Calling for Clear Guidelines and Incentives
Policymakers and industry leaders are increasingly understanding the importance of energy storage in a number of applications, such as integrating renewable energy sources and providing grid resiliency, which has become particularly exigent in New York in the aftermath of Hurricane Sandy.
As a result, organizations like the New York Battery and Energy Storage Technology (NY-BEST) Consortium have been working to become a global leader in energy storage technologies, which is projected to become $40 billion worldwide market by 2022, according to the Bicameral Task Force on Climate Change. The growth of this market has been supported through state policies like California’s 1.3 GW storage mandate by 2020 and New York’s recent opening of a $23-million battery and energy storage testing center. ALso, the proposed federal Energy STORAGE Act would create a 30 percent energy storage tax credit for property that is directly connected to the grid.
At New York Energy Week’s Energy Storage Roundtable, leaders from four major energy storage companies headlined a panel discussing storage technology trends and the policy and regulatory barriers in continuing the aforementioned growth of the storage market. The panel included: Jae Choi, product and application manager at FIAMM Energy Storage Solutions; Bob Currie, technical director and founder at Smarter Grid Solutions; Chelle Izzi, director of storage commercialization at Constellation Energy; and Brian Beck, vice president of sales at American Vanadium Corporation.
The panelists agreed on the need for storage vendors, utilities, and regulatory agencies to work together to develop the right guidelines and incentives. When John Cerveny, director of resource development at NY-BEST and panel moderator, kicked off the roundtable discussion by asking for the panel’s thoughts on Con Edison’s recently announced energy storage program providing $2,100 per kW for battery storage and $2,600 per kW for thermal storage projects, all the panelists supported the new program. Izzi, on the other hand, suggested that there has been greater focus on demand response incentives, but the new energy storage incentives will allow companies to better offset their high capital costs. Meanwhile, Choi said that incentives need to be paired with clear guidelines and procedures for how battery systems can be applied to different storage settings.
Compensation of storage companies is another important area where utilities and regulatory agencies need to develop a consistent and viable framework, the panelists argued. The current infrastructure and payment schemes were created based on the “basic grid concept” and ill-suited for today’s bi-directional energy system. According to Beck, storage companies need multiple revenue streams because of high initial capital costs of developing and deploying a relatively new technology, yet the utilities and regulatory agencies have not “figured out how to write [storage providers] a check.” Beck called for an “unbundled regulatory environment,” while Currie highlighted the need for “multiple control options to validate and audit the performance of [storage] assets.”
Choi added that the confusion on how much to compensate storage services stems from the difficulty and disagreement in defining “storage,” which could be as expansive as including water heating systems. In response to Choi, Izzi defining storage as not only “storage” but also “generation” will affect contracts and customer decisions because the company would then need to pay standby charges. Furthermore, Choi said that utilities have been unable to properly compensate companies for softer but essential value-add capabilities provided by storage technologies, like safety, backup power, and renewables integration.
The roundtable concluded with a discussion of different storage technologies and their applications in the power sector. The panelists agreed that there is a trend toward new battery storage technology that can be cycled daily and have longer duration, but changes in building codes and other regulatory policies are needed to enable their deployment and financial viability. But overall, the range of battery storage technologies serve different storage and energy requirements, which the panelists argued was the reason why there would not be a single winning battery technology but a mix of different technologies serving the transportation and power markets. View the full recording of the NYEW 2014 Storage Roundtable.
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