Congress’ ability to boost storage limited

Source: Sam Mintz, E&E News reporter • Posted: Friday, July 20, 2018

Energy storage experts made clear to a House panel this week that Congress’ options for helping lower prices and increase deployment of the technology are fairly limited.

Despite calls by members of the House Energy and Commerce Committee for a renewed effort by the federal government to develop storage and help it overcome policy barriers, most actions companies want would happen on the state, grid operator or regulatory planes.

Primarily, experts say policymakers should look to remove barriers for storage so it can have access to the grid and energy markets, so it is included in transmission planning, while also working to adequately value and compensate the technology.

That falls mostly to the Federal Energy Regulatory Commission, which recently finalized a major order aimed at combating barriers but still needs to ensure that grid operators implement it fully.

“It seems like people are figuring it out without our help, but if you need our help, I want to know,” Rep. Scott Peters (D-Calif.) told a panel of witnesses yesterday.

One area where lawmakers could step in is tax credits. Storage is currently eligible for a federal investment tax credit (ITC) when it’s paired with renewable energy generation, but the industry would like to see that law expanded.

“The value of storage to the grid is happening regardless of whether it’s paired with renewable energy generation or not,” said Kushal Patel, a partner at Energy and Environmental Economics Inc. “We are asking for a much more broader, all encompassing definition of the eligible technologies that can qualify under Section 48 [of the Internal Revenue Code].”

Such a credit, which was proposed in a December bill from Rep. Mike Doyle (D-Pa.), would lower the cost of storage and accelerate its implementation, the witnesses said.

But there remains caution even among some Democrats about the necessity of direct government spending on storage technology.

“How long and when should the federal government intervene in some of these technologies? We’re spending money like drunken sailors. At some point in time, there may be a reckoning; we may want to get fiscally responsible again,” said Rep. Kurt Schrader (D-Ore.).

Mark Frigo, head of energy storage at E.ON North America, told him that any tax credit should only last until the technology is competitive.

“My guess is it would happen much sooner than the ITC or [production tax credit] for wind and solar,” Frigo said.

While lawmakers generally have embraced the value that energy storage brings as an emerging technology, there is still skepticism among a small pocket of Republicans, primarily with concerns about costs to consumers.

Rep. Joe Barton (R-Texas) questioned yesterday whether building large storage facilities makes economic sense compared to the continued use of power plants.

“I’m not against energy storage … but I’m a little bit skeptical if we’re doing this just because we don’t like natural gas power, we don’t like coal power, we don’t like nuclear power, because that would be an added cost that somebody’s got to bear, is that correct? It may be socially, politically viable, but it’s not the best economic decision,” Barton said.

Several witnesses on the panel noted that storage is especially valuable in meeting state environmental goals. California especially has benefited from a comparatively large amount of storage on its grid.

“If you have a state policy where you’re focused on decarbonizing the grid and incorporating the cost when it comes to planning … adding battery storage to replace an existing power plant can make sense economically,” said Keith Casey, a vice president at the California Independent System Operator, the state’s grid operator.