According to the U.S. Energy Information Administration (EIA), battery storage capacity in the United States tripled in a single year—from 2020 to 2021—jumping from 1.4 to 4.6 gigawatts (GW). Small battery storage has also seen great growth. From 2018 to 2019, US capacity increased from 234 to 402 megawatts (MW), mostly in California.
While this progress is impressive, it is just the beginning. The clean energy industry continues to deploy significant amounts of storage to ensure a low-carbon future.
Sufficient energy storage in the right places will support the huge amount of renewables needed to be added to the grid in the coming decades. This could look like large-scale storage projects using batteries or compressed air in underground salt caves, smaller projects in warehouses and commercial buildings, or batteries in homes and in electric vehicles.
The U.S. Department of Energy’s 2021 Solar Futures Study estimated that up to 1,600 GW of storage could be available by 2050 in a decarbonized grid scenario if solar power grows to meet 45 percent of electricity demand as projected. Currently, only 4 percent of US electricity comes from solar power.
But for storage to deliver all the benefits it can and enable the rapid growth of renewable energy, we need to change the rules of the energy game designed and controlled by fossil fuels.
Energy storage has major obstacles in its way
We will need to clear three significant barriers to ensure a carbon-free energy future.
The first challenge is battery production. Existing supply chains are vulnerable and must be strengthened. To create more resilient supply chains, the United States must reduce its dependence on other countries for key materials, such as China, which currently supplies most of the minerals needed to make batteries. Storage supply chains will also be stronger if the battery industry addresses the social and environmental impacts of cradle-to-grave storage production, from mineral extraction to end-of-life recycling.
Second, we need to be able to connect the batteries to the power system, but the current grid interconnection rules cause massive delays in storage projects. Regional grid operators and state and federal regulatory agencies can do a lot to speed up the connection of projects waiting in the queue. In 2021, 427 GW of storage sat idle in interconnection queues across the country.
You read that right: At the beginning of this column, I applauded the tripling of battery storage capacity to 4.6 GW in 2021, but it turns out that nearly 100 times that amount of storage was waiting to be connected. Network operators can – and must – pick up the pace!
Once connected, battery storage must be able to provide all the value it can in energy markets. The third obstacle to storage is thus the energy markets. Energy markets operated by network operators (called regional transmission organizations or RTOs) were designed for fossil fuel technologies. They need to change significantly to allow for more storage and more renewables. We need new market participation rules that redefine and redesign market products, and all stakeholders need to be on board with the proposed changes.
Federal storage support is strong
Despite these formidable challenges, the good news is that storage will benefit from new funding and several federal initiatives that will develop projects and programs that will strengthen energy storage and its role in the clean energy transition.
First, the Infrastructure Investment and Jobs Act signed by President Biden last year will provide more than $6 billion for demonstration projects and supply chain development and more than $14 billion for grid improvements that include storage as an option. The Act also requires the Department of Energy (DOE) and EIA to improve storage reporting, analysis, and data, which will increase public awareness of the value of storage. And even more support is on the way now that President Biden has signed the historic Inflation Reduction Act into law.
Second, DOE is working to develop storage solutions. The Energy Storage Grand Challenge, established by the agency in 2020, will accelerate the research, development, production and deployment of storage technologies by focusing on reducing costs for applications with significant growth potential. These include storage to support grids powered by renewable sources as well as storage to support remote communities. It sets the goal of making the United States the global leader in energy storage by 2030 by focusing on expanding domestic storage technology capabilities to meet growing global demand.
Dedicated actions to realize this long-term vision include the Long Duration Storage Shot, part of the DOE Energy Earthshots Initiative. Focusing on systems that provide more than 10 hours of storage, the initiative aims to reduce lifecycle costs by 90 percent over a decade.
Third, national laboratories drive technology development and much-needed technical assistance, including a focus on social justice. The Pacific Northwest National Laboratory in Richland, Washington operates the Energy Storage for Social Equity Initiative, which in many ways aligns with the Union of Concerned Scientists’ (UCS) principles for equitable energy storage. The goal of the lab is to support energy storage projects in disadvantaged communities that have unreliable energy supplies. The initiative is currently supporting 14 urban, rural and tribal communities across the country to address any technical gaps that may exist and is also supporting funding applications. It will provide support tailored to each community’s needs, including identifying metrics to define such local priorities as affordability, resilience and environmental impact, and expand community understanding of the relationship between the local electricity system and equity.
Fourth, the Federal Energy Regulatory Commission (FERC) is encouraging RTOs to modify their rules to allow data storage technologies to connect faster as well as to fairly participate and maximize their energy and grid support services. Those nudges come in the form of FERC orders, which are just the beginning. Implementation of the changes dictated by these orders is essential but often slow.
States also encourage storage development
Significant progress in promoting energy storage is also occurring at the state level.
In Michigan, for example, the Public Utilities Commission supports storage technologies and has ordered utilities to submit pilot proposals. My colleagues and I at UCS and other clean energy organizations are making sure these pilot projects are well designed and benefit ratepayers.
Thanks to the Climate and Equal Jobs Act of 2021, Illinois is supporting pilot programs that combine solar and storage. The law also includes regulatory support for the transition from coal to solar power by requiring the Illinois Power Agency to acquire renewable energy credits from sites that previously generated electricity from coal with eligible projects, including storage. It also requires the Illinois Commerce Commission to hold a series of storage workshops to examine policies and programs that support the deployment of energy storage. The commission’s May 2022 report highlights the role of pilot projects in advancing energy storage and understanding its benefits.
So far, California has more battery storage installed than any other state. Building on this track record, California is moving forward and diversifying its storage technology portfolio. In 2021, the California Public Utilities Commission mandated 1 GW of long-term storage to be online by 2026. To support this goal, California’s fiscal 2022-2023 budget includes $380 million for the California Energy Commission to support long-term storage technologies. In the long term, California plans to add about 15 GW of energy storage by 2032.
To accelerate the transition to clean energy, other states can look to these examples to help shape their own path for energy storage. In particular, the Illinois Act of 2021 provides a realistic plan for other Midwestern states to address climate change and ensure a carbon-free energy future.
The power bank is here, so let’s make it work
Storage will enable the growth of renewables and in turn lead to a sustainable energy future. And as I said, significant progress has been made and the future looks promising. Federal initiatives are already helping to improve storage technologies, reduce their costs, and deploy them. Similarly, some states support this dynamic.
That said, more work will be needed to remove the obstacles I described above, and to do so, the to-do list is clear. The battery industry needs to develop responsible, sustainable supply chains, FERC needs to overhaul interconnection rules to encourage faster deployment, and regional grid operators need to reform energy markets so that storage adds value to the clean grid. My colleagues and I at UCS are working to make it all happen.
Courtesy of Union Of Concerned Scientists.
Guillermo Pereira, Senior Energy Analyst
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