NRRI 14-08-Energy-Storage

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Electricity storage is a growing component of the utility grid. A mix of old and new storage technologies can provide value to the utility grid, and more storage is becoming cost-effective as emerging technologies improve and their cost declines. The Federal Energy Regulatory Commission (FERC) is already taking actions to enable storage technologies to participate and be compensated in wholesale power markets, and many states are already starting to deploy storage, at least in demonstration and pilot programs. The U.S. Department of Energy (DOE) presently identifies nearly 200 electricity storage demonstration projects underway in the U.S. Hundreds more are being planned and developed now, and over 2GW of requests for proposals (RFPs) are in the works, for procuring utility-scale storage to be installed over the next five years. (, 2014; Sandia Corporation, 2012; U.S. DOE, 2014; Wesoff, 2014).
This paper reviews the current situation for energy storage and explores state regulatory and other policy options, for enabling storage to play a larger role in electricity service provision when and where storage options are cost-effective. The goal for this paper is to identify best practices for state public utility regulations and associated policies that can best reduce or remove any unintended barriers facing cost-effective electricity storage technologies. Electricity storage represents something of a new frontier for state regulators. This paper is intended to serve as a preliminary guide to regulatory issues and an introduction to practical approaches for addressing them.
Regulatory approaches identified include provisions for storage both as a utility resource and as a customer resource, operating behind the utility meter. Six different concepts are presented, including: (1) incorporating storage options into utility integrated resource planning (IRP); (2) gaining and applying maximum information from demonstration and pilot projects; (3) overseeing utility requests for proposals (RFPs) for meeting specific, identified needs; (4) implementing storage-friendly rate designs, including time-differentiated rates; (5) enabling storage operations in microgrids; and (6) mandating storage installations. In addition, recent state commission actions regarding possible changes in the utility-regulatory paradigm are briefly described.
State and U.S. territory energy storage policies and implementation activities are briefly summarized in Appendix A, including: Active Dockets (7 states); Completed Dockets (4 states); Demos & Pilots (39 states, totaling about 350 projects); IRP requirements (6 states); Proposed Legislation (5 states); Microgrid Policies including storage capabilities (9 states) and Plug-In Electric Vehicles Policies (13 states); R&D or Business Incubator Centers (6 states); RPS provisions including storage (8 states plus Puerto Rico); Storage Mandates (in California and Puerto Rico); storage Tax Credits or other Financial Incentives (10 states); and Working Groups or completed public workshops (8 states).