Energy Storage Technologies: Policy and Regulatory Landscape

Introduction

Grid-Scale Energy storage is utilized to shift the energy generation from peak-loads to off-peak hours to facilitate a flexible and reliable grid system, with structured policy reforms to encourage large scale deployment of energy storage technologies. Energy is also stored on a large scale within a power grid, using multiple technologies. Grid-scale storage technologies have emerged as a critical component of a decarbonized power system. Recent technological advancement, ranging from mechanical energy storage to electrochemical batteries and thermal storage, also impact the deployment of low-carbon electricity options, such as solar photovoltaic and wind electricity.

Need for Grid-Scale Energy Storage: Energy storage allows more flexibility and provides reliability to the grid system. For example, during the night when the electricity demand is less and supply is more, the excess energy can be stored in power storage devices and provided during the daytime, when the demand peaks.

Energy Storage Technologies in Use

The current state of the Grid-Scale Energy Storage technologies in use is as follows:

Effects of Energy Storage on GHG Emissions

Energy storage is necessary for the integration of clean energy resources. Energy storage is also expected to lead to a reduction of greenhouse gas emissions when paired with a clean generator. For example, it can store the excess energy generated at times of low market demand and inject it to the grid at later stages, reducing the need for generation from fossil-fuel-powered bulk system generators.

However, the relationship between the increased deployment of energy storage and reduced carbon emissions is not guaranteed. Numerous studies have shown that under certain conditions, additional storage can also lead to increased emissions.

Policies and Regulation Landscape – Key Regions

The United States

As of 2019, There are multiple energy storage technologies which are yet to be commercialized or in the research phase, but, the US government has so far deployed 4 technologies for energy storage applications, namely, Pumped Hydroelectric Storage (PHS), Compressed Air Energy Storage (CAES), Advanced Battery Energy Storage (ABES) and Flywheel Energy Storage (FES). Out of these, PHS and CAES are large scale energy storage technologies having capacities of up to 1 GW and discharge time of tens of hours. On the other hand, ABES and FES are low energy storage technologies with discharge times of up to 6 hours, but, these technologies are not limited to a particular geography. For CAES technology, there is one energy storage plant operational as of 2019, which is a 110 MW facility operational in Alabama, United States.

The American Recovery and Reinvestment Act (ARRA) administered by the Department of Energy (DOE) provided funding of ~US$185 million to support 16 energy storage projects at large scale, having a cumulative energy storage capacity of ~0.53 GW.

Policies and standards impacting the energy storage initiative of the US government include,

• The Energy Independence and Security Act 2007: Enabling Energy Advisory Committee to form an Energy Storage Technologies subcommittee for advising the DOE on the status and progress of the United States energy storage goals.
• California approved Assembly Bill 2514: It requires the California Public Utilities Commission (CPUC) to set and meet energy storage procurement targets for investor-owned utilities, totaling 1.33 GW of storage capacity completed by 2020 and implemented by 2024. There exist similar energy storage mandates in the states of Massachusetts, Oregon, and New York.
• The U.S. Federal Energy Regulatory Commission (FERC) issued Order No. 784 in July 2013. It revises the accounting and reporting requirements for public utilities to better account for the use of energy storage devices. The order builds upon No. 755, which regulates compensation for energy storage systems.
• In February 2018, the Federal Energy Regulatory Commission (FERC) unanimously approved Order No. 841, which required Independent System Operators and Regional Transmission Organizations to remove barriers to entry for energy storage technologies, by having these groups re-evaluate their tariffs. The FERC believes this will lead to greater market competition in the energy grid sector.

The regulatory policies for energy storage in the United States include Advanced Metering Legislation and Regulation, Demand response Legislation & Regulation, and Net metering & distributed generation legislation & regulation to govern the energy storage solutions in each state of the economy.

Impact: These policies enable utility customers to take advantage of lower-cost and more precise ancillary services and provide opportunities for developing energy storage technologies.

European Union

As of 2019, the energy storage technologies deployed in the European Union include PHS, CAES, Flow-Vanadium Battery, and Short-term Storage of Heat, Carbon Capture Storage, Flywheel Energy Storage, Fuel-Cell Hydrogen Energy Storage, etc.

EU lawmakers are lifting barriers to the market for energy storage. The EU’s new electricity directive (2019/944) states that the TSOs and DSOs should not own or operate storage facilities unless circumstances are exceptional. This initiative is taken to enhance competition and ensure fair access to storage facilities for other market participants. The new rules prohibit discrimination of storage in comparison to other technologies. EU member states are supposed to turn this into law till 2021.

The EU directive aims to reduce barriers to energy storage and mandates non-discriminatory and competitive procurement of balancing services and fair rules to network access and charging.

Impact: National governments are beginning to realize that energy storage is essential and the storage technologies are going to play an important role in the integration and expansion of renewables across the globe.

Incentives: The key incentives on Energy Storage offered by some of the governments across European countries include:

Policies Supporting Renewable Energy Storage Solutions

Integrating energy storage solutions into future power systems will require certain amendments in the current regulation of energy markets, and the network operation procedures should be reconsidered. As per the European Commission, innovative energy storage solutions will play an important role in ensuring the integration of renewable energy sources into the grid at lower costs. It is also expected to help the EU to reach its 2050 de-carbonization objectives under the European Green Deal while ensuring Europe’s security of energy supply.

Furthermore, to accelerate the deployment of renewable energy storage solutions, there is a need for standardization on safety issues, issues of permitting, double grid tariffs and taxes, price signals, and access to ancillary services markets. To serve the purpose of the integration of renewable energy with energy storage solutions, Clean Energy legislation is progressing in the European Union with a huge number of proposals to drive national and regional energy systems towards efficiency and low carbon footprints.

Implications of Policies and Regulations Governing Energy Storage Solutions

Energy storage already plays an important role in the energy system. The EU’s pursuit of ambitious climate and energy policies, as well as global climate agreements, will drastically increase the need for effective energy storage technologies. This leads to an opportunity for energy companies, but a challenge for policymakers. The rapid development and deployment of energy storage technologies and applications must be supported through ambitious RD&D programs coupled with regulatory change.

Clear and transparent regulatory frameworks are required to identify services that regulated transmission and distribution operators can provide, to avoid competition with power generators.

A key issue is storage ownership: in many markets, storage is considered a generation asset, and system operators (for transmission as well as distribution) are not allowed to own storage devices. This is a significant barrier to transmission and distribution deferral, one of the highest-value applications for storage.

References

1. US Grid Energy Storage CSS
   
2. Grid Energy Storage December 2013.pdf
3. Managing the Future of Energy Storage.pdf
4. Actors that benefit from storage services along the energy value chain fig 298217301
5. Smart Grid Legislative and Regulatory Policies and Case Studies