Technology alone cannot achieve decarbonization goals without smart regulation, a new paper suggests: how energy storage systems are used determines how they contribute to climate goals.
“Energy storage programs must be strategically and intentionally designed to achieve peak demand reduction,” writes Clean Energy Group, a Vermont energy policy nonprofit. “Otherwise, battery usage may not effectively lower demand peaks and may even increase peaks and/or greenhouse gas emissions in some circumstances.”
Energy storage is a fast-growing resource for shifting energy systems and can be used to help balance variable energy supply like solar with fluctuating demand. It is commonly associated with battery technology, but also includes other methods like pumped water or thermal storage systems. Energy storage can improve the efficiency of variable renewables by storing electricity when wind and sun are abundant and releasing it back to the grid when supply dips below demand.
Replacing fossil fuels in the grid can result in lower emissions, but only when the electricity stored is from non-emitting sources. When it comes initially from fossil fuels there are no emissions cuts, and because some energy is lost when electricity is transmitted to storage and back, this pairing can actually lead to higher emissions.
Clean Energy Group studied programs that aimed to address peak demand periods by increasing energy storage capacity, highlighting why some worked to reduce emissions while others did not. The programs took a variety of approaches to ownership of the storage technology, which was usually a battery. Electricity customers could either own batteries directly and enter agreements with the grid, or from third parties, utilities, or developers.
While the report advocates for utility-owned storage, it also warns against utilities being able to abuse a monopoly over the system. Governments need to set “guardrails” to protect all parties involved so that utilities don’t outcompete customers or third-parties or create restrictive regulations, the report suggests.
Incentives were widely used to help electricity customers overcome the upfront cost of adopting energy storage. Some programs prescribed strict requirements to be met before customers received an incentive, in order to ensure a certain kind of performance. Others were designed to achieve their goals by tying incentives to performance.
Performance-based incentives must be directly tied to emissions specifically to ensure a desirable outcome, the report finds. In one example, California implemented a self-generation incentive program that encouraged households to install batteries that stored and released electricity back to the grid. But the program failed to lower emissions at first because there “were no emissions-related price signals for customers to follow in dispatching batteries,” Clean Energy Group writes. So the state adjusted the system to make half of the incentive dependent on emissions-reducing battery cycling.
Programs tend to have options for determining how electricity is dispatched: energy storage can be released as needed when customers or utilities choose, or according to pre-defined periods. And different programs target different loads to balance the grid, either by reducing load behind the meter, or by shifting excess load from behind the meter back to the grid. While both approaches work, exporting power back to the grid is more helpful for utilities, though it can also add complicated interconnection and regulatory hurdles.
The report suggests that programs focused on reducing load can “significantly limit” the value of storage for the storage owner “because load cannot be reduced below zero, meaning unused energy may be stranded in the battery.”
So “in order to make storage economical for home and small commercial loads, power export may be necessary.”
