The focus on storage in the deployment of renewables is relatively new. As noted in my last post, storage is key to solving problems with renewables like intermittency and the Duck Curve. Unfortunately, the cost of storage is still a factor.
It’s not rocket science. We need manufacturing scale in storage to bring down those costs, accelerate deployments and expand the potential for intermittent renewables.
The good news is that the market will eventually get there on its own. Players like Musk and LG Chem are doing more than their fair share. We’ve made decent progress over the past few years.
Nonetheless, we’re at a tipping point period in storage, much like solar was in 2006. It needs a nudge to move faster. A shot in the arm.
Consider what happened with solar in 2006. Costs of solar manufacturing had been steadily dropping since the 1970's. But, it was after the establishment of the Incentive Tax Credit (established in 2006) that solar really took off. It created new momentum, drove manufacturing scale and took the cost per Watt below the critical threshold of $1.
We need that for storage.
In the remainder of the post, I propose a number of strategies to accelerate storage deployments. I ask states, communities, regulators, and politicians to consider them and engage the conversation.
Before digging in, please note that I am not advocating a specific storage technology; I’m a cheerleader for all forms of storage… dams, ice coolers, and lithium ion alike.
ITC for Storage
Perhaps the easiest and most obvious strategy would be a Federal incentive tax credit for storage. Call it the Storage Incentive Tax Credit or SITC. Mimic the ITC with a 30% tax credit on storage deployments. Offer the credit for 10 years, through say, 2026.
A number of folks will probably ask “Why on earth should governments subsidize uneconomic technology?” Two answers. First, I don’t see it as subsidizing an uneconomic technology; I see it as accelerating a strategic technology. Second, governments have been massively subsidizing fossil fuel technologies for decades by allowing them to produce without bearing the true carbon cost to the environment.
Carbon Tax / Carbon Marketplace
Beyond a tax credit, another way to go is to push all energy sources to bear their real costs. A national tax or marketplace for carbon that 1) “charges” carbon emitters for the cost of carbon they emit and 2) offers credits to entities that are carbon clean or negative. Basically that assigns a price tag to atmospheric carbon and levels energy production costs for renewable technologies.
Such a structure has not been hugely popular for a couple reasons.
- Strident environmentalists dislike the fact that big companies can essentially pay to continue carbon-dirty practices, while securing the sheen of green. I suppose that’s true, though I’d argue it’s a rational, balanced way to level technical costs and flood investment into renewables and storage.
- Big corporations dislike it for obvious reasons, and they’ll undoubtedly argue that it will create a drag on the economy. From where I sit, it may create corporate drag on incumbents, but on a grand scale, such a measure should foster new business sectors and propel new, clean and local manufacturing. (Manufacturing jobs coming back to the US!) That’s fuel for growth of the economy.
Musk has been a big advocate of this approach. You can read more about Elon’s advocacy here: Elon Musk Says Robust Carbon Tax Would Speed Global Clean Energy Transition
States should also examine incentives for storage deployment… particularly states where solar penetration is trending toward mid single digits or more. California is already ahead of the game with its Self-Generation Incentive Program, commonly known as SGIP. Though broadly targeted, batteries are taking the lion share of the funding for this program. One can hope that more states take action like California to support storage deployments. There are a myriad of potential approaches that states can take.
Solar + Storage Incentives
The way I see it, solar and storage go together like peanut butter and chocolate. We should look at motivating this combination to turn solar deployments into dispatchable energy sources.
That’s happening already, albeit in a hamstrung way. Folks are extending the ITC to storage deployments, but there are constraints on that. For one, storage can only be underwritten to the extent that the solar panels are the energy source for the associated batteries. Plus, batteries can only receive credits if they are deployed at the same time as the solar array.
Given the power of the combo, it’s worthwhile to do a couple things to drive solar and storage.
- Create new state level incentives that drive solar and storage marriages.
- Relax the ITC rules to allow storage arrays to receive full credit when paired with solar, even if that storage is deployed after the solar and even if the storage is oversized (within reason) compared to the solar.
- Provide solar and storage incentives that allow remote pairings as part of unified projects on the same grid. This strategy could be hugely impactful, unlocking new models and investment, though likely to be somewhat controversial. More on that under Remote Net Demand below.
Remote Net Demand
Consider the impact that Net Metering has had on solar. Alongside the ITC, state regulated net metering laws have been the other huge driver of solar rollouts. States like NY have gone a step farther than basic net metering, extending the concept to allow remote net metering. These allowances have fueled creative deployment structures and supported emerging new models like community solar.
Along those lines, why not expand the allowance on energy to be applied to power as well? Remote net demand.
In other words, allow businesses to buy storage and house it at a different site from where a business’ electric load lives, with the allowance to net power discharges from the storage on an interval-matched basis.
Because the flexibility in where to deploy that storage will drive broad rollouts of distributed storage and generate new models for financing it. It could provide a path to financing resilient, independent microgrids and more.
Given that remote net demand would require time interval matching, it may present real challenges to utility billing systems. It also could be perceived to take a cut at a cash cow for the utilities, so utilities may not fall in love with this proposal on first review.
That said, ConEd is offering major storage incentives via BQDM to defer investment in a next peaker plant. Remote net demand could prove a cheaper way to achieve that and still maintain control over the deployed infrastructure.
Research & Development
Unfortunately, storage does have drawbacks and limitations. We need to fund R&D to solve those problems, and it should come from both public and private sectors.
Bill Gates has been big on this point. He’s 100% right, and the Breakthrough Energy Coalition represents his commitment to solve big problems inherent in storage. You can read more about Gates’ thoughts on storage here: It Is Surprisingly Hard to Store Energy.
Here are a couple areas for R&D into storage that are worth pursuing aggressively:
- Density. A quantum leap in storage density would have massive impact. Right now kWh’s of storage are generally heavy and bulky. Improvements there are seemingly far off, but technology has a funny way of finding a way. Let’s nudge that.
- Materials. Core materials for storage are often rare and poisonous. That’s a bummer on multiple levels. Pushing research into newer, green and renewable source materials will make storage a much more valuable citizen of the grid.
- Manufacturing. Manufacturing is generally a dirty process. Ongoing R&D, beyond just materials, to improve the cleanliness of manufacturing processes will be well worth the time and effort.
Lastly, it’s tough to think about a responsible storage future that doesn’t include recycling. As noted, battery materials currently tend to be poisonous and rare. (Let’s fix that!) Any responsible policy around storage should drive recycling of materials and motivate use of second-hand batteries. To me that seems like a “no brainer”, and politicians at all levels ought consider provisions around recycling of batteries in storage policy.
I could go on, but that’s a good start to chew on. My hope is that I’ve provided fodder for the discussion and debate. As with anything, there are pros and cons to storage, and to most of the measures above. Let’s dive into the discussion with renewed vigor.