An Update on Storage Policy Nationally and in North Carolina

At the North Carolina State Energy Virtual Conference this past week, I had the honor to moderate a group of panelists discussing growing trends in energy storage. The entire session is available here and the highlights are described in this blog post below.

I began by providing an overview of historic and present action on storage in North Carolina. We then heard from:

Jamease Leonard, Manager, ScottMadden

Joe DeCarolis, Professor, Dept. of Civil, Construction, Environmental Engineering, at N.C. State University

Zak Kuznar, Manager Director, Regulated Renewables, Duke Energy

David Sarkisian, Senior Project Manager, N.C. Clean Energy Technology Center

Current Action

Despite the pandemic and its resultant chaos, the number of energy storage installations in 2020 broke records across the United States. At the conference, Leonard noted that this upward growth in storage success is driven primarily by continued cost decreases in storage technology, particularly lithium-ion batteries. Utilities with implemented storage have shown better operating performance than previously expected, and deployment continues to skyrocket; between 2018 and 2021, 20 states added more than 50 megawatts (MW) of energy storage and capacity, with 17 of those states adding more than 100 MW. (see the graph she put together below)

California, for example, has the largest energy storage market in the United States, surpassing the capacity of the PJM regional transmission organization (RTO) in 2019. Installations have boomed, with two projects in particular comprising 550 MW—a large portion of their expected capacity in 2020. Energy storage policy has dominated state bills since 2011, and implementation has been bolstered by amenable leadership as well as generous bilateral contracts with utilities and aggregators. The state of Massachusetts also added 37 MW of storage in 2020, second only behind California's progress. Massachusetts' initiatives, however, were primarily smaller, distributed projects ranging from one to five MW in size.

Though we're moving in the right direction with energy storage as a whole, a few remaining necessities will ignite faster growth:

● Overcoming leadership and regulatory challenges to increased deployment

● Making necessary changes in storage's application to increase system capacity—i.e., shifting applications to both behind and in front of the meter to provide more reliable power

● Growing interest, research, and development of longer-term technologies—i.e., cost-effective batteries that can store energy for greater spans of time (lithium-ion fall short over long durations)

The NC Energy Storage Study

2017's House Bill 589, Competitive Energy Solutions for North Carolina, directed the North Carolina Policy Collaboratory at UNC Chapel Hill to study the values and services that energy storage can provide to North Carolina and to make policy recommendations. NC State University conducted the study, led by DeCarolis as the principal investigator, and issued the final report in December of 2018.

The study demonstrated many net-positive monetary ($/KW) benefits when projecting battery use in 2030; lithium-ion pricing in 2030 was projected to be so low that several areas which have previously not been a benefit will be so. Since the study's conclusion, however, prices have dropped so dramatically that we are already nearing the projected 2030 pricing. Much sooner than projected we will begin to see those 2030 benefits in the use of lithium ion in commercial and industrial end use services (i.e., putting lithium-ion behind the meter), distribution reliability and capacity, and frequency regulation.

Overall, the study recommended three categories of policy options:

Prepare: Address potential gaps or areas of uncertainty—planning provisions, definition of ownership, net metering rules in relation to utilization of storage, interconnection rules, adoption of local codes etc.

Facilitate: Consider interventions to increase the value or decrease cost of energy storage—develop competitive procurement, standard offer, new tariff structures, etc.

Accelerate: Increase pace of energy storage deployment—develop storage-specific incentives, incorporate storage, etc.

During the State Energy Conference panel session, DeCarolis acknowledged that the outlook for energy storage in North Carolina is promising, given that innovation is lowering costs at a much quicker rate than expected. Lithium-ion battery prices have dropped much closer than the projected 2030 value even in the three years since the study was published. However, storage-related policy in the state still needs more development. Though storage has been showing up in more recent dockets, including several options within Duke Energy's 2020 IRP, there are still many regulatory questions to be answered to further grow this industry.

Duke Energy Projects and Progress in NC

Kuznar presented a brief rundown of Duke Energy's engagement in energy storage development. The utility's first battery storage projects (400 KW and 36 MW came online in 2011 and 2012 as R&D pilots, and a few larger projects have been installed since. Energy storage efforts are key in meeting Duke Energy's 2020 updated carbon reduction goals, which include a net-zero scenario by 2050 that requires significant renewable and storage growth.

In 2020, the Asheville/Rock Hill battery came online (see image below), offering peak load shaving and ancillary services. At 8.8 MW/MWh, it's the largest operational storage project in North Carolina. Another project underway is the Hot Springs Microgrid, a 5 MW/MWh battery coupled with a 2 MW ground-mounted solar array and a microgrid controller. Set for operations in Q3 2021, this project will offer peak load shaving, ancillary services, and back-up power for the town of Hot Springs.

Electric Cooperatives and Municipal Utilities

Sarkisian discussed how cooperatives and municipal utilities are working to implement energy storage technology.

NCCETC implements storage projects with cooperatives and municipalities, as well as tracks nationwide storage policies and deployment via their DSIRE database (Database of State Incentives for Renewables & Efficiency).

Project examples include:

Fayetteville PWC Community Solar and Storage Project: This project is funded as a part of the U.S. Department of Energy's Community Solar for the Southeast project and developed an economic model to evaluate community solar and storage projects in the area. Fayetteville deployed a 500 KW battery system in fall of 2019.

Solar-Plus for Electric Cooperatives (SPECs) Project: This initiative adds value stream insight to economic modeling around storage and conducts reviews of procurement best practices and policy/institutional considerations.

Electric cooperatives may have trouble defining policies and linguistic terms to govern their storage deployment. This primarily falls within the realm of their wholesale power contracts with their generation and transmission supplier.

The North Carolina Electric Membership Corporation (NCEMC) is the generation and transmission supplier for NC's electric cooperatives and has been working in recent years to set up storage projects with its members. NCEMC has procured storage through a partnership with the National Renewables Cooperative Organization (NRCO), and the Corporation stands as the owner of the storage capacity (rather than the member cooperatives themselves). This allows these co-ops to avoid problematic limits on generation capacity, while still providing availability to deploy storage within their local grids.

Eight NCEMC member utilities have deployed projects thus far, with solar facilities ranging from one to five MW, and battery facilities ranging from 2 MWh to 10 MWh. These initiatives provide benefits such as electricity resilience (example: on Ocracoke Island, where a microgrid will assist with outages during storms); support for sustainability initiatives and low-income support programming; flexible charging protocols and demand management resources; and more.

It is exciting to see the energy storage progress since 2018 when the NC State Energy Storage Study was completed, and I look forward to seeing what the next couple of years brings.

Image: NEC

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