Emerging Issues in Energy Storage – Unlocking the Next Wave of the Energy Transition
For how long will fossil fuel-generated electricity remain a critical part of our electrical systems? That is the question for those seeking to predict the pace of the global energy transition.
For jurisdictions that do not benefit from extensive hydroelectric power generation, or a taste for nuclear power, there is a point beyond which intermittent sources like wind and solar cannot grow without threatening system stability. The game-changer in this space will be the massive expansion of industrial-scale and distributed energy storage.
Many things will need to go right for energy storage to scale to this point. Nascent technologies still need to mature, but governments and industry have an important role to play as well. We explore this changing landscape below by considering key questions for energy regulators, and some of the commercial challenges in energy storage projects and transactions.
Regulatory
As utilities consider battery and other energy storage projects, there are a number of key questions facing utilities regulators. Resolving these issues will be critical for widespread adoption of energy storage solutions, especially in light of the potential for growth in battery storage solutions:
1. Regulatory Characterization
The first and most basic question is how to characterize energy storage facilities for regulatory purposes, which sometimes act as loads and at other times act as generators. This unique combination is hard to square with many existing tariffs and interconnection arrangements, resulting in a lack of clarity in their application and a potential need for updates to account for this emerging technology.
2. Effects on the Grid and Capital Project Requirements
In addition to ensuring adequate on-peak resources and reducing or eliminating the need for peaking facilities, energy storage can reduce costs to public utilities by deferring or avoiding the need for costly transmission and distribution upgrades….
