Report: 50 GW US electric storage potential

Thursday, March 1, 2018

A recently adopted federal regulation aimed at helping electric storage resources participate in wholesale electricity markets could unlock 7,000 megawatts of storage potential -- or up to 50,000 megawatts if all benefits can be captured through state and federal action -- according to a report by consulting firm The Brattle Group.

The study is titled, “Getting to 50 GW? The Role of FERC Order 841, RTOs, States, and Utilities in Unlocking Storage’s Potential.” Released on February 22, 2018, the report concludes that electric storage market potential could grow to 50,000 MW within the next ten years, if storage costs continue to decline and state and federal regulatory policies continue to be supportive.

The Brattle report comes one week after the Federal Energy Regulatory Commission's issuance of Order No. 841, a final rule aimed at removing barriers to the participation of electric storage resources in wholesale markets operated by regional transmission organization and independent system operators. The Brattle report describes Order 841 as "an important step in unlocking the value in wholesale energy, ancillary services, and capacity markets," noting the consulting firm's finding that at least half of storage's total possible value can be achieved in wholesale electricity markets.

Crucially, the Brattle study finds that fully realizing the value of electric storage will require state policy reforms similar to those at the federal level. Generally speaking, wholesale electricity sales and interstate transmission are subject to federal jurisdiction, while retail sales and local distribution are subject to state jurisdiction. This split jurisdiction means that some value streams available through battery storage can be only captured at the state level -- for example benefits from deferring or avoiding investments in transmission and distribution infrastructure by using storage as a non-transmission alternative, or customer benefits like increased reliability and engagement with power supply.

Storage can also save customers money -- as noted in the report, avoiding retail rate demand changes is one of the primary business drivers for storage deployment by U.S. commercial and industrial customers. But these values can only be fully captured through state action to remove the barriers that remain.

Some states are acting to incentivize or require energy storage investments. California set a mandate of 1,325 megawatts of storage by 2020, and Oregon and Massachusetts have also set state storage mandates.

The report also covers implications for existing storage resources, most of which are hydropower. It finds that existing storage resources can provide substantial new capabilities, if they can be operated more flexibly than today. As noted in the report, "Increasing flexibility of existing hydro can be very valuable, reducing the need for new investments." The report also suggests that optimizing operating strategies could increase storage revenues by 2 to 5 times.

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