Nevada earlier this month became the fourth state to adopt an energy storage incentive.
The Silver State joins California, New Jersey and Maryland, which in April passed a bill creating a 30% tax credit for energy storage devices, as the only states to have put storage incentives in place. And at least two other states, Hawaii and Massachusetts, are moving toward energy storage incentives.
“It's probably fair to call this incentive push a trend, as we've now got at least five states either discussing or implementing these sorts of bills, and I wouldn't be surprised if more follow in the not-too-distant future,” said Brett Simon, energy analyst at GTM Research and author of a new report on energy storage initiatives in Hawaii and Maryland.
To date, however, California’s storage incentives are the only one that has been implemented. California’s incentives, in fact, seems to be in constant state of process.
The state just re-opened its Self-Generation Incentive Program (SGIP), which is now heavily tilted toward energy storage, and a bill that would provide rebates for residential storage was just passed by the Senate.
In Nevada and Maryland, the incentives are of such recent vintage that implementing regulations have yet be drawn up. And in Massachusetts, the Department of Energy Resources (DOER) is scheduled to finalize procurement targets by July in accordance with legislation passed last summer that lays the groundwork for an energy storage mandate.
That mandate would be separate from Massachusetts’ SMART program. Incentive levels for that program, which would provide an adder for solar systems paired with energy storage to help boost behind-the-meter storage, are being discussed and drawn up.
Abundant sunshine and the termination of the state’s net metering policy would seem to make Hawaii the perfect location for solar-plus-storage applications. But the state’s legislature has failed to pass legislation for energy storage incentives multiple times over the past several years. In January 2017, there were five bills in the legislature that included some form of energy storage credit, but only one of them, HB 1593, has moved forward.
The bill aims to reduce oversight in order to speed the loan process as a way of encouraging more renewable projects and to use a green infrastructure loan program to jump start projects for underserved residents and disadvantaged communities. That program would also set up a rebate program to incentivize energy storage that is installed concurrently with solar panels. It would last two years from Jan. 1, 2018.
According to GTM’s economic modelling, HB 1593 could increase internal rates of return between 110 basis points and 140 basis points.
"There’s an unmistakable benefit to having a storage system for new solar customers in Hawaii, although it is clear that legislators were careful to propose a moderate incentive that prevents a gold rush,” Simon told Energy Storage News.
According to the GTM report, HB 1593 could incentivize between 75 MWh and 300 MWh of storage in Hawaii, a state that in 2016 installed a total of 3.7 MWh.
Under the recently passed bill in Maryland, SB 758, the state has $750,000 a year available for energy storage tax credits for behind-the-meter systems.
Simon notes that Maryland still has a net metering program and lacks high demand charges, two factors that often serve to encourage energy storage development. But the report estimates that the new law could spur development of 150 residential or 10 commercial storage systems, or a mix of both. Simon calls the law a “foundational” piece of legislation that could establish Maryland’s energy storage market.
As of year end 2016, less than 11 MW of storage has been installed in Maryland, most of which is in the 10-MW Warrior Run project.
Simon says the recent legislative developments in Maryland and Hawaii could mark the start of a greater trend, one he says will be carefully watched by other states looking to spur the development of energy storage.
“A storage incentive can help build a state's storage market, which can have a number of benefits,” says Simon. One of the most tangible benefits, he says, is “reducing grid stress from over generation.”
In the report, he also notes that incentives offer an important avenue to build storage markets, offering a clear improvement to project economics and, thus, encouraging market players to develop new business models within these markets.
The report argues that states will increasingly take the lead on energy storage policies in the U.S., and the outcome of Hawaii and Maryland’s incentive programs are likely to offer “key takeaways” that other states can use when crafting their storage initiatives.