N.J. sets 'aggressive' 2 GW storage target by 2030
The latest energy storage goal could inspire more states to follow.
New Jersey has adopted an energy storage goal, becoming the fifth state with some form of energy storage target.
The state's storage goal is part of a broader legislative effort, A 3723, that was signed into law last week, along with a law establishing a zero emission credit program for nuclear power plants.
The Renewable Energy law requires New Jersey’s Board of Public Utilities to submit a report on energy storage to the governor and legislature within one year. Six months later, the BPU is required to begin work to establish a process and mechanism "for achieving the goal of 600 megawatts of energy storage by 2021 and 2,000 megawatts of energy storage by 2030," according to a New Jersey Assembly Appropriations Committee statement.
The statement says the report should include ways to increase opportunities for energy storage in the state, including recommendations for financial incentives by public and private entities.
The state's storage goal is "the most aggressive one I’ve seen," Navigant Research senior research analyst Alex Eller told Utility Dive.
California set an energy storage target of 1,325 MW by 2020 with the passage of AB 2514 in 2013. Since then, AB 2868 added another 500 MW to the state’s goal. Oregon followed suit in 2015, setting a target of 5 MWh by 2020. Massachusetts passed an energy storage initiative in 2016 and has set its target at 200 MWh. And, until New Jersey’s law, New York was on track to have the most aggressive energy storage target — 1,500 MW by 2025. A regulator on Arizona's Corporation Commission has proposed a 3,000 MW by 2030, but it has not yet been approved.
"I expect to see many more New Jersey or Arizona-style GW-scale goals, rather than Oregon-style 5 MWh mandates."
Senior energy storage analyst at GTM Research
The states' efforts are not directly comparable, however. The time frames vary and some targets, like California's are mandatory, while other’s like Massachusetts', are not. And the level of New York's target is not yet codified but has only been indicated by statements from Democratic Gov. Andrew Cuomo. The various targets do, however, give an indication of how states are stacking up with regard to energy storage policies.
New Jersey's goal could create momentum for other similar processes across the country. Arizona and Nevada have both passed laws calling for their regulators to investigate energy storage targets. And several other states — including Colorado, Illinois, Indiana, Minnesota, Missouri, New Mexico, Ohio and Vermont — have begun proceedings on energy storage policies.
A storage trend
New Jersey's energy storage target is "part of an increasing trend of storage targets and mandates getting bigger, both in MW scale and when compared to overall state peak load," Daniel Finn-Foley, senior energy storage analyst at GTM Research, told Utility Dive via email. "I expect to see many more New Jersey or Arizona-style GW-scale goals, rather than Oregon-style 5 MWh mandates."
New Jersey's target is the first to be set in a state within the territory of the PJM Interconnection. That "opens up a new avenue into examining how storage can capture value in the region," Finn-Foley said.
An energy storage project in New Jersey could provide load shifting for the local utility and conceivably provide spinning reserves or frequency regulation for PJM. That could create a means for the revenue stacking that many analysts say is key to the economic viability of an energy storage project. But there could be a lot of details to work out before such a project can actually take place.
It is "a complicated question with complicated answers," Finn-Foley said. And most likely there will be no clear answers before the Federal Energy Regulatory Commission’s Order 841 is implemented, he added.
Order 841, issued in February, directs RTOs and ISOs to devise market rules to allow energy storage to participate in the wholesale energy, capacity and ancillary services markets.
Finn-Foley also advised caution on the prospects for New Jersey's energy storage target. "I wouldn't break out the confetti yet," he said. The state's Board of Public Utilities still has to set the implementing regulations. The way the BPU implements the New Jersey law could "significantly affect how effectively it incentivizes storage," Finn-Foley said.
For example, enthusiasm for Massachusetts' energy storage target diminished after state regulators set what many analysts thought was a low target.
The BPU has expressed interest in storage in the past, Brett Simon a senior energy storage analyst at GTM Research told Utility Dive via email. The state's Renewable Electric Storage Incentive Program sought to support non-residential behind-the-meter (BTM) storage with an emphasis on critical facilities, but many of the approved projects were ultimately canceled. None of the seven projects in the queue have been completed, he noted.
The reasons for the canceled or stalled projects have not been made public, but "it's clearly a case of less than stellar economics," Simon said. It is possible, he said, that wholesale market opportunities did not materialize, battery price declines were not as rapid as expected or potential bill savings were not as robust as estimated.
There is no indication yet whether or not New Jersey's new target will set a carve-out for BTM storage. But Simon said his sense is that the deployments in New Jersey will be front-of-the-meter installations. That could be quite a challenge in a state the size of New Jersey.
Small state, big goals
New Jersey currently has a total of 415 MW of energy storage in nine projects, including a 400 MW pumped-storage project.
Navigant's Eller told Utility Dive he would expect to see some of the projects that are built to meet the target be behind the meter, particularly if they are tied to resiliency based grants, such as hospitals and government buildings. But to reach the ambitious target levels, there will have to be some utility scale energy storage projects. They may not be in the multi-megawatt range as in some of the larger states, but Eller said that there is interest in co-locating energy storage at solar plants, based on conversations he has had with utilities in the state.
Some of the more remote solar plants in New Jersey have been having issues with energy feeding back into the grid. Energy storage could provide a solution by absorbing some of the excess power.
The state's ambitions for offshore wind — recently-passed legislation calls for 3,500 MW of offshore wind resources to be in place by 2030 — could fit in with the energy storage target. The intermittency of wind energy could be tempered by shipping the energy to an onshore storage hub before the energy enters the grid.
Otherwise, Eller sees opportunities for storage to play a role in distribution line and substation deferrals and as a tool to reduce peak demand for commercial and industrial customers.
Energy storage ownership in the state has not yet been addressed in detail. The state's utilities could seek to tap the storage market — as some have expressed an interest in owning storage facilities, Eller said — or it could be open to third parties. In the end, "I think it will be a mix," Eller said.
CORRECTION: A previous version of this article misidentified New York’s energy storage target and some California bill information. The New York target is 1,500 MW of storage by 2025. The California bill calling for another 500 MW of storage is AB 2868 and AB 2514 requires 1,325 MW of storage, not 1,300 MW.
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