Massachusetts Decided to Set an Energy Storage Target. What Should It Be?
The Bay State could soon follow the Bay Area as a leading battery boomtown.
The Massachusetts Department of Energy Resources (DOER) decided, at the close of 2016, that it would set an energy storage target. Now it has six months to figure out what that number should be and how to implement it, following the timeline set by legislation last summer. Once complete, this will be only the third state-level target after California and Oregon.
California’s mandate gave it a decisive lead in attracting storage companies and deploying the technology in homes, businesses and on the grid. Massachusetts currently has very little storage deployed, but it is already home to a cluster of storage startups that spun off from research at MIT. With an effective target, Massachusetts could set itself up as the second hub of the U.S. storage industry, while streamlining the operation of its grid and the integration of new renewable generation.
Finding the right target, though, requires a careful balancing of competing goals.
“DOER should assure the target is large enough that substantial, relevant experience is gained by all, but not so large that it becomes unworkable and a substitute for the fully functioning market,” wrote Phil Giudice, CEO and president of Cambridge-based storage company Ambri, in a letter to DOER Commissioner Judith Judson in December.
DOER isn’t starting from scratch here. The department had a hand in the State of Charge report from September, which comprehensively analyzed the value of storage for the Massachusetts grid and concluded that up to 1,766 megawatts of storage installed by 2020 would maximize savings for ratepayers. Storage can reduce the state’s system costs like peak capacity, transmission and distribution upgrades, overall energy prices, integration of intermittent renewables, and ancillary grid services that smooth out the momentary differences between supply and demand.
The authors included a humbler proposal — namely, that 600 megawatts would be achievable given current market and regulatory realities, and still save ratepayers $800 million by 2025.
The state could go in a different direction after gathering stakeholder input this month. Questions remain about how exactly the target would be implemented, which will have a significant impact on what kind of real-world changes it drives. Given the uncertainty, GTM reached out to policy experts and storage industry professionals active in Massachusetts to hear what they hope the state decides.
Keep it 600
Based on current market design and state rules, 600 megawatts is a reasonable target, said State of Charge coauthor Jacqueline DeRosa, vice president of emerging technologies at Customized Energy Solutions.
“The 1,766 megawatt number makes some assumptions that the world is a certain way,” she said. It’s more of a best-case scenario, if storage deployment could proceed optimally without bureaucratic or regulatory obstacles. But, she added, “It’s not that easy to change the world overnight.”
The 600 MW goal reflects the deployments the state could likely achieve in the near future. It was the outcome of collaborative discussions held by DOER with stakeholders like utilities, project developers and storage vendors.
A common refrain among energy storage professionals interviewed for this story was that a higher number would be great, but 600 megawatts is a strong starting point. It would be a big step up from the approximately 2 megawatts of advanced storage capacity the state has now.
With two and a half years from the adoption of the targets to their due date, the state may opt for a less ambitious number initially. It would be possible to hit 600 megawatts in that timeframe, though, said Ravi Manghani, energy storage director at GTM Research.
For others, like Ted Ko, director of policy at commercial storage company Stem, 600 megawatts is the minimum for attracting a bustling industry.
“The state can and should go higher — the industry has shown time and again that it is ready to respond quickly, at scale, when given a big enough market signal,” he wrote in an email Wednesday.
What type is it?
The energy storage industry is still young enough that just saying the words “storage mandate” gets folks fired up. The fact of the matter is, though, the number itself doesn’t mean very much in terms of what the deployment will look like.
The category of energy storage includes systems that operate on a matter of minutes, or for half an hour, or a couple hours, or very many hours. Different jobs require different durations.
“My biggest wish is that the storage be discussed in terms of its application, and therefore the type of technology that is best suited to meet that application,” said Jonathan Milley, director of business development at Massachusetts-based battery maker Vionx. “If you need a hammer, don’t get a screwdriver.”
Vionx is scaling its flow battery technology, and has one system operating in Massachusetts, one being commissioned and one under construction. Those three will add up to more than 1 megawatt of capacity at 6 hours duration.
It’s not surprising to hear a long-duration battery maker recommending a carve-out for long-duration batteries. Without that, cheap, short-duration lithium-ion batteries could swarm the mandate. Similarly, Ambri, which is commercializing a new liquid metal battery technology, recommended that part of the procurement target go to demonstrations of emerging technologies.
Company interests aside, there’s a strong argument to be made for connecting the storage mandate to particular services on the grid.
The State of Charge report found the most lucrative savings from storage come from using it for peak capacity, which defers expensive gas peaker plant construction and lowers prices in capacity markets. If the state decides to prioritize storage taking over the role of peaking plants to save ratepayers lots of money, it could create a mandate with a certain percentage of capacity dedicated to longer-duration storage for peaking capacity.
Conversely, if the state wants to ensure that storage can meet certain ancillary service needs in the near future, it could set a target for short duration batteries. DOER asked stakeholders to comment not just on the scale of the target, but the structure, so targeted goals such as these could end up in the final decision.
Further guidance could also address whether the storage goes in front of the meter, putting it in the realm of utilities, or behind the meter, under the purview of commercial and residential customers. Ko suggested one-third of the target should be set aside for behind the meter storage, to take advantage of private investment to spur deployment.
California set a precedent in this regard, as it required its three investor-owned utilities to procure storage at the transmission, distribution and customer levels.
Who owns it?
Who controls the storage asset says a lot about what it will look like, so some stakeholders are pushing for the target to address this as well.