The regulatory regime for distributed energy storage needs a revamp, according to the Interstate Renewable Energy Council. And it’s got the proposal to prove it.
“The potential of distributed energy storage to lower costs and improve the quality of electric service is considerable,” explains IREC’s new report Deploying Distributed Energy Storage: Near-Term Regulatory Considerations to Maximize Benefits (PDF). “However, since the market for distributed energy storage is still in its infancy there is a significant need for regulatory guidance and proactive policies to ensure a smooth rollout of this technology.”
IREC’s guidance for unlocking the power of our future grid hinges upon on six major points. First, rate structures need to specifically designed so energy storage customers know how to operate their systems to benefit the entire grid. “Distributed storage developers have identified rate structures as the most critical regulatory change needed to help facilitate growth in the distributed storage market,” the report said.
To make that happen seamlessly, storage systems also need to be able to stack different services. “Regulators should still give serious consideration to programs that would allow third party providers to aggregate those services at the distribution level,” explained IREC. “Without a market that allows for such aggregation, the ability of energy storage providers to assist utilities and grid managers will likely go untapped.”
Inefficient interconnection standards aren’t helping utilities or customers, either. Standards need to be upgraded so distributed energy storage pioneers have “fair and efficient” access to an increasingly internetworked smart grid. In 2013, the Federal Energy Regulatory Commission got the procedural ball rolling by amending the definition of a “Small Generating Facility” to specifically to include storage systems. But states need to streamline their clarification and review policies, so FERC’s redefinition can nationally evolve. Clarifying eligibility rules for net metering programs to include storage systems would smooth our transition to a smart grid as well.
“Where there is a need to reduce peak demand, or increase generation during certain periods, there could be some benefits to allowing customers with storage systems to export energy onto the grid in exchange for bill credits even if they are not eligible for a renewable-based NEM program,” IREC report proposed.
Finally, utilities and policymakers need to widen their scopes when it comes to distribution system planning and management, beyond what “has been seen historically,” IREC added. The smart grid’s bidirectional flow demands more vision, meaning that utilities must identify prime energy storage locations while states must to develop accordant methodologies for assigning them value, so mutually beneficial rates and incentives can be calculated. Adding greater oversight coordination of energy storage systems between both states and utilities would also “ensure safety without imposing duplicative or conflicting regulatory requirements.”
It’s a pretty common-sense proposal, if you’re viewing the present from the future, where our solar-powered smart grid is humming along nicely. The good news, IREC notes, is that most states are beginning to work toward this common purpose, as investment and innovation in renewable, distributed energy take off. And will be little in the way of bad news, IREC’s report concludes, “if the electric industry moves now to capture the benefits of the new technologies before the challenges associated with integrating these 21st century technologies into a 20th century grid are realized.”