2017 is over, almost. So it's time to set that year aside like a stranded asset, and move on to the next big thing. Namely, 2018.
For this week's edition of Storage Plus, I'll describe what I see as the key trends that will shape this sector in the coming months.
New allies
Storage needs to compete on economics, and there's no getting around that. But the industry could gain from forging new alliances with stakeholders that have overlapping interests.
Environmental justice is a logical place to start, because storage is well equipped to tackle the environmental damage that often falls more heavily on poor or minority populations. Activism around environmental justice in Oxnard, California, coupled with clean energy advocacy, has already succeeded in stalling the final approval for a new gas plant in that community this fall.
The city had long been saddled with power plants and industrial sites along its share of the California coast. Desire to reclaim an area for the local community animated the resistance. But the history of differential impacts didn't change the fact that the local grid needs a reliability boost in the next few years.
That's where storage came in: it offered the alternative that the community needed to convince regulators the gas plant was unnecessary. Storage produces no onsite carbon or particulate emissions, and can be dispersed throughout a community, so it wouldn't hog the shoreline the way the plant would.
Crucially, the California ISO determined that storage could fulfill the technical requirements that the Puente gas plant was designed to serve. Now, a new RFO is in the works for the coming months, letting the storage industry compete to provide a cost-effective alternative.
Another opportunity awaits in New York City, where researchers have documented that decades-old peaker plants contribute to morbidity and mortality in neighborhoods with disproportionately high concentrations of poor and minority residents. The city has a desperate need for local capacity, due to broader transmission constraints, and has been relying on outdated equipment that lacks modern air-quality controls.
Batteries can handily provide distributed local capacity without the deadly emissions. So far, a robust alliance between community activists and the New York storage industry hasn't materialized, but the two stand to benefit greatly by cooperating.
Storage developers offer a specific, technically feasible alternative to the grid assets that create localized pollution. Community activists can provide testimony in favor of storage and pressure politicians to look more closely at the technology. This holds true across many cities in many states, and represents a significant untapped opportunity.
New market alert
California remains the undisputed hub of storage activity, with a few faint lights on the horizon. 2018 promises more substantial demand in a handful of other states.
New York: Governor Andrew Cuomo finally signed the storage target bill, and the state has already begun a storage roadmap. On top of that, the Public Service Commission chided utilities in March for not doing more to deploy storage, and ordered each utility to build two energy storage projects by the end of 2018. Sunrun just announced that its BrightBox product is now available to customers on Long Island. The company is pursuing the resilience pitch for an area that's been battered by hurricanes and polar vortices in recent years.
Massachusetts: This state finalized a storage target over the summer with a goal of 200 megawatt-hours by 2020. That didn't immediately spark a wave of deployments; the state only counts 4 megawatts and 7 megawatt-hours of advanced energy storage installed so far. But an early vision of things to come has emerged with Green Charge's 3-megawatt/6-megawatt-hour system to manage system-wide peaks for Holyoke Gas & Electric. CEO Vic Shao told me that project kicked off a wave of interest, and many more municipals could benefit from this approach. The state just dispatched $20 million in grant funding for 26 projects totaling 85 megawatt-hours, so more work is on the way.
Puerto Rico: The hurricane relief effort has included work by all the big names in solar and storage. Expect more of the small-scale projects to power emergency responders, water treatment and other critical infrastructure. As time passes, the island will develop a better sense of how to rebuild the grid in a big way. AES has already floated a vision of interconnected, clean-powered microgrids.
Oregon: The state has a diminutive 5 megawatt-hour goal for 2020, but Portland General Electric has proposed 39 megawatts including storage paired with solar, sited on the transmission and distribution grids, placed in microgrids and tucked into 500 homes for a utility-controlled battery pilot.
Arizona: This state has been active even without a government mandate, as the regulated utilities jostle over who can produce the most innovative storage projects. Arizona Public Service recently called for more than 500 megawatts in its latest long-term plan. So you can bet there will be plenty more storage fun in the sun.
Resilience becomes more than a buzzword -- maybe
Nothing sharpens the focus on disaster planning like an unending spate of actual disasters.
This year's hurricanes, earthquakes, floods and fires have stoked an interest in keeping the lights on in the face of calamities. In Puerto Rico, that has already led to dozens of solar-plus-storage project deployments to shore up critical infrastructure. But, as Emma Foehringer Merchant documented on the fifth anniversary of Hurricane Sandy, even that disaster hasn't spurred much actual change on the grid.
“A lot of money has been allocated, but not many of the microgrids have actually been built with post-Sandy funding,” GTM Research analyst Colleen Metelitsa noted in that story.
Grid edge technology has come a long way in the last five years, and prices have steadily fallen. The industry is better positioned now to respond quickly, if regulators and policymakers will let them.
With the right stakeholder buy-in, 2018 could be the year that resilient microgrids proliferate in storm afflicted regions. Wires utilities may pursue selective undergrounding of troublesome wires and hardening of other vulnerable grid assets. Storage is likely to play a key role in keeping these mini-grids running. The playbook already exists -- it's just a matter of execution.
The fruits of consolidation
As I discussed in my 2017 reflections, we saw a wave of storage acquisitions by larger international energy and equipment companies.
Next year we'll see the results of that. Look for more ambitious projects and geographical scope from the likes of Demand Energy, Green Charge, Greensmith, Younicos and more.
Several of the buyers have assembled the components for a full stack of energy services business. Entities like Enel and Engie have the ability to cover solar, storage, demand response and energy management.
Those are treacherous waters, if the experiences of GE and Edison Energy are any indication.
That said, a persuasive insight drives these endeavors: that energy investments make more sense in a holistic vision than as separate, siloed purchases. You don't need to oversize your solar if you have a right-sized battery, and you don't need as much solar or battery if you reduce your load through efficient energy management. The trick is to make this concept work as a business when you combine many disparate products and companies under one banner.
Potential upside in federal turbulence
Federal policy developments slammed the solar industry with unexpected crises this year. The Suniva trade case and Rick Perry's crusade to pay more for coal and nuclear power are still underway at the time of writing.
Storage managed to escape largely unscathed by those pitfalls. Indeed, the turbulence in Donald Trump's Washington could end up benefiting the storage industry.
One route would be the elusive infrastructure bill. Trump is rumored to be releasing "a detailed document of principles" by the end of January, Bloomberg reported.
There's plenty of reason to doubt a grand compromise on infrastructure will happen next year, especially after a partisan tax cut reduces revenue and bloats the deficit. If it does happen, though, grid infrastructure will be fair game, and storage could cut in on the action.
That will require some savvy maneuvering in Washington, but the technology performs well on the administration's favored goals of reliability and resilience, and can avoid more expensive upgrades that would strain the budget.
The Department of Energy's push to reward reliability so far has focused on helping out coal and nuclear plants. If that effort gets blocked by the Federal Energy Regulatory Commission, or changed to something more compatible with competitive wholesale markets, storage might find a way into that conversation as well.
