Energy Storage Industry Already Experiencing Coronavirus Delays

The U.S. Energy Storage Association (ESA) surveyed members of its industry and found that almost two-third of respondents say they already are experiencing coronavirus-related delays, due to disruptions in the global supply chain, travel restrictions, and the downturn in equity markets that is cutting investment in projects. The ESA said more than one-third of those companies expect delays to last six months or longer.

Kelly Speakes-Backman, CEO of the ESA, who was honored as Woman of the Year by The Cleanie Awards last year (the awards are a partner with POWER magazine), said 175 companies responded to the survey. She told the Washington Examiner many of those companies were not sure how long the industry disruption might last.

Speakes-Backman told the Examiner that a slowdown would be a best-case scenario; a flattening of the storage market would be a worst-case situation. She issued a warning about the disruption for the entire power generation industry, saying storage “has the potential to transform the way we generate and deliver electricity,” and adding that, “The slowdown of these will slow down, in my opinion, the entire modernization of the grid.”

Standalone ITC

The storage industry, like others in the renewable energy community, is looking for relief from Congress as lawmakers work on an economic stimulus bill. The storage industry wants a standalone investment tax credit (ITC) for energy storage. It also wants Congress to take measures to ensure projects can continue to be financed, even as equity markets flounder.

The ESA on Monday cautioned that the one-third of the energy storage market that is focused on behind the meter, or retail, customers, is concerned about falling demand due to economic disruptions.

The ESA said it is looking to Congress to “act swiftly and decisively to modify energy investment tax credits to allow businesses to monetize them directly, including for energy storage technologies.” The group said policies with the fastest impact include:

  1. Modify energy investment tax credits (ITC) to allow businesses to monetize them directly, including for energy storage technologies.
    • Make energy storage technologies eligible for the ITC under IRC Sec. 48 and 25D, with the option to elect “direct payment.”
    • Extend safe harbor provisions for businesses electing the ITC.
    • Allow regulated utilities to opt-out from normalization of a Treasury grant or “direct pay” election of the ITC for energy storage.
  2. Grant an industry-wide exclusion from Sec. 301 tariffs on grid energy storage projects and their components (see USTR Exclusion Request ID USTR-2019-0017-48999).
  3. Provide grants for distributed energy resources, including energy storage, for resilience and cost-savings.
  4. Direct the Department of Energy (DOE) to undertake demonstration projects of energy storage across electric systems.
  5. Incorporate energy storage into immediate relevant funds to state, local governments, and communities and expand those funds.
    • Incorporate energy storage as an eligible investment for a renewed version of the DOE’s Energy Efficiency and Conservation Block Grant (EECBG) Program.
    • Provide Department of Transportation funds for electric vehicle charging infrastructure and Department of Energy funds for electric vehicle supply equipment, with integrated energy storage as an eligible component.
    • Incorporate energy storage as an eligible investment for Department of Education programs that promote school construction and renovation.
    • Incorporate energy storage as an eligible investment for Department of Agriculture energy programs.

A U.S. slowdown in energy storage would come after Europe’s energy storage boom stalled last year, according to the European Association for Storage of Energy (EASE). A study for the group, conducted by consultants Delta-EE, found that the European storage market grew by about 1GWh in 2019, well off the 1.47 GWh of capacity added in 2018.

The International Energy Agency (IEA) already has said the coronavirus pandemic will likely wipe out any growth in energy demand in 2020. The IEA also said it expects the renewable energy sector will see its growth stalled; Fatih Birol, the group’s executive director, has said governments would need to help finance renewable energy technologies this year in order to support the sector.

“We should not allow today’s crisis to compromise the clean energy transition,” Birol said in a recent statement. He said governments should ensure any economic stimulus packages promote investments in renewable energy.

Said Birol: “We have an important window of opportunity. Major economies around the world are preparing stimulus packages. A well-designed stimulus package could offer economic benefits and facilitate a turnover of energy capital which have huge benefits for the clean energy transition.”

Darrell Proctor is associate editor for POWER (@DarrellProctor1, @POWERmagazine).