible cost of solar projects, which has driven developers to stick batteries next to solar plants and charge from them. That works for some purposes but doesn’t help the many situations where a standalone battery could provide real value to the grid.

A dedicated storage credit could boost storage across the board, lowering costs and making some projects pencil out economically sooner. It could be particularly pronounced in the merchant market, lowering the payback investors need to hit. A 2019 Wood Mackenzie analysis found that a standalone storage investment tax credit could increase the market by 16 percent, although the impact varies based on the size and duration of the credit.

The best bet for this would be inclusion in a broader spending bill. Standalone storage credits have been proposed over the past few years, but have yet to win enough support to pass out of Congress.

Time-matching clean energy standards

It’s looking like the ambitious nationwide clean energy standard Biden ran on is not going to be feasible. Even if the Democrats pull out a surprise sweep in Georgia's Senate runoffs, it’s far from clear that the party will have the appetite for muscular action on clean energy with their slim congressional majority.

Still, if there is a clean energy standard, the storage industry would want to see time-matching included. Instead of setting targets for a certain amount of clean power produced in a year, time-matching ensures that this production corresponds in time with consumption. The idea would be to drive storage deployment alongside intermittent renewables, instead of producing a ton of wind and solar at certain times and burning a ton of gas at other times.

The latter scenario is what can happen when renewable portfolio standards don’t care about when the power is produced. The recent adoption of a Clean Peak Standard in Massachusetts is one attempt to address the oversight, by shifting investment toward resources that deliver clean energy during peak hours.

Google blazed a pathway in the private sector by announcing this fall that it will move to time-based clean energy.

“Currently, even though we buy as much total renewable energy as we use electricity each year, we must still contend with times and places when the wind does not blow or the sun does not shine,” the tech giant noted in September. “Achieving 24/7 carbon-free energy means we will have clean energy available for every hour on every grid — completely eliminating carbon emissions associated with Google’s electricity use.”

If a national standard of clean electricity by 2035 is not viable given the makeup of Congress, Biden could still push for federal energy procurement.

"Should the Biden-Harris administration increase federal clean energy procurement as a part of its commitment to decarbonization, ESA believes that ambition should include time-matching the supply of clean energy with federal facility demand," Burwen noted.

Such a policy could start with interim targets, such as pledging to match 50 percent of federal consumption with clean energy supply in a few years, he added. Then it could ramp to 100 percent matching by the end of the decade.

"Doing so will drive the deployment of energy storage and load flexibility to decarbonize federal energy demand and pave the way for other sectors of the economy to follow," Burwen said.