The State of Massachusetts recently awarded US$20 million worth of grants to 26 energy storage demonstration projects. The awards are an extension of the state’s June announcement that called for a 200 megawatt-hour energy storage target for the state’s three electric distribution companies to achieve by 2020. According to the Massachusetts Clean Energy Center, the projects will add 85 megawatt-hours of storage capacity to the state’s 7 megawatt-hours of storage currently installed.
Over the past three years the price of lithium-ion battery systems decreased approximately 50 percent, which has drastically improved the economics of energy storage. While system costs drop, regulatory uncertainty still exists across US service territories in terms of how battery owners are compensated for selling their stored energy back into the grid. In the case of the Massachusetts grants, the state’s Department of Energy Resources stated that the grant recipients must negotiate individually with ISO New England, the utility and grid manager within New England. The awards will be used to evaluate how storage economics change according to business model, market involvement and location.
Among the grant awardees, the use cases vary among behind-the-meter solar C&I (Commercial & Industrial) storage, residential storage dispatched by a utility, resiliency microgrids, and load serving entity (LSE)/competitive electricity supplier portfolio optimization. This list serves to highlight the different value streams derived from storage.
For example, Advanced Microgrid Solutions will partner with National Grid to place two storage systems at two different Walmart locations (one with existing solar PV and one without). The systems will be paired with software controls and an active demand management system to reduce peak load and provide seasonal peak demand management. This model could very well be replicated across big box stores. In another project, Sunrun proposed an aggregated system of 200 storage systems paired with solar PV to residential homes. These systems would provide backup power, demonstrate net metering time of use and respond to unique local and time-based characteristics.
Generally, energy storage provides many benefits to the grid. Storage bolsters the case for renewables integration because it reduces intermittency issues, reduces curtailment, and helps smooth out peak load times. Storage can also delay or wholly prevent the need for new transmission infrastructure, which can help reduce ratepayer tariffs. As grid software becomes more sophisticated, storage can be a tool to more finely price value based on time and location and allow more customer interfacing with the grid. The jury is still out on how many and how well storage benefits can be monetized. The Massachusetts grant demonstration projects will be watched closely to explore exactly this.