Massachusetts to Offer $10-$20M in Energy Storage Grants this Fall
Massachusetts plans to offer $10-$20 million in energy storage grants this fall, as it positions for a paradigm shift in the economics of electricity.
State officials described the upcoming solicitation in a call Friday with the media, with release of a new report, “State of Charge,” which calls for Massachusetts to add 600 MW of energy storage by 2025.
The New England state is jumping on what industry analysts see as a major opportunity in the power industry. Today’s better and cheaper batteries open a path to correct one of the industry’s biggest economic hurdles: an inability to store its product for later use.
Most other commodity businesses don’t face this problem, as Judith Judson, Massachusetts energy commissioner, pointed out.
“Other commodity supply chains have more storage than electricity. Things like water, oil, food. About 10 percent of daily average consumption is in storage at any point in time. While electricity, today, is less than one percent,” she said.
The statistic is an eye opener, according to Judson. Lack of storage feeds economic inefficiencies that contribute to Massachusetts’ high electricity rates.
With little stored for later use, electricity must be generated, delivered and used almost at once. If there is a threat that the system may go out of balance, prices spike — a common occurance on severely hot days when demand rises.
In fact, 10 percent of hours per year – when power prices are highest –– account for 40 percent of spending on electricity in Massachusetts, or $3 billion.
“Once you can get significant storage deployed across your grid that paradigm changes,” Judson said. “You’re generating energy and using it at a later time, instead of generating energy on demand.”
To that end, Massachusetts wants to attract 600 MW of energy storage projects, which it calculates will save electricity ratepayers $800 million.
Upping the number to 1,766 MW would save $3.4 billion, according to the report, which was released by the Massachusetts Department of Energy Resources and Massachusetts Clean Energy Center (MassCEC).
Unfortunately, ratepayer savings do not translate into profits for energy storage developers – which explains why so little storage has been developed to date, the report said.
“Private investors will simply not invest in building storage projects in Massachusetts without a means to be monetarily compensated for the value the storage resource provides to the system,” said the report.
Double money for energy storage grants?
To jumpstart development, the state plans to offer at least $10 million in energy storage grants through a request for proposals issued at a yet-to-be-specified date this fall.
Gov. Charlie Baker set the $10 million figure last year. But the report recommends doubling it to $20 million because of the early interest stakeholders are showing in the program.
“Given some of the parties that are interested, I imagine a lot of these projects will be large dollar projects. So it may well be that the $10 million will just be a starting point. But we’ll need to assess that as the proposals come in,” said Steve Pike, interim CEO of the MassCEC.
The RFP is being crafted as “very open-ended” in terms of who will be allowed to bid, Pike said.
As it stands now, state officials expect to welcome applications from both utilities and private parties. Utilities are allowed to own energy storage under a law recently signed by Baker.
