US Energy Storage Needs National Standards and Regulations to Thrive Amid Clean Energy Transition: G

Industry insiders and other experts largely praised the agency’s recommendations but noted that its recent report omitted some key hurdles to adopting energy storage.

In a wide-ranging report, released March 30, the Government Accountability Office outlined some of the challenges facing energy storage and detailed the planning, regulation, and market changes necessary to promote its widespread use.

“No matter what we do, we will need more and more storage,” said Steven Low, the Frank J. Gilloon professor of computing and mathematical sciences and electrical engineering at Caltech. “The question is cost.”

The GAO developed several policy options and implementation approaches to help address energy storage’s challenges, including establishing road maps, creating a common set of rules, and standards for integrating energy storage into power grids, incentives such as loan guarantees and tax credits, and funding for research, and development.

Experts and industry insiders are generally supportive of the agency’s recommendations.

“Some of the challenges they list are absolutely valid and their policy recommendations are pretty solid,” said Leslie Ponder, director of advanced energy storage for Black & Veatch, a Kansas-based engineering, construction and consulting firm.

“The study recognizes outstanding issues related to regulatory hurdles that remain when building out storage and connecting to the grid,” Elise Caplan, vice president of regulatory affairs for the American Council on Renewable Energy, said in a statement.

However, even the GAO’s sweeping review of the nation’s energy storage needs misses some key issues, such as permitting, industry insiders and other experts said.

Bringing the price down

The primary barrier to widespread adoption identified in the report is cost, noted Lei Wu, a professor with the Electrical and Computer Engineering Department at the Stevens Institute of Technology who studies power system operation and energy markets. 

But that is improving.

The price of installing retail, non-residential energy storage in New York averaged $567 per kWh in 2022, according to an analysis by the state’s Department of Public Service and PA Consulting. Prices will naturally fall as the market for utility-scale energy storage matures, experts noted. Storage costs will decline by between $150 and $200 per kWh by the end of the decade, according to an estimate from Bloomberg NEF.

“Storage is like any other type of tech we’ve used before,” Wu said. “When it’s exponentially growing, the investment costs will keep decreasing, and that will promote usage.”

Creating regulatory standards

Also among the key hurdles identified by the GAO: The U.S. has no standard set of rules governing energy storage. Regulators have taken steps to address this problem. The Federal Energy Regulatory Commission, which regulates the regional transmission organizations and independent system operators that oversee wholesale electricity markets, issued order 841 in 2018 mandating the removal of barriers to energy storage. 

But “we don’t have one standard regulatory body that oversees the entire grid in the United States,” said Brian Bothwell, the GAO’s director of engineering and technology assessment.

A patchwork of sometimes conflicting rules on energy storage can create a labyrinth for utility companies to navigate, the GAO report found. California, for example, mandated energy storage with renewable energy projects, but many other states have not, and states vary in their energy storage targets.

Nationwide standards and a clear plan for integrating energy storage into a power grid would give utility companies and their financial backers the confidence to invest in the emerging technology, the GAO said. 

However, creating a standard set of energy storage rules across the nation is difficult in a country with three energy grids — in the East, West, and Texas — with different regulations. The Texas grid operates under much less stringent rules than the other two, said Severin Borenstein, faculty director of the energy institute at the Haas School of Business at the University of California Berkeley and a board member for the California Independent System Operator.

Written by:  Patrick Cooley, writer, for Utility Dive.