TODAY’S STUDY: Massachusetts Storage Initiative Studied

State Of Charge; Massachusetts Energy Storage Initiative

September 2016 (Massachusetts Department of Energy Resources and Massachusetts Clean Energy Center)

Executive Summary

Increasing the amount of storage capacity on the power grid has the potential to transform the way we generate and consume electricity for the benefit of Massachusetts ratepayers. As compared to other commodities, the electricity market currently has the least amount of storage in its supply chain. Other commodities, including food, water, gasoline, oil and natural gas, have an average storage capacity of 10% of the daily consumption (Figure 1). The electricity market currently has only a storage capacity of 1% of daily electricity consumption in Massachusetts. In addition to having a small storage capacity, electricity is also the fastest supply chain traveling at 1,800 miles per second, meaning that without storage electricity needs to be produced, delivered, and consumed nearly instantaneously for the grid to maintain balance. This requires grid infrastructure -- including generation, transmission and distribution systems -- to be sized to manage the highest peak usage of the year, despite consumer electricity demand varying significantly both throughout the day and at different seasons of the year (Figure 2).

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The need to size all grid infrastructure to the highest peak results in system inefficiencies, underutilization of assets, and high cost to ratepayers. These high costs can be seen in the highly variable hourly electricity prices. Over the last three years from 2013 – 2015 on average, the top 1% most expensive hours accounted for 8% ($680 million) of Massachusetts ratepayers’ annual spend on electricity. The top 10% of hours during these years, on average, accounted for 40% of annual electricity spend, over $3 billion.1 Energy storage is the only technology that can use energy generated during low cost off-peak periods to serve load during expensive peak periods, thereby improving the overall utilization and economics of the electric grid (Figure 3). Until recently, the ability to store electricity across the electric grid was limited, but recent advances in new energy storage technologies, such as grid-scale batteries, are making viable the wide-scale deployment of electricity storage.

Advanced storage technologies can also provide the flexibility needed to reliably manage and utilize renewable resources’ variable output. Today, the electric system operates on a “just-in-time” basis, with decisions about power plant dispatch that are based on real-time demand and the availability of transmission to deliver it. Generation and load must always be perfectly in balance to ensure high power quality and reliability. As intermittent renewable generation, such as wind and solar, grows in Massachusetts maintaining this perfect balance becomes more challenging. Additionally, storage resources can be an important tool for better managing electric outages caused by severe weather, thus increasing grid resiliency. For these reasons and more, new storage technologies are an important component of a modern electric grid and a resilient clean energy future for the Commonwealth.

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Massachusetts Energy Storage Initiative

Recognizing that energy storage can be a valuable component of a diversified energy portfolio for the Commonwealth, in May 2015 the Baker-Polito Administration launched the $10 million Energy Storage Initiative to evaluate and demonstrate the benefits of deploying energy storage technologies in Massachusetts. As part of the initiative, the Department of Energy Resources (DOER) and the Massachusetts Clean Energy Center (MassCEC) partnered to conduct a study to analyze the economic benefits and market opportunities for energy storage in the state, as well as examine potential policies and programs that could be implemented to better support both energy storage deployment and growth of the storage industry in Massachusetts. The DOER, MassCEC, and the State of Charge Study Consultant Team kicked off the study in late October 2015 with an interactive stakeholder session in Boston. Subsequently, the team held webinars, and conducted numerous surveys and interviews. Over 300 stakeholders including representatives from the utilities, municipalities, competitive suppliers, storage project developers, renewable generation developers, storage technology companies, and the regional grid operator, ISO New England (ISO-NE), participated in the stakeholder process.

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The message was clear: energy storage is recognized as a game changer in the electric sector. An overwhelming proportion of stakeholders are optimistic about the future of grid-connected energy storage in Massachusetts. Utilities and developers cite renewables growth, technology advances, and technology cost decreases as factors why energy storage will shape the grid both near-term and longterm.

While recognizing the potential of energy storage, however, stakeholders identified numerous challenges and barriers that are preventing widespread deployment in the Commonwealth. Challenges highlighted are uncertainty regarding regulatory treatment, barriers in wholesale market rules, limitations in the ability for project developers to monetize the value of their energy storage project, and the lack of specific policies and programs to encourage the use of innovative storage technologies.

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State of Charge is a comprehensive report prepared by Customized Energy Solutions, Sustainable Energy Advantage, Daymark, Alevo Analytics, and Strategen in conjunction with the DOER and the MassCEC that links Massachusetts’ energy challenges to specific energy storage Use Cases, and offers insight into the cost, benefits, and feasibility of deploying new energy storage technologies in Massachusetts. It provides recommendations on policies and programs that can be employed by the Baker-Polito Administration to establish a mature local market for these technologies through increasing the deployment of storage on the state’s electric grid and supporting the growth of energy storage companies in the Commonwealth…

Energy Storage Technologies and Market Landscape… Storage Can Help Address Massachusetts’ Energy Challenges… Storage Opportunity Analysis… Energy Storage Application Use Cases…

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Conclusion

New advanced storage technologies provide an opportunity to modernize our electric system for the benefit of our ratepayers and to grow the clean tech industry here in the Commonwealth. By adopting the policies and recommendations contained herein Massachusetts will continue to lead the way on clean energy, energy efficiency and the adoption of innovative technologies such as energy storage. Storage can provide an important component of a diversified energy portfolio that will achieve the Baker-Polito Administration’s goal to create a clean, affordable, resilient energy future for the Commonwealth.

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