Nevada jumped to the vanguard of energy storage policy after passing a revision to its state renewable energy targets.
In the past week, state legislators deputized the Public Utilities Commission to investigate whether it is in the public interest to require an energy storage procurement by utilities. The PUC has until October 1, 2018 to make that decision, based on a wide variety of criteria. That makes it the fourth state to set in motion a storage target, a policy that contributed significantly to the growth of the technology in California.
Nevada tucked even more goodies into a bill updating the state renewable portfolio standard. If Governor Brian Sandoval signs AB 206, it will raise the state's RPS from 25 percent renewable by 2025 to 40 percent by 2030. And storage will play a role that no state has thus far attempted.
Each kilowatt-hour of energy delivered by a qualified energy storage device will count double for the purposes of meeting the RPS requirement. There are two ways for a storage system to qualify: if it charges from renewable generation and discharges during a peak load period, or if it performs ancillary grid services that help integrate renewable generation.
“I am astounded at the amount of progress that Nevada legislators have made in such a short amount of time to catapult their state into the leadership of storage policy in the United States,” said Jason Burwen, policy and advocacy director at the Energy Storage Association industry group.
The new policies leapfrog Nevada into the ranks of important storage markets like Arizona, Hawaii, Massachusetts, New York and Washington, behind the national leader, California, said Ravi Manghani, energy storage director at GTM Research.
Several of those states have passed storage targets, but the RPS bill takes storage policy in a whole new direction.
It casts storage devices as renewable energy assets that can deliver energy, along with solar, wind, and geothermal.
It also incentivizes storage specifically for peak capacity, so that systems will be inclined to discharge their energy at the time of greatest grid need. Alternatively, it rewards systems that provide valuable grid services like frequency regulation and voltage control, which keep the grid running smoothly as renewable penetration increases.
A typical mandate sets a gigawatt threshold for utilities to meet. That drives deployment on the metric of power capacity. Nevada's policy uses more sophisticated metrics, which could lead to outcomes more carefully tailored to the state's goals.
In a zero-sum view of the world, any RPS credits that go to storage are coming at the expense of renewable generators that could have had them. The bill offers storage a slice of the pie, but it also expands the pie so that everybody who qualifies gains in market size.
The bill also caps the role of energy storage at 10 percent of the electricity covered by the RPS, ensuring the vast majority of compliance will still take the form of generation.
What kind of market could this create for storage?
Here's a back-of-the-envelope calculation. NV Power, the state's largest regulated utility, reported 21,581,533 megawatt-hours of retail sales in 2016. If we take 10 percent of that as the maximum amount of eligible storage, and halve that because peak hours count double, the result is 1,079,077 megawatt-hours of peak power delivered by batteries in a year, or an average of 2,956 megawatt-hours per day.
By GTM Research's count, the U.S. energy storage industry deployed 336 megawatt-hours in 2016. The analysts predict the national market will reach 2,822 megawatt-hours in 2019. It's safe to say that if Nevada's utilities come anywhere close to the energy capacity cap on storage under the RPS, the state will become a prominent national market.
Whether utilities do pursue that future remains to be seen. It could be that utility-scale wind and solar fit better with their resource plans, or are more economic in terms of fulfilling RPS obligations.
Then again, the legislature has made its interest in seeing more storage development undeniably clear. The PUC soon will begin its investigation into whether the benefits of energy storage exceed the costs, and that law spells out quite a few potential benefits, including: reduction in peak generation, transmission deferral, lower greenhouse gas and pollutant emissions and the value of diversified electricity supply.
If recent research literature is any guide, taking into account all those factors will likely lead to a finding of storage as a net positive, which will prompt a regulatory procurement target. If it's going to be required anyway, why not use it to fulfill some of the RPS requirement too?
The pro-storage fervor did not come out of nowhere. Nevada, after all, is home to the largest grid storage manufacturing capacity in the U.S. — Tesla's Gigafactory. The state stands to benefit from a modernized and cleaned up grid, but storage expansion also serves economic development goals.
“Nevada's kind of thinking outside the box when it comes to storage technology — they have leaders in the industry in the state so they’re looking to expand that technology and make it more valuable,” said Ray Fakhoury, who tracked the bill's progress as a state policy associate at the Advanced Energy Economy, which represents businesses that manufacture, develop and purchase clean energy.
The strong renewables and storage incentives strengthen Nevada's efforts to attract large corporate entities to set up shop in the state, as many of those companies have strong clean energy targets themselves, he added.
California's first-mover status in storage policy helped it attract most of the U.S. activity thus far. Other states may be able to capture some of the job creation by spurring an industry in their own borders, but the competition is heating up.
“There’s a reason why a large part of the grid storage industry is now based in California,” Burwen said. “There’s only really a couple more opportunities for states to take leadership and ensure a significant part of the industry decides to make their home in those places — the window is closing.”