The Federal Energy Regulatory Commission's Feb. 15 order, which aims to dismantle barriers that keep batteries and other energy storage resources from more fully participating in energy markets, could supercharge U.S. storage installations to the level of 50,000 MW over the next decade, according to a new report from The Brattle Group.
The federal agency's Order 841 directed regional transmission organizations and independent system operators to create market rules that enable storage resources to participate in all capacity, energy and ancillary services markets. That alone, however, would not be enough to accelerate the energy storage market at the exponential pace envisioned in the report, released Feb. 22.
"State policy and regulatory initiatives will need to build on [FERC's order]," the report said, including retail rate designs that support behind-the-meter storage. And cost reductions for energy storage must continue. "Despite the significant potential benefits, storage still faces economic, regulatory and market barriers that limit its overall market potential."
At an installed cost of $350/kWh, Brattle Group economists calculated, an additional 1,000 MW of storage could be installed in the Electric Reliability Council of Texas grid alone "solely based on wholesale market benefits." Storage could add 5,000 MW in ERCOT if projects could capture all potential value streams in wholesale and retail markets. The report's U.S.-wide estimate of storage market potential, based on an extrapolation of its ERCOT analysis, sees the largest markets emerging in the PJM Interconnection and the Midcontinent ISO.
Utility integrated resource planning, particularly in states with large volumes of intermittent renewable energy, is beginning to recognize the role of storage in improving power system reliability and economics. Current planning evaluations, however, "do not yet capture the full value of storage," the report added. Much of the identified potential "will depend on utility planning and states' views of the value of storage."
The Brattle Group previously has predicted that the U.S. storage market could become larger than expected by tapping the "stacked benefits" of batteries, by allowing them to provide multiple grid services simultaneously.