On June 30, 2017, the Massachusetts Department of Energy Resources (DOER) announced that Massachusetts would adopt an aspirational 200 megawatt-hour (MWh) energy storage target to be achieved by January 1, 2020. The target is the second largest in the nation, although it is far lower than California’s 1.3 gigawatt storage mandate. Still, Massachusetts’ storage target will make the commonwealth a leader in the burgeoning energy storage field.

The process of setting storage targets began last summer, when Massachusetts enacted a law directing DOER to determine whether to set targets for electric companies to procure energy storage systems by January 1, 2020. In September 2016, Massachusetts released a report called the “State of Charge,” which recommended the installation of 600 megawatts (MW) of energy storage by 2025. The report predicted that 600 MW of storage could capture $800 million in system benefits to Massachusetts ratepayers. The energy storage industry praised the 600 MW level as a good starting point.

DOER’s “aspirational” 200 MWh by 2020 target falls short of the “State of Charge” recommendation, but leaves the door open to achieving 600 MW by 2025. DOER’s letter announcing the target noted that “[s]torage procured under this target will serve as a crucial demonstration phase” for Massachusetts to gain knowledge and experience with storage. “Based on lessons learned from this initial target,” the letter continues, “DOER may determine whether to set additional procurement targets beyond January 1, 2020.”

Beyond DOER’s storage target, Massachusetts has a broader Energy Storage Initiative, which includes a $10 million grant program aimed at piloting energy storage use cases and business models in order to increase commercialization and deployment of storage technologies. DOER also announced that it will examine the benefits of amending the Alternative Portfolio Standards, an incentive program for installing alternative energy systems, to expand the eligibility of energy storage technologies able to participate. While Massachusetts’ storage targets are not as lofty as some in the industry were hoping, the commonwealth is demonstrating a clear commitment to developing its energy storage industry beyond the few megawatts currently installed.

UPDATE: This bill was signed into Maryland law on May 4, 2017 with a $75,000 maximum credit for commercial systems. A previous version of the bill offered credits to commercial systems up to $150,000.

In April, the Maryland legislature passed a bill creating a state income tax credit for the costs associate with installing an energy storage system. Governor Larry Hogan is expected to sign it into law. Unlike measures in other states such as California and Massachusetts, the Maryland bill does not contain mandated amounts of energy storage that utilities must procure. Instead, if the current bill is signed, Maryland will be the first state in the country to incentivize the deployment of energy storage systems by offering a tax credit. Presently, an energy storage system can qualify for the federal investment tax credit if it is installed alongside a solar photovoltaic system. This is the first ever tax credit for storage-only projects, although qualified energy storage systems still may be paired with renewable energy projects.

Under the terms of the bill, a taxpayer will receive a credit equal to 30 percent of the installed costs of the system, not to exceed $5,000 for a residential system or $150,000 for a commercial system. The incentive program has a funding cap of $750,000 per year, and applications for the credit will be approved on a first-come, first-served basis. Additionally, the tax credit may not be carried over for use in future tax years. The tax credit is currently slated to run from 2018 to 2022. Continue Reading Maryland Likely to Become First State to Adopt Energy Storage Tax Credit

by Melissa Dorn

The California Public Utilities Commission (CPUC) recently released a proposal that would require the major investor-owned utilities (IOUs) in the state to procure approximately 1.3 gigawatts (GWs) of energy storage by 2020.  Consistent with state’s energy storage bill, Assembly Bill 2514, which passed in 2010, the CPUC’s proposal aims to reduce market barriers and incentivize development of viable, cost-effective energy storage methods.  The CPUC hopes that the rapid growth of energy storage in California will support the state’s renewable energy industry as the state seeks to meet the legislature’s mandate to have one third of California’s energy generated from renewable sources by 2020.  Many renewable energy sources are intermittent, making energy storage technologies important for the integration of a large quantity of renewable energy into the existing electric system.

Central to the CPUC’s proposal are biannual procurement targets for the three major IOUs, Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric. The CPUC’s proposed aggregate procurement targets for each IOU are divided into three different “use cases” based on the end uses of the energy storage:  transmission-connected storage systems, distribution-connected storage systems, and customer-sited storage systems. The initial proposed procurement targets are: 

* The Totals include the additional interim targets for 2016 and 2018 that were intentionally omitted from this table.

To procure third-party owned energy storage to meet the targets, the CPUC proposed a “reverse auction” market mechanism, similar in structure to the state’s existing Renewable Auction Mechanism for renewable power sources. Under a reverse auction, energy storage providers would bid non-negotiable price bids, and the IOUs select projects starting with the lowest cost. The first auction, proposed for June of 2014, will require the IOUs to procure an aggregate 200 MW of storage. Subsequent auctions will be conducted every two years. The procurement targets are subject to change if the IOUs can demonstrate, among other things, that the energy storage resources bid into the reverse auction are not reasonable in cost, are not cost effective, or were insufficiently competitive.

The CPUC anticipates releasing its final order in October of this year.