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Complete-The State of Grid Energy Storage in Massachusetts

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Complete-The State of Grid Energy Storage in Massachusetts DECEMBER 2019 THE STATE OF GRID ENERGY STORAGE IN MASSACHUSETTS REPORT BY: Maria Fonseca-Guzman, Zachary Traverso, Ertan Agar, Christopher Niezrecki, Hunter Mack, Aaron Smith-Walter The State of Grid Energy Storage in Massachusetts DECEMBER 2019 THE STATE OF GRID ENERGY STORAGE IN MASSACHUSETTS Table of Contents Executive Summary 2 I. The State of Energy for the Commonwealth 5 I-A. Energy Generation...........................................................................................................................5 I-B. Energy Consumption.....................................................................................................................7 I-C. Future Projections............................................................................................................................9 II. Review of Grid Energy Storage 10 II-A. Types of Grid-Scale Energy Storage Technologies............................................10 III. Current Status of Energy Storage Deployment in Massachusetts 13 III-A. Technologies in Use.....................................................................................................................13 III-B. Future Projections..........................................................................................................................15 IV. Grid Energy Storage Applications and Services 16 V. Review of State Incentives for Energy Storage 18 V-A. Active Federal Programs.........................................................................................................18 V-B. Active State Programs...............................................................................................................19 .VI. Key Barriers to Implementation of Grid Storage 21 VI-A. Cost..........................................................................................................................................................21 VI-B. Technical Challenges Regarding Grid Integration .............................................22 VI-C. Resource Availability..................................................................................................................22 VI-D. Policy......................................................................................................................................................23 VI-E. Acceptance........................................................................................................................................24 VII. Conclusions and Recommendations 25 VII-A. Issues....................................................................................................................................................25 VII-B. Call to Action...................................................................................................................................25 References 27 UMass Lowell & AIM Foundation | Page 01 The State of Grid Energy Storage in Massachusetts The Commonwealth of Massachusetts is planning to add thousands of megawatts of new renewable energy sources in the next decade, primarily offshore wind, even as many EXECUTIVE SUMMARY nuclear-, coal-, and oil-powered resources have been shut down in recent years and many The State of Grid more are slated to be retired in the next decade. For the maximum cost savings and Energy Storage in environmental benefits of these billions of Massachusetts dollars in ratepayer investment in renewable energy to be fulfilled, cost-effective, grid-scale energy storage will need to be deployed and developed for Massachusetts, alongside quick- response storage solutions to solve short-term Grid-scale energy storage is often described as a and highly localized electric grid efficiency game changer because of its potential to challenges. revolutionize the design and operation of electrical grids while enhancing the viability of With this critical need, the Commonwealth of renewable energy generation systems. Today, Massachusetts launched the Energy Storage electrical grids require demand and supply of Initiative in 2015, which aims to establish the electricity to be balanced in real time to avoid state as a national leader in the emerging power disruption and blackouts. This is already a energy storage market. Through the Advancing challenging task, and growing efforts to integrate Commonwealth Energy Storage (ACES) intermittent renewable energy sources, like wind Program, 20 million dollars of funding has been and solar, create additional complications for the provided to 25 demonstration projects across electrical grid. The current grid system tolerates the state. All these activities associated with the existing level of fluctuations in energy supply utility-scale energy storage establish the basis by utilizing spinning reserves and plants that can and need for this comprehensive study on the quickly respond to demand, commonly known as status, challenges, and outlook of grid energy “peaker” plants. However, substantial growth of storage in the Commonwealth of intermittent sources in coming years will create Massachusetts. further issues for grid resilience and energy security, underlining the critical need for This report explains why utility-scale energy widespread utilization of grid-scale energy storage is needed and what benefits it can storage. deliver; which technologies are available today and which will be in the near future; the current state and federal incentives affecting energy storage development; and the key remaining barriers to implementation of wide-scale grid "Going forward, storage. The report concludes with recommendations for how policies and the need for incentives should be adjusted and refocused for the future, including the need for additional utility-scale energy studies to specify how much energy storage Massachusetts will need within various storage will be timeframes and renewable energy generation scenarios, how much the usage of existing more critical for the underutilized storage resources can be Commonwealth." increased, and whether long-term contracts should be considered, or if they may be necessary, to secure adequate utility-scale storage at cost-effective prices for ratepayers. UMass Lowell & AIM Foundation | Page 02 The State of Grid Energy Storage in Massachusetts EXECUTIVE SUMMARY Key Findings The need for energy storage is primarily driven by economic factors because the regional grid 1 operator, Independent System Operator New "Without utility- England (ISO-NE), is by design energy- agnostic and by design and assigned to scale energy identify the lowest-cost generation sources while maintaining system reliability. The three storage, the most significant factors driving demand for additional energy storage include: (1) Commonwealth’s Occasions when system demand exceeds power generation capacity; (2) Price volatility in commitment to wholesale markets that creates arbitrage carbon emission opportunities for energy storage to be profitable; (3) Promotion of renewable energy reduction will to mitigate the effects of climate change by reducing carbon emissions, which in the future likely fall short." is likely to be driven by carbon pricing and tax incentives. Construction of new utility-scale energy The Commonwealth of Massachusetts is 2 storage systems remains expensive from an 3 home to two pumped hydro storage facilities investment and operational perspective, with a total capacity of about 1,800 MW. and systems are in most cases far from However, less than 30% of their capacity is economically feasible without stacking of currently utilized, largely because of the policy incentives and revenue opportunities lack of competitive-market incentives for from ancillary services. As with other nascent producing carbon-free electricity outside of technologies, the market does not yet drive state-directed contracts (as opposed to the incentive, so state and federal initiatives bilateral contracts for wind and hydro power that recognize the full value of storage will required by state carbon-reduction policies). drive additions of new storage while the price of these technologies becomes more Without utility-scale energy storage, the competitive. Commonwealth’s commitment to carbon 4 emission reduction will likely fall short. Even in scenarios with high penetration of renewable energy, the overall emissions of the grid could remain unacceptably high. Research by Anbaric Group, for example, has found 1that moving to an 80% renewable grid, without energy storage, would lead 30% of the clean energy being wasted or curtailed, producing a grid that is only 20% “clean” at times of peak demand [1]. [1] Clean Peak Analysis and Recommendations, Anbaric Development Partners, May 21, 2019 UMass Lowell & AIM Foundation | Page 03 The State of Grid Energy Storage in Massachusetts Massachusetts needs both short-term, highly responsive energy storage systems that EXECUTIVE SUMMARY 1 operate for seconds or minutes in specific geographies with grid constraints and Recommendations transmission congestion, and longer-term, baseload-like energy storage released over hours. However, how much and what kind of energy storage will be necessary and most cost-effective for utility ratepayers, and in which timeframes, is still to be determined Expected revenues for investors based on the and critically important information for the benefits provided by storage systems are Commonwealth’s policymakers and utility 3 difficult to predict. Quantifying the value regulators, ISO-NE, prospective energy streams of energy storage would storage
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