The Energy Storage Association (ESA) on Nov. 6 said that it has released its “35×25: A vision for energy storage” white paper, which was created in conjunction with Navigant Research, and maps a pathway to reaching 35 GW of new energy storage systems installed in the United States by 2025.
This year, the United States has about 0.5 GW of installed energy storage, deployed in retail and wholesale markets, ESA said.
Electrification of transportation, data centers, HVAC, communications, industry and manufacturing are driving the need for a more flexible, resilient grid, ESA said, adding that that electrified economy will rely heavily on a properly functioning grid, with disruptions to become even more costly in the future. It is estimated that power outages, surges, and spikes cost more than $150bn today to the U.S. economy every year, ESA said.
The key to a resilient and disruption proof grid is to increase system flexibility and efficiency – building more safeguards into the system in the form of on-demand capacity and responsive balancing capability, ESA said, adding that energy storage technologies are critical to addressing those vulnerabilities, as they deliver fast-dispatch flexibility.
ESA noted that according to the report, the values that storage brings consumers, utilities, and grid operators include:
- Faster and more accurate response within seconds, resulting in $4bn in cumulative operational cost savings by 2025
- Enhanced reliability and resilience to reduce disruptions to the grid
- Customer engagement to help modernize the grid
- Cleaner air
- The creation of more than 167,000 jobs in manufacturing and R&D, construction, project development, operations and maintenance, sales, marketing, management, administrative, and other positions
Discussing reliability, resilience, and flexibility, the white paper noted that recent natural disasters have highlighted the fragility of a centralized grid architecture, and that communities are opting for local generation, as well as microgrids, to provide community centers of refuge, or to ensure that their power stays on during a disaster.
Energy storage will play a key role in investments to modernize the grid and ensure continued reliability by optimizing new and existing hardware, as well as by hardening the grid to handle external threats, such as natural disasters, physical attacks, and cybersecurity threats, the white paper said.
While the U.S. energy storage market to date has been highly concentrated in select areas where market and regulatory conditions are supportive, over the coming years, energy storage deployments will accelerate around the country with different factors influencing the overall size and dynamics of the market, the white paper said.
The Southwest and Hawai’i will account for a little over one-third of the storage market between 2017 and 2025. The Northeast, the white paper added, will account for slightly over one-quarter of capacity installed, and the remaining capacity will be split between the Central and Midwest region, as well as the Southeast and Northwest.
Wind integration is a major driver for storage in the Central and Midwest region. The white paper also noted that with more than 8 GW of U.S. wind energy added last year alone, much of it concentrated in the Midwest states and Texas, the high penetration of intermittent renewables has increased the need for frequency regulation to manage power fluctuations.
Key drivers in the Northeast include aggressive greenhouse gas reduction policies or renewable deployment targets implemented by states in the region, while in the Northwest, government and regulatory support for storage in the region is likely to be an important driver to enable more renewables, the white paper said.
Low electricity prices in the Southeast, a regulatory structure that does not account for the flexibility values of storage, and limited deployments of renewable energy have influenced the development of the storage market in that region, the white paper said.
The Southwest region of the United States has been by far the leading market for energy storage to date, the white paper noted, adding that California accounts for a majority of new storage development in the country over the past five years.
Discussing “a call to action for stakeholders,” the white paper noted that policymakers should first consider legislation or regulation to study their energy networks in order to better understand the benefits and long-term impacts of widespread energy storage deployment on their grid.
Massachusetts, for instance, commissioned the “State of Charge” report last year that articulated $2.3bn in total benefits to ratepayers from widespread deployment of more than 1.7 GW of energy storage, the white paper said.
Some states have passed laws that enforce competitive energy storage procurement targets – most notably California – that set minimum requirements for utilities to adopt storage systems, the white paper said. Oregon and Massachusetts are in the process of implementing their own storage targets, while New York regulators recently ordered utilities to each have at least two storage projects operational at two substations or feeders on their distribution systems by the end of 2018, the white paper said. New York City recently announced a target of 100 MWh of energy storage to be installed in the city by 2020, the white paper said.
Under “regulator considerations,” the white paper said that the first step for any regulator is investigation and evidence gathering; they should ask whether current regulations adequately account for energy storage participation and a better outcome for ratepayers. As regulators look to future market designs, understanding the enhanced technical capabilities of the grid and what is possible will be essential to regulating new market structures, the white paper noted.
Discussing “utility considerations,” the white paper said that while some utilities have demonstrated interest in understanding the costs and benefits of advanced energy storage in the context of integrated resource plans (IRPs), informational barriers remain: planning models are not granular enough to capture the operations of advanced storage, and some models use inaccurate or out-of-date cost information.
Today, advanced energy storage is now commercially contracted and procured competitively with traditional resources at project scales up to 100 MW, on par with natural gas-fired power plants and deployed in a fraction of the time, the white paper said. There are several validated commercial planning models available today that can capture intra-hourly operations of storage and other resource options, the white paper said.
Storage cost estimates are available through public sources, many of which are updated annually or quarterly, the white paper noted.
If utilities and regulators update their approach to storage in IRPs, the choice of storage as a capacity resource can be made on a least-cost economic basis today, avoiding costs for ratepayers and improving overall system outcomes, the white paper said.