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Energy storage group pushes FERC, Capitol Hill to remove deployment barriers

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Energy Storage Association CEO Kelly Speakes-Backman.

Source: ESA

A federal investment tax credit for new projects and fuller compensation for energy storage systems in U.S. power markets are two of the Energy Storage Association's top priorities for 2019, the group's CEO said in a recent interview.

The organization will also work to increase deployment of energy storage at the state level, including by encouraging more states to consider the technology in their long-term energy plans.

"There's a number of smaller barriers that we're just kind of pushing on every day," Energy Storage Association CEO Kelly Speakes-Backman told S&P Global Market Intelligence.

At the end of 2018, the group and its allies, including over 150 companies and industry groups, pushed U.S. lawmakers to make stand-alone energy storage projects eligible for a federal investment tax credit, or ITC, under Sections 48 and 25 of the U.S. tax code. Currently, energy storage can only qualify for an ITC if it is installed in conjunction with solar power facilities.

Storage proponents, including the American Wind Energy Association and Solar Energy Industries Association, urged Congress to include provisions of the Energy Storage Tax Incentive and Deployment Act — H.R. 4649 in the U.S. House of Representatives and S. 1868 in the U.S. Senate — in spending legislation Congress had hoped to pass before the end of 2018. Although lawmakers excluded a storage ITC in end-of-year appropriations bills, supporters will keep up the fight in 2019, Speakes-Backman said.

Energy storage can allow the grid to better use the output from intermittent resources such as wind and solar plants, but industry backers stress that storage can provide other benefits, including absorbing excess generation from other energy sources that can be put back on the grid later at a lower cost than new electric output.

"We think it's just really common-sense to allow storage to participate as a resource that supports the rest of the grid as well as renewables," Speakes-Backman said.

The Energy Storage Association will also focus in 2019 on proposals before the Federal Energy Regulatory Commission to more fully accommodate energy storage in wholesale power markets. In early December 2018, regional grid operators submitted compliance filings to FERC on how they plan to satisfy the commission's Order 841. The rule requires regional transmission organizations and independent system operators to allow electric storage resources to provide and be compensated for all of their capacity, energy and ancillary services.

The length and complexity of the filings mean the Energy Storage Association will likely seek an extension to file comments on the grid operators' proposals, Speakes-Backman said.

"We're going to need more than 30 days to give a really good response," she said. "So the beginning part of our year is going to be really focused in on FERC."

The group is paying particular attention to filings from the PJM Interconnection, ISO New England, New York ISO, Midcontinent ISO and the Southwest Power Pool, with the California Independent System Operator Corp. "steps ahead of the rest," according to Speakes-Backman.

Order 841 is meant to enable multiple-use storage technologies beyond just capacity. California is already doing that by allowing behind-the-meter resources such as demand response and distributed energy resources, or DERs, to "play" into wholesale markets, she said.

Aside from California, "the filings that are coming in, while we're very excited about [them], don't begin to address the DER side of storage and how it can play a role as well," Speakes-Backman said.

State work

In addition to federal policy reforms, the Energy Storage Association will pursue state-level changes in 2019 to open up new markets, particularly at the start of the year when many state legislatures convene.

Getting a storage ITC and removing barriers through Order 841 may be the "big headline stuff," according to Speakes-Backman, but state policies to encourage energy storage will be just as crucial. One hurdle is that states with restructured markets sometimes restrict or outright prohibit utility ownership of generation assets, she said. More fundamentally, some states have not even considered storage in their long-term planning.

"We're trudging along in states," Speakes-Backman said. "We're trying to make sure that these barriers are removed so that when the big stuff comes down, it opens up markets fully for storage."

She said state-level developments to watch for in 2019 include the implementation of Massachusetts' "clean peak standard"; a storage cost-benefit study in New Jersey and reforms to that state's incentive program; and New York's authorization of a $310 million market acceleration bridge incentive for storage development, part of the state's goal to have 1,500 MW of energy storage by 2025.