Despite worries about federal decision makers backtracking to fossil-fuel generation sources, battery technology projects have gotten good news from the executive branch on several fronts lately.
Earlier this year, the Federal Energy Regulatory Commission released its Order 841, requiring that regional transmission organizations (RTOs) include energy storage as resources in wholesale capacity markets. RTOs will have the flexibility to establish new service products and bidding parameters around battery technology, noted a new report from the Brattle Group.
There’s still plenty of state-by-state regulatory hurdles to determine, but 841 is a historic benchmark for storage advocates.
“The participation model must ensure that a resource using the model is eligible to provide all capacity, energy and ancillary services that it is technically capable of providing, can be dispatched, and can set the wholesale market clearing price as both a seller and buyer consistent with existing market rules,” the FERC letter read.
Meanwhile, the U.S Internal Revenue Service also sent out a private letter indicating an energy storage retrofit for a residential solar PV project is eligible for the 30-percent investment tax credit (ITC). The letter does not provide guidance on overcoming bureaucratic barriers, so a statement by the Energy Storage Association offered some helpful ideas.
“The determination that an energy storage retrofit of a residential solar PV project is eligible for a 30 percent investment tax credit (“ITC”) under Section 25D is a step in the right direction toward a common-sense tax approach to storage,” the ESA statement reads. “There is still significant uncertainty surrounding taxpayers’ ability to access the ITC, which could limit investment and hamper industry growth. ESA will continue advocating for federal legislation to further reduce bureaucratic barriers to availing the ITC for energy storage and eliminating constraints on development options for storage companies.”
Federal mandates will be federal mandates. Lots of gray area but nothing to be blue about. Energy storage has had a good year so far as it heads into next month’s ESA national conference in Boston. The Brattle report shows that capital costs are projected to decline by 5 to 15 percent annually through 2020.
If those estimates are close, the capital cost of energy storage could be below $600 per kilowatt hour for the next decade, according to multiple research reports such as such as the Electric Power Research Institute.
The Brattle Group’s report also pointed out that state regulatory action was still needed to address system transmission and distribution (T&D) benefits and barriers. Those needs include more “granular, cost-based and stable rate design.” The net energy metering issues also will need to be ironed out, according to the report.
Many progressive states already are moving to future energy storage mandates. New York Gov. Andrew Cuomo proposes 1,500 MW of energy storage by 2025, while Massachusetts plans for 200 MWh by 2020 and Arizona lawmakers have asked regulators to investigate a 3-GW storage target.