DOER Energy Storage Target Misses the Mark

On June 30, 2017, the Massachusetts Department of Energy Resources (“DOER”) announced an “aspirational” target for Massachusetts’ utilities to procure 200 MWh of energy storage by January 1, 2020.  While solar targets are typically expressed in MW, the capabilities of energy storage facilities are often measured both in terms of power (MW) and energy (MWh), reflecting the multiple applications for which energy storage can be used.  For example, 6 MWh of energy storage could be provided by a storage facility capable of delivering 3 MW of power over two hours, 2 MW of power over three hours, or 1 MW of power over six hours.  DOER was required to set an energy storage target by the 2016 “Act to Promote Energy Diversity” and the decision to do so that it made back in December, but it had flexibility in selecting the level and structure of that target as well as in adopting mechanisms for implementing the target.

DOER’s announcement describes the 200 MWh target as a “demonstration phase” and an opportunity for learning that could guide possible future targets.  It quickly pivots to a discussion of other energy storage initiatives that are in the works, such as the $10 million ACES grant program (discussed here); DOER’s still-in-development SMART program, the successor to the SREC incentives for solar, which includes an “adder” for solar projects that incorporate energy storage; provisions in last year’s energy legislation that allowed for energy storage to be “paired with” renewable energy projects for the purpose of clean energy procurements; and grants for “peak demand reduction projects” that include energy storage projects.

Although the announcement of the target and the accompanying press release present this non-binding goal as a bold step forward for clean energy, on initial review, the step looks more tentative than bold.  DOER’s announcement and press release tout the benefits of investing in energy storage, referring to its “State of Charge” report from last year (discussed here).  That report concluded that optimal benefits would be achieved by deploying 2,125 MWh (1,766 MW) of advanced energy storage through 2020.  Although the State of Charge Report acknowledged that figure would likely exceeded development capabilities and proposed policies to generate 600 MW of new energy storage by 2025, it provides a contrast to DOER’s 200 MWh target.  As further perspective, the Massachusetts utility companies, who would be subject to the procurement target, submitted joint written comments to DOER recommending a target that blended 200 MW and 500 MWh goals.  Other commenters proposed higher targets.

It is not clear that DOER’s 200 MWh target advances meaningfully beyond the quantity of storage that the utility companies have already proposed in various proceedings before the Massachusetts Department of Public Utilities (the “DPU”).  Eversource has proposed installing approximately 130 MWh of energy storage in a rate case currently before the DPU and has a proposal to procure roughly 4 to 14 MW of energy storage as part of a demand reduction program.  National Grid is already interconnecting three energy storage systems, received approval in December for 7 MW of energy storage to be paired with solar, and has a proposal for approximately 17 MWh of energy storage before the DPU as part of its “grid modernization plan.”

Looking out of state, the California experience demonstrates the potential for rapid growth in energy storage deployment when aggressive policies are in place.  In 2014, Southern California Edison was able to contract for 264 MW of energy storage out of a single solicitation.  By late 2015, when a major leak at the Aliso Canyon natural gas storage field posed reliability threats in southern California, 70 MW of energy storage were deployed within six months of an emergency storage tender.  By 2020, ambitious policies could likely spur significant expansion of energy storage deployment in Massachusetts.

In short, DOER’s aspirational 200 MWh target is unlikely to independently spur significant deployment of additional energy storage projects.  Massachusetts may, with the help of other policies, zoom past this target by 2020.  But if it does not, we may look back at this modest target without an implementation mechanism as a missed opportunity.


Leave a Reply

Your email address will not be published. Required fields are marked *