6 months after target adoption, Massachusetts sees energy storage growth, challenges
Hurdles remain in integrating the technology in the state and into the wider ISO New England.
Six months after a target was set, energy storage in Massachusetts is beginning to take off, albeit slowly, as policies continue to evolve.
Ongoing challenges to wider adoption include questions about whether storage is eligible to net meter under the state's rules and who retains the capacity value of storage in ISO New England's forward capacity market.
Target spurs projects
In June, the state’s Department of Energy Resources set a 200 MWh-by-Jan. 1, 2020, target for energy storage.
Since then, the state’s Department of Public Utilities (DPU) has approved a rate increase for Eversource Energy utilities NSTAR Electric and Western Massachusetts Electric that includes $15 million for a 5 MW storage facility on Martha’s Vineyard and up to $40 million for a 12 MW energy storage project on Cape Cod.
In October, ENGIE North America and Holyoke Gas & Electric said they would build a 3 MW, 6 MWh storage project, the largest to date in Massachusetts, at the 5.7 MW Mt. Tom solar farm that went online in January 2017.
In November, National Grid said it plans to install a 6 MW, 48 MWh battery storage system on Nantucket to back up a new diesel generator on the island.
And in mid-December, Massachusetts awarded $20 million in grants to 26 energy storage projects, doubling the state’s original $10 million commitment. The grants were awarded under the state’s Advancing Commonwealth Energy Storage (ACES) program that is part of the Energy Storage Initiative (ESI) funded by the Department of Energy Resources.
“The policies are not developed to the extent they need to be in order for storage to take off."
Attorney, Foley Hoag
The ACES projects encompass a wide range of use cases, from merchant solar-plus-storage and utility dispatched residential storage to resiliency/microgrids and transit applications. The technologies, while mostly calling for lithium-ion batteries, also include a flywheel, a vanadium redox flow battery and a zinc iron flow battery. The awardees include municipalities, universities, utilities such as National Grid and Unitil, and developers such as Advanced Microgrid Solutions, Stem, NextEra Energy, Vionx Engineering and Tesla.
In all, the ACES projects represent 32 MW and 85 MWh of energy storage capacity, of which 16 MW and 45 MWh are within electric distribution company territory. At year end, Massachusetts had 4 MW and 7 MWh of advanced energy storage installed.
Projects are beginning to roll into the pipeline in Massachusetts, but there are concerns. “The policies are not developed to the extent they need to be in order for storage to take off,” Zachary Gerson, an attorney with Foley Hoag, told Utility Dive.
One of the outstanding questions is the eligibility of energy storage systems to net meter under Massachusetts rules. That issue was raised last year in a filing with the Massachusetts’ Department of Public Utilities.
The issue has been simmering since at least 2015 and is still not resolved. Late last year, the DPU created a separate docket to handle the matter. In short, developers are seeking clarity on whether or not a storage system paired with a solar power installation is eligible for net metering. Some parties, such as utilities, are concerned that net metering of storage could lead to double dipping of benefits. The DPU issued a narrow ruling on a case involving Tesla, but left the wider issue to be hammered out in the new docket.
The issue also intersects with the state’s Solar Massachusetts Renewable Target (SMART) program, which aims to double the state’s installed solar power capacity from 1,500 MW to more than 3,000 MW by providing a fixed price contract for solar projects of less than 5 MW.
Energy storage developers are looking at the SMART program as one of the venues for making their projects viable. “In order for these projects to pencil out, they have to have different revenue streams,” Gerson said.
In Massachusetts, “there is still some amount of regulatory uncertainty around future growth and pending wholesale market rule development for energy storage developers right now."
CEO, Energy Storage Association
One of the ways to do that would be to capture revenues from the ISO New England forward capacity market. But under current rules, it is unclear who retains the capacity value of storage.
“No one wants to deploy without knowing the value of the capacity,” Jason Burwen, vice president of policy at the Energy Storage Association, told Utility Dive.
New England has an open-ended capacity performance market, and the penalties for non-performance could pose too much liability for developers, Burwen said.
As a result, most energy storage providers are likely to design their projects to participate in the ISO’s ancillary services market because they are not prepared to assume the financial burden of qualifying for the forward capacity market.
State issues more significant
In general, analysts say state issues are more significant right now than regional grid operator issues. In Massachusetts, “there is still some amount of regulatory uncertainty around future growth and pending wholesale market rule development for energy storage developers right now,” Energy Storage Association CEO Kelly Speakes-Backman told Utility Dive via email.
There is always some uncertainty regarding new regulations, Speakes-Backman said, and developers seem to be holding off right now in order to assess the longer term risks before starting projects. In addition, developers may be drawn to states such as New York that have recently announced finance and policy commitments for energy storage, she said.
Earlier this month, New York Gov. Andrew Cuomo (D) announced a plan to combat climate change that includes the installation of 1,500 MW of energy storage by 2025 as well as investments of at least $60 million in energy storage pilot projects and activities to reduce barriers to the deployment of energy storage.
ISO New England, meanwhile, has implemented rules that provide for an “energy neutral signal to better accommodate storage technologies with smaller amounts of stored energy,” ISO-NE spokesman Matthew Kakley told Utility Dive.
Kakley said the ISO’s rules enable storage to compete with other conventional resources in the frequency regulation market while avoiding the risk of being fully depleted or overcharging.
The ISO “will continue to review the performance of our markets as more storage is integrated,” Kakley said. And, as additional experience is gained, “we will make modifications to better enable storage to provide the grid services consistent with its physical characteristics.” But there are no specific changes planned beyond what has already been done to accommodate storage in the regulation market, he added.
Kakley said the ISO is working toward a December 2018 implementation of a more integrated storage model that enables participation of storage in the real-time markets (energy and reserves) in a more robust manner while continuing to offer energy-neutral regulation service.
The ISO’s timeline coincides with the Notice of Proposed Rulemaking for energy storage and distributed energy resources (RM16-23-000) that the Federal Energy Regulatory Commission issued in November. “It is an evolving market,” Burwen said.
Meanwhile, in Massachusetts, Gerson described the state’s approach as “a little scattershot.” A variety of policies are being tried out, and progress is being made in many areas, he said, but “it might take a while to get the pieces to work together.”
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