Massachusetts Energy Storage Target Comes with Less Clout but More Money

Massachusetts’ new energy storage target isn’t mandatory as some industry players had hoped — but comes with more money.

The state Department of Energy Resources (DOER) on Friday announced the much-awaited specifics of the program. The state called for utilities to secure 200 MWh of energy storage by 2020. But the target is “aspirational” — not binding as several independent companies had urged.

At the same time, the state doubled funding for energy storage projects to $20 million.

The fact that the target is voluntary marks a win for the Edison Electric Institute and state’s investor-owned utilities. The utilities had argued that because of changing battery economics it was better to move slowly. They said that battery prices are falling, so adding capacity early when prices are still higher could mean locking ratepayers into greater costs.

The target number also aligns with the utilities’ recommendation of a 200-500 MWh goal, which they said will put the state on a path to reach 600 MW of energy storage capacity by 2025. That is the goal described in the DOER’s 2016 report, “State of Charge,” which outlines policies to generate $800 million in benefits from storage in Massachusetts.

Several independent companies and clean energy organizations pushed for a higher target and wanted it to be binding, as is the state’s renewable portfolio standards (RPS), which sets targets for green energy. The state imposes a penalty if utilities fail to meet the RPS targets. Proceeds from the money collected go toward programs to spur more renewable energy.

Those favoring an energy storage mandate, over a voluntary target, included NEC Energy Solutions, Stem, Advanced Microgrid Solutions, Green Charge Networks, the Conservation Law Foundation and the Clean Energy Group.

Ted Ko, Stem’s director of policy, welcomed the extra funding, but said “a significant, binding mandate would have sent the market signal needed to attract meaningful investment in the state.”

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More money, possible APS for storage

The state increased its funding from $10 to $20 million. The first $10 million is being distributed by way of a solicitation that was issued in early June. The state is still working out details about how it will issue the second $10 million.

The state also says it may include energy storage within its alternative portfolio standard (APS), which would give the resource another boost. Similar to the RPS, the APS is a requirement that a certain amount of the state’s electric needs be met from specified power sources. Technologies that now qualify include combined heat and power, flywheel storage, coal gasification, and efficient steam technologies.

In a letter to state lawmakers, Judith Judson, state energy commissioner, explained the thinking behind the aspirational target. She described the voluntary approach as a way for the state to further its knowledge about the technology. Based on the results, the DOER may decide to set additional targets beyond 2020.

“Additionally, the target sets a flexible goal for electric distribution companies [utilities] to identify the most cost-effective applications and the best locations for energy storage deployment,” she wrote.

The state is in various stages of developing several other energy storage initiatives. These include:

• Allowing energy storage to be paired with the state’s newly authorized procurements of 9.45 million MWh of clean energy and 1,600 MW of offshore wind
• Incentivizing energy storage through the state’s new solar incentive program, the Solar Massachusetts Renewable Target (SMART)
• Making energy storage eligible for future Green Communities grants
• Using utility energy efficiency funds to pay for energy storage that reduces peak load

Third state with energy storage target

The DOER also instructed utilities to submit annual reports beginning on January 1, 2018 that detail the amount of energy storage each procures and its cost-effectiveness. The utilities also must show how they identified and used wholesale market opportunities for energy storage, and provide recommendations for continued deployment of energy storage.

The energy storage target sprang from “An Act Relative to Energy Diversity,” legislation signed by Gov. Charlie Baker last year that among other things required that the DOER determine if an energy storage target is prudent, and if so, set the target.

Massachusetts is among three state that have set energy storage targets. The others are California and Oregon. At this writing legislation in New York awaits a signature by Gov. Andrew Cuomo that would set a target for that state.

The progress of energy storage is closely tied with microgrid development, since many new microgrids include batteries and other storage technologies.

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