Under a newly enacted law, Connecticut will deploy 1 GW of energy storage by December 2030 and pursue interim targets to deploy 300 MW by 2024 and 650 MW by 2027. With the measure, Connecticut joins California, Massachusetts, New Jersey, Nevada, New York, Oregon, and Virginia, states that have so far set targets to procure energy storage as part of strategies to address climate change.
Gov. Ned Lamont on June 16 enacted Public Act No. 21-53, a law that directs the Connecticut Public Utilities Regulatory Authority (PURA) to develop, before January 2022, proceedings to develop programs and rate designs to encourage energy storage technologies with multiple grid applications, including resilience, ancillary services, and load-leveling. The law envisions separate programs for residential power consumers, commercial and industrial consumers, and storage systems connected to distribution systems in front of the meter.
Under the law, starting in July 2021, the Commissioner of Energy and Environmental Protection may also issue requests for proposals for energy storage projects that will be connected at the transmission or distribution level. If deemed cost-effective, these will include stand-alone energy storage projects and energy storage projects paired with Class I renewable energy sources or hydropower facilities that have a capacity of less than 100 MW. The law, notably, also requires the state’s energy commissioner to publish and make available for public comment a “cost-effectiveness test that considers each applicable benefit provided by energy storage.”
A Target for a Changing Power Mix
Earlier this year, PURA rolled out a Notice of Issuance of Straw Electric Storage Program Design and Request for Comments, a straw proposal to bring 580 MW of additional energy storage to Connecticut by 2030. The proposal, which responds to power outages in the aftermath of Tropical Storm Isaias, includes a targeted incentive structure designed to prioritize delivering increased resilience to low-income and other vulnerable customers.
According to the Connecticut Department of Energy and Environmental Protection (DEEP’s) December 2020 draft 2020 integrated resources plan (IRP), the state will need to ramp up its grid-scale renewable supply to meet a 100% zero-carbon electric supply goal by 2040 as set out by an executive order issued in September 2019.
DEEP said Connecticut ratepayers are already supporting over 600,000 MWh/year of operating grid-scale, zero-emission renewables, and more than 9 million MWh/year of zero-carbon nuclear resources, which is equivalent to about 65% of the electricity consumed by customers of the state’s two electric distribution utilities companies. By 2025, that percentage is expected to increase to 91%, or 24.5 million MWh/year, as new offshore wind and grid-scale solar projects that have been contracted will come online.
The IRP suggests that if the Millstone nuclear plant—a facility that provides about 36% of the state’s power today—retires in 2029 (absent a contract extension), the state will need at least 1,060 MW of new energy storage capacity by 2040. But if more wide-scale electrification occurs, it will need up to 1,603 MW.
Connecticut Becomes 8th State With a Storage Target
Connecticut’s 2030 energy storage targets compared to other state targets are still significant.
California. California in 2013 set a 1.3-GW investor-owned utility storage target by 2020. According to the California Public Utilities Commission, to date regulators have approved procurement of more than 1,533.52 MW of new storage capacity. Of this, about 506 MW is operational.
Massachusetts. The enactment of House Bill 4857 in 2018 established a 1,000-MWh energy storage deployment target to be achieved by 2026.
New Jersey. Assembly Bill No. 3723 established goals for the state to procure 600 MW by 2021, and 2 GW by 2030.
New York. In 2018, the New York Public Service Commission (NYPSC) adopted an aspirational statewide energy storage goal of installing up to 3 GW of storage by 2030 and an interim objective of 1,500 MW by 2025.
Oregon. At the end of 2016, the Oregon Public Utility Commission issued guidelines under HB 2193 that require Portland General Electric and PacifiCorp to each have a minimum of 5 MWh of energy storage in service by January 2020.
Nevada. The Public Utilities Commission of Nevada in March 2020 adopted a regulation in Order No. 44671 that establishes biennial energy storage procurement goals starting at 100 MW by December 31, 2020, and increasing to 1 GW by 2030.
Virginia. The 2020-enacted SB 851 establishes a 3.1-GW target. Specifically, it sets a 400-MW and 2.7-GW energy storage deployment mandate for Appalachian Power Company and Virginia Electric and Power Company, respectively, to be achieved by 2035.
According to the Energy Storage Association (ESA), state targets and market needs are driving a boom in the U.S. storage market. Earlier this month, the trade association said 910 MWh of new storage were brought online in the first quarter of 2021—an increase of 252% over the first quarter of last year. “Looking ahead to the rest of 2021, deployments are expected to accelerate dramatically. Wood Mackenzie forecasts that nearly 12,000 MWh of new storage will be added in 2021, which is three times the amount of new storage added in 2020,” it said.
A significant driver could be the introduction of a stand-alone federal storage investment tax credit (ITC). If passed this year, a stand-alone storage ITC would result in a 20-25% upgrade to Wood Mackenzie’s five-year market outlook in megawatt-terms, suggested Chloe Holden, Wood Mackenzie Energy Storage Analyst.
“An extra 20 to 25% growth for the U.S. market over the next five years would supercharge an already fast-growing energy storage market,” she said. “The front-of-the-meter (FTM) segment would see the largest incremental growth, with an extra 6 GW of capacity expected through 2025, which is 25% of our base case market forecast. Without the stand-alone storage ITC, we forecast that the FTM segment will add 3,674 MW in 2021 and 6,915 MW in 2026.”
In a recent report, ESA and Wood Mackenzie note that the FTM interconnection queue now sits at over 200 GW. “Though most projects in the queue will not come online, the queue is the largest it has ever been and is a testament to the rapid growth of the U.S. FTM storage market,” the report says. “There is a clear trend of increased geographic diversity of interest in FTM projects, with a surge of interconnection queue requests sitting outside of incentivized markets.”