by Julian Spector
July 20, 2018

Say what you will about Congress — at least they are now aware of advanced energy storage.

The legislators of the House Energy and Commerce Committee brought in a panel of five storage experts Wednesday to educate them on the latest thinking on how energy storage might benefit the grid.

The all-male panel included envoys from the California Independent System Operator, Duke Energy, E.ON, Energy and Environmental Economics and Fluence. Collectively, they painted a picture of storage as a resource that already makes sense in certain circumstances for multiple vital grid tasks, and which will get more attractive with time as costs come down.

Repeatedly, legislators asked what, if anything, the federal government could do for the industry. That’s actually a good question that we have not addressed recently, so that’ll be the focus of this week’s Storage Plus.

What should the industry ask for from Congress?

The storage experts didn’t have a concise, uniform response to this line of questioning. Not that they should be expected to. They all have a stake in the growth of storage as a grid tool, but a utility like Duke approaches it from a different perspective than a vendor like Fluence or a grid operator like CAISO.

There was much discussion of the need to reform power market rules, in order to allow storage to earn money for the value it provides. But that’s FERC territory, and Order 841 is already winding its way through the system.

The simplest ask is always money, such as more research and development funding for ARPA-E at the Department of Energy. That’s boring and predictable, but absolutely makes sense if the U.S. wants to retain a leading position in the future of battery development.

Then there’s the federal Investment Tax Credit.

Developers have been jumping through hoops to connect batteries directly to solar facilities so they can claim the solar ITC. But co-location doesn’t necessarily make more operational sense than placing batteries where they’re most needed. A standalone credit would streamline design and financing of storage systems, making the market more efficient.

Of course, the American predilection for incentivizing energy investment via the tax code creates a thicket of arcane complexity and would best be avoided. The fact is, though, it’s easier to pass a targeted tax cut than to earmark new spending that incentivizes the desired policy outcome.

“It’s not that this is a new ask; this is really a clarification of an existing item,” said Kiran Kumaraswamy, market applications director at Fluence, when I caught up with him after his appearance in Congress.

He'd like to see storage better integrated into utilities' long-term planning, not to mention in regional transmission planning. That process is beginning in select locations, but has a lot of growing to do.

Encouraging FERC to finish its procedural work, allocating more R&D funds, fixing the tax credit and optimizing utility planning are all good steps that would remove unnecessary obstacles to storage deployment. But they’re all continuations of ongoing efforts.

Where’s the big idea?

That left me wondering what storage advocates could seize on as their big idea, in the way that the 100 percent clean energy goal fires up renewables advocates. As the industry steps further into the national spotlight, it needs to get better at framing its goals and contributions in big-picture terms.

That’s inherently more difficult than messaging wind and solar, which simply produce electricity without emissions. There’s also a risk in oversimplification, as seen in the counterproductive vitriol in the debate between 100 percent renewables versus other decarbonization schemes.

The kind of storage procurement mandate that sparked the storage revolution in California doesn’t fit well with national politics. After lambasting the Trump administration’s attempts to force out-of-market payments to coal plants, it wouldn’t look good for the clean energy industry to ask for compelled storage purchases.

But there might be other lessons to learn from state-level thinking, which is where most of the storage policy progress has happened so far.

I checked in with GTM Research analyst Daniel Finn-Foley, who studies storage in the wholesale markets, to see what generally plausible federal policy he would propose.

“I would enact a federal clean peak standard to ensure that a rising level of our capacity, rather than just energy, comes from renewable sources,” he said.

The "clean peak" idea popped up in Arizona as a way to save ratepayers money by requiring a portion of peak electricity to come from clean sources (as opposed to a renewable portfolio standard, which only requires that a portion of the energy used throughout the whole year be clean). This would avoid the scenario where intermittent renewables force a massive build-out of gas peakers that hardly ever get used, at great expense to ratepayers.

That was proposed by Republican utility regulator Andy Tobin as part of a grid modernization plan that is still being finalized. Massachusetts Governor Charlie Baker, also a Republican, adapted the concept into a legislative proposal for his state’s grid.

The current Congress will be more amenable to adopting best practices from Republican laboratories of democracy than following the climate hawks of California. The question is how such a policy would work when filtered through the state-by-state regulatory system.

The feds could ask each state to set its own clean peak target, as a means to ensure reliability during a time of great change in the energy system. It could include a caveat that the policy only goes into effect if it will save money on grid investment relative to business as usual.

If a hard enforcement target isn’t politically feasible, the federal government could offer incentives, like matching funds to states that participate in the challenge. That has worked for other policy initiatives.

The current administration has shown no particular interest in this sort of thing, so it might only succeed if the congressional energy leadership uses its clout to push something forward. Then again, Congress hasn’t managed to pass a robust energy policy since 2007.

The energy storage industry can’t control what kind of appetite Congress has to make nuanced grid reform policy. What it can do is figure out what big asks it would propose when given a national platform and an inquisitive audience.