Massachusetts Positions to be Third State to Set an Energy Storage Mandate

energy storage mandateMassachusetts entered the vanguard of the energy storage industry with legislative approval late Sunday night of an energy storage mandate.

The mandate – a requirement that utilities procure a specified amount of energy storage by 2020 – is part of a broader energy bill state lawmakers passed minutes before the legislative session ended for the year on July 31.

H. 4658 also clarifies that utilities can own energy storage in the restructured state.

Pending the signature of Gov. Charlie Baker, Massachusetts will become the third state to create an energy storage mandate, according to GTM Research. The others are California and Oregon.

Update! Gov. Baker signed H. 4658 into law on August 8

“The bill shows Massachusetts’ commitment to race along the path it has carved for itself in the last two years to transition to a modern, cleaner and more resilient grid,” said Ravi Manghani, GTM Research’s director of energy storage.

The energy storage mandates are somewhat like renewable energy portfolio standards, credited with playing a big role in build-up of renewables in the U.S. by creating a degree of market assurance for industry players.

It’s not yet clear exactly how much energy storage Massachusetts will require. The figure will be set by the Department of Energy Resources, which is headed by Judith Judson, a nationally recognized expert in energy storage. Given Judson’s background, storage supporters are confident the target will be set at the maximum level that makes sense for the grid.

If Massachusetts scales its target to California’s 1.3 GW goal, then it might set roughly a 330 MW energy storage mandate, according to Peter Shattuck, Massachusetts director of Acadia Center.

Energy storage + microgrids = resiliency

Judson highlighted the value of energy storage to the Massachusetts grid in a presentation at a restructuring roundtable held by Rabb Associates in May.

Customer outages due to bad weather have been on the rise, and energy storage, especially when coupled with microgrids, can increase resiliency in storms, according to Judson.

Energy storage also is expected to help the state grapple with its rapid integration of intermittent renewables. As of May, Massachusetts had about 40,000 distributed solar projects, and is adding about 400 distributed generation installations a week.

Meanwhile, the state’s peak demand continues to grow about 1.5 percent per year, according to Judson’s presentation. Energy storage systems can store energy during inexpensive periods and then use it to serve the grid during expensive peak periods.

Energy storage also is often incorporated into advanced microgrids, which are under consideration in Massachusetts utility grid modernization plans. In addition, the MIT Lincoln Lab and the Boston Redevelopment Authority have identified 22 potential microgrid sites in Boston.

Yes to utility ownership

The bill removed one of the gnarly issues energy storage faces in restructured states – whether energy storage should be defined as generation or load.

Energy storage is unique in that it can be considered either; generation because it can deploy power; load because it also takes power from generators.

Utilities typically cannot own generation in restructured states. So if energy storage is defined as generation, utilities are precluded from ownership. Rather than grappling with whether energy storage is or isn’t generation, the bill simply clarified that utilities have the ability to own it.

However, this isn’t a signal that Massachusetts will allow utility monopoly control over energy storage, according to Shattuck.

“Folks are definitely going to be watching to ensure that there is competition,” Shattuck said. “You don’t want to crowd out that potential for competition and innovation.”

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The bill now goes to Gov. Baker’s desk. Clean energy advocates expect Baker to sign the bill, although he has yet to say so publicly. Baker already has signaled his support for energy storage, last year announcing $10 million in funding for pilot projects and studies. The studies, on energy storage’s economic potential and its effect on the grid, are expected to be completed soon.

The energy storage vote came out of congenial negotiations among parties, according to Matt Roberts, executive director, of the Energy Storage Association.

In some parts of the country, such talks result in utilities versus storage companies. But that isn’t true in Massachusetts, where utilities, storage companies and other interested parties are working together to create long-term storage goals for the state, he said.

“It’s about sitting at the table, a fair and even-handed way to move forward,” said Roberts.

ESA and others asked Massachusetts House and Senate leaders to include the energy storage provisions as part of the larger energy bill, which boosts clean energy in several other ways as well. Among other things, it creates new support for fuel cells and small hydro plants, creates a 1,600 MW procurement of offshore wind, and expands energy efficiency and clean energy financing options for commercial customers.

Home to energy storage companies

In a letter of support for the energy storage provisions, the Energy Storage Association and a number of renewable energy and energy storage companies said that Massachusetts citizens would benefit in many ways from accelerating the adoption of energy storage.

The coalition noted that the state is home to several innovative energy storage companies, as well as one of only three energy storage industrial clusters in the US. The letter said that accelerating deployment of energy storage will provide for more clean tech jobs and economic growth in the state.

In addition, the coalition said that storage can defer investments in power plants and wires needed to meet peak loads and provides for more efficient use of existing resources.

“According to a methodology used by the New York Department of Public Service, Massachusetts could avoid up to $600 million annually by flattening just the top 100 hours of its load during peak hours using technologies like energy storage,” said the letter.

The letter also cited the IHS Grid-Connected Storage Report, saying that more than 400 MW of commercial energy storage have been deployed since 2012, costs have dropped by 50 percent over the past three years, and costs are expected to be reduced by at least another 50 percent by 2020. “Yet, grid operations and state regulations never contemplated cost-effective storage, hamstringing utilities and customers. It’s time for policy to catch up to technology.”

A number of energy storage companies have offices in Massachusetts, noted Roberts. They include Ambri, Lockheed Martin, Steffes, and Stem.

Lisa Cohn contributed to this article.

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Elisa Wood About Elisa Wood

Elisa Wood is the chief editor of MicrogridKnowledge.com and EnergyEfficiencyMarkets.com. She has been writing about energy for more than two decades for top industry publications. Her work also has been picked up by CNN, the New York Times, Reuters, the Wall Street Journal Online and the Washington Post.

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