Batteries Included: Incentivizing Energy Storage

AuthorLindsay Breslau - Michael Croweak - Alan Witt
PositionAll three authors were Sustainability Law Student Research Fellows within the Program on Law and Sustainability at Arizona State University's Sandra Day O'Connor College of Law. This Article was researched and written under the supervision and guidance of Professor Troy A. Rule as part of the Sandra Day O'Connor College of Law's Sustainability ...
Pages29-39
29Spring 2017
batterieS incluDeD:
incentivizinG enerGy StoraGe
Lindsay Breslau, Michael Croweak, & Alan Witt*
AbstrAct
Distributed Energy Storage (“DES”) technologies that
allow households and businesses to store substantial
amounts of electricity on site are rapidly advancing
and could soon have dramatic impacts on the nation’s electricity
generation, transmission, and distribution markets. These tech-
nologies could provide numerous benefits, including enhanced
energy security, grid stability, and greater support for renewable
generation technologies, but several obstacles are slowing their
adoption throughout the country. Among these obstacles are
stubbornly high manufacturing costs and the potential impacts
of DES development on utilities and the traditional energy regu-
latory framework. Fortunately, policymakers in California, New
York, Hawaii, and some other states are beginning to proactively
address these challenges through an innovative array of pro-
grams, consortiums, partnerships, and regulations designed to
incentivize more widespread adoption of DES systems. This Arti-
cle explores these states’ approaches and offers suggestions for
improving upon them to better incentivize DES development and
clear the way for these important technologies to revolutionize
electricity generation and distribution in the twenty-first century.
IntroductIon
Someday, in the not-too-distant future, household distributed
energy storage (“DES”) units may be as common in American
homes as water heaters or washing machines. Homeowners will
use these devices to store electricity that they purchase from the
electric grid or generate from their own rooftop solar panels.
During times of day when electricity demand is high and per-
kilowatt-hour prices are elevated, such as in the evening when
many utility customers are at home cooking dinner, those with
DES systems will use energy stored on these systems rather than
buying it from the grid. To encourage this practice, utilities will
implement time-of-use pricing structures that more closely cor-
relate the price of grid-supplied electricity to its true real-time
cost based on supply and demand. Utilities may likewise allow
customers to sell energy stored on their DES units back to the
grid at different rates based on the time of day. When storms
knock out power lines, the electricity stored in DES units will
help to keep lights on and refrigerators running until full elec-
tricity service is restored.
Obviously, several advancements in technology and policy
must occur and numerous obstacles must be overcome before
this futuristic vision of DES can become reality. So what can
policymakers do now to help accelerate the transition toward
more distributed storage of electric power? This Article explores
this complicated question and argues that many of the policy
strategies that have successfully driven the impressive expan-
sion of rooftop solar energy markets in recent years could serve
a similar function in promoting the growth of DES. Part I of
this Article provides background information on DES and its
potential applications within businesses and homes. Part I also
highlights some shortcomings of the existing United States elec-
tricity distribution system and describes how DES could help
to address these shortcomings and provide additional economic
and other benefits. Part II describes several current impedi-
ments to the widespread deployment of DES, including unit
manufacturing costs, utility opposition, consumer reluctance,
and environmental concerns. Part III examines recently-adopted
policy strategies in New York, California, and Hawaii aimed at
increasing the market penetration of DES and suggests that valu-
able lessons can be learned from these states and certain other
countries’ experiences in promoting new energy technologies.
Part IV then offers specific policy proposals for hastening the
development and deployment of DES in the coming years.
I. the PotentIAl PoWer of des
Energy storage technologies could someday play a critically
important role in the United States electricity system. Arguably,
no other area innovation has greater potential to make the
nation’s electricity grid more reliable, flexible, and cost effective.
The array of impacts that energy storage, and particularly DES,
could have on the nation’s electric utilities is awe-inspiring and
potentially more transformative than any other energy technol-
ogy that has emerged in recent decades.
Energy storage technologies on a variety of scales can offer
substantial value both on and off the grid.1 For instance, com-
panies are already beginning to build large scale energy stor-
age projects with the goal of addressing grid-related problems.
California’s Tehachapi Wind Energy Storage Project, paid for
by Southern California Edison Company and federal stimulus
funds, features 32MWh of lithium-ion battery energy storage
specifically designed to stabilize the grid and integrate renew-
ables with the grid, among other objectives.2
DES products with higher capacities than home DES units
but less storage capacities than utility-scale energy storage
* All three authors were Sustainability Law Student Research Fellows within the
Program on Law and Sustainability at Arizona State University’s Sandra Day
O’Connor College of Law. This Article was researched and written under the
supervision and guidance of Professor Troy A. Rule as part of the Sandra Day
O’Connor College of Law’s Sustainability Law Research Clusters project. The
authors wish to thank other students working within the Clusters project for their
invaluable input on early stages of this Article.
30 Sustainable Development Law & Policy
projects also have great potential as components of micro-grid
systems. Micro-grids are comparatively small, self-sustained
energy grids that have independent means of generation and
transmission.3 Energy systems on a growing number of military
bases and university campuses make use of micro-grid technolo-
gies.4 Micro-grids do not need to be connected to the larger grid
system. Communities that install a micro-grid might plausibly
be able to go “off-grid”—or disconnect from the larger national
grid system—if they generate enough electricity to meet their
energy needs. On the other hand, maintaining a connection to
the grid might nonetheless be desirable for such communities
to provide an additional source of back-up power for emergency
situations. Regardless, as photovoltaic solar and other renewable
energy technologies become more cost-effective, micro-grids
may begin to make more and more sense for geographically
remote communities.
Although the potential applications of utility-scale and com-
munity-scale energy storage are substantial, this Article focuses
on smaller-scale, DES technologies. In contrast to utility-owned
energy storage systems ( “Centralized Energy Storage”), DES
units are installed and operated in individual homes, businesses,
and industrial sites. Owners of DES units can choose to integrate
them with renewables such as rooftop solar or can use them in
conjunction with traditional power sources delivered through the
electric grid. When combined with a rooftop solar panel system,
a DES unit allows a homeowner to store excess energy produced
during the day for use at night or any other time that the home’s
energy demands exceed its supply. And DES systems could be a
cost-justifiable investment even for homeowners without rooftop
solar if their electric utility offers a progressive time-of-use pric-
ing plan5 and storage net metering6 program. Homeowners under
such plans and programs could potentially purchase electricity
from the grid when the price is low and store it on the home’s
DES unit for use or resale later when the electricity price is high.
Many businesses are also beginning to install DES to help
meet their electricity needs and reduce their operating costs.
For example, Target has announced plans to install Tesla’s
100kW battery block, known as the Powerpack, in some of its
stores instead of a generator to better meet its energy needs.7
Likewise, the wine producer Jackson Family Wines plans to use
Powerpacks to store energy for use during periods of the wine-
making process that require a higher amount of energy.8 Like
homeowners, business owners can also use DES in combination
with rooftop solar panels or as a way to draw energy from the
grid and store it for when their energy needs spike.
a. leGacy GriDS anD their ShortcominGS
The physical infrastructure of the United States electricity
system of “legacy” grids is traditionally viewed as serving three
main functions: generation, transmission, and distribution.9 The
majority of the nation’s electricity generation occurs at power
plants that use fossil fuels, such as coal and natural gas.10 To meet
daily and annual fluctuations in consumer demand for electricity,
an electricity system operator must decide which power plants
to run at a given time.11 Legacy grids currently do not handle
these fluctuations in demand very efficiently. The introduction of
renewable energy generation to legacy grids only frustrates the
efforts to accommodate changes in demand.
1. BasiC fEaturEs of lEgaCy PowEr griDs
The nation’s legacy electric grids utilize different types of
electricity generation facilities, also known as power plants, to
meet the public’s changing demand for electricity. Power plants
fit into four main categories for purposes of grid load manage-
ment.12 Each category serves a specific purpose and has both
benefits and drawbacks. Baseload plants have low fuel costs
but cannot be turned on and off quickly.13 Variable “must run”
plants, including wind and solar energy systems, tend to involve
lower marginal costs of production, but wind and solar plants
can only operate during times that renewable resources are read-
ily available.14 Intermediate load plants, usually old coal plants,
are more expensive to operate.15 Although peaking plants have
high operating costs, they can be taken on and offline quickly.16
They are typically natural gas or diesel plants.17
The transmission system consists of power lines that trans-
port electricity from generating plants to consumers.18 These
high-voltage lines must maintain a voltage within certain narrow
limits to meet customer demand without overstraining the grid
system.19 To keep the voltage within these limits, the system
operator relies on “spinning reserve” and “operating reserve” to
add electricity to the grid quickly when it is needed.20 “Spinning
reserve” refers to generating plants that are being run and are
ready to be switched onto the network immediately.21 Operating
reserve plants generally can be brought on or off the network
within about ten minutes.22
Electricity distribution systems consist of substations,
poles, wires, and underground lines that deliver electricity from
high-voltage transmission infrastructure to retail customers.23
Substations within these systems reduce the voltage of power
coming from transmission lines so that it can travel along
lower-voltage lines into homes and businesses.24 An entity that
operates an electricity distribution system typically has a duty to
serve all customers in its service area.25
2. shortComings of lEgaCy griDs
Although legacy grids have served the nation well for a long
time, they suffer from several major shortcomings. First, for
these grids to function properly, the grid operator must maintain
a strict balance between energy supply and consumer demand.26
This delicate balancing act requires that the grid quickly respond
to changes in demand as well as to problems caused by equipment
failure.27 Since legacy grids do not have an easy way to store
energy, changes in demand must be addressed by increasing or
decreasing energy generation almost instantaneously.28 Lega cy
grids presently handle this problem by relying on peaking plants,
spinning reserve, and operating reserve. Spinning reserve29 and
operating reserve are inefficient because they generate power
that is wasted until it is needed to meet an increase in demand
on the grid.
A second shortcoming of legacy grids is that their current
design requires that they be capable of supplying a quantity of
31Spring 2017
electricity through the grid equal to the greatest amount of energy
that the system’s consumers ever demand at any one time.30 In
other words, this “peak load” requirement necessitates that the
grid be built to accommodate a level of electricity demand that
it only rarely actually experiences. Peaking plants run during
these periods of highest demand.31 While the adaptive capacity
of peaking plants makes them valuable tools for system opera-
tors, they are costly to operate and discharge more pollution than
base-load plants.32 Peaking plants are one of the most inefficient
parts of the legacy grid but are currently a necessary part of the
legacy grid and a critical means for it to meet the public’s peak
demand for energy.33
Lastly, “must run” generating facilities, including some that
use renewable energy, create additional challenges for legacy
grids. As renewable energy technologies improve, more and
more utilities are supplementing their fossil-fuel fired genera-
tion facilities with renewable generation facilities such as wind
farms and utility-scale solar energy plants.34 Renewable energy
generation facilities can exacerbate grid operators’ challenge
of balancing supply and demand because of their intermittent
nature.35 Unlike fossil fuel plants, which can be turned on and
off, wind and solar energy facilities are considered “must-run”
technologies whose outputs are controlled by forces of nature
rather than grid operators. This can create problems because
renewable energy systems continue producing energy regardless
of whether there is demand for it.36
b. how DeS can benefit leGacy GriDS
The potential benefits of widespread DES implementation
for power generation and distribution are tremendous. DES has
the potential to address many of the current shortcomings of
legacy grids. It can make them better equipped to handle peaks
and dips in electricity demand. For consumers, DES can provide
increased energy security during storms and other threats to
legacy grids. From an economic standpoint, there are likewise
many potential benefits for the United States as a whole if the
nation were to become a world leader in the DES industry.
1. how DEs Can makE griDs morE EffiCiEnt
The implementation of DES can address the major supply
and demand issues that grid operators currently face. Among
other things, DES can make it easier for grid operators to bal-
ance supply and demand, thereby reducing utilities’ reliance
on spinning reserve, operating reserve, and peaking plants. As
described above, energy storage technologies have the capacity
to store excess power when grid supply exceeds demand and
then send that energy back onto the grid later in a very short
response period.37 Some utility-scale energy storage facilities
already store energy generated by baseload plants and discharge
that energy when it is needed.38 If DES systems were more
widely used and coupled with technologies such as net metering
and smart meters, grid operators could draw stored energy from
customers’ DES units to achieve similar effects.
DES also has the ability to smooth consumer demand for
electric power. Rather than relying solely on electricity bought
from the grid in real time, consumers with DES systems can
draw from their own stored electricity when it is needed. In par-
ticular, this practice could help grid operators during times of
peak energy use by shaving off the peak of the demand curve.
Ideally, after enough customers install DES, peak demand will
be so reduced that utilities will no longer need to build and oper-
ate as many peaking plants. And by enabling grid operators to
better adapt to real-time fluctuations in supply and demand and
by smoothing consumer demand for power, DES systems could
make it easier to incorporate must-run renewable energy gener-
ating facilities to the grid.
2. how DEs Can EnhanCE EnErgy sECurity
More widespread use of DES could additionally improve
energy security by better protecting electricity customers against
storms and other episodic threats to grid infrastructure. If a trans-
mission line or some other important element of grid infrastruc-
ture suffers substantial damage, many customers downstream of it
can be left without electricity until the infrastructure is repaired.
Utility-scale energy storage only helps address this problem if the
infrastructure damage occurs between the generation facility and
the energy storage facility. If the damage occurs downstream of
it, however, customers can still be affected. DES can offer a more
reliable protection against these situations, providing precious
power while neighbors suffer from blackouts or brownouts.
In a broader sense, these additional benefits of widespread
use of DES could improve communities’ resiliency and ability
to aid recovery in the wake of natural disasters. In recent years,
huge storms have caused substantial power outages and left
large numbers of households and businesses without power for
extended periods of time. For example, after Hurricane Katrina
hit the Gulf Coast on August 29, 2005, over one million people
were left without power.39 Superstorm Sandy left 8.5 million
people without electricity service40 and prompted a surge in
home generator sales in the months that followed.41
Someday, DES could be a key component of storm and
emergency planning. Homes and businesses with installed DES
systems have a source of back-up power to use during power out-
ages. When a powerful storm threatens a community, those citi-
zens with DES units could anticipate the need for excess energy
and charge their DES units with energy from the grid. Then, if
the power goes out, energy from the DES units could serve criti-
cal electricity needs until damage to the grid is repaired.
3. how DEs Can sPur EConomiC growth in thE
unitED statEs
The United States economy could also benefit if the nation
becomes a leader in the development of DES technologies.
Businesses in the United States would not need to rely on
imports of storage units, and the United States could even put
itself in the position of exporting such technologies. States could
similarly boost their economies if they became leaders in this
emerging industry.
Germany provides a good example of a country that stra-
tegically used policies and regulations to become a leader in an
emerging renewable energy technology. The policy regime that
Germany put in place to govern and incentivize the development
32 Sustainable Development Law & Policy
of wind energy has been so successful as to render Germany “a
world leader in renewable energy development.”42 Germany’s
policies created a stable market for wind energy that gave inves-
tors the confidence required for rapid investment and develop-
ment.43 This in turn resulted in a highly competitive market. As
a direct result of the stable marketplace that Germany was able
to create, Germany is among the top exporters of wind turbines
in the world.44
Because the United States already has the lead in the DES
industry,45 the creation of a stable market for batteries through
policy should be a high priority. By adopting a regulatory
scheme that incentivizes DES and creates a stable market for
it, the United States can cement its position as a top worldwide
manufacturer of DES units. Among other things, this would be
a boon for job creation and potentially allow the United States
to become an exporter of DES technology. The United States
has already demonstrated its desire to become a world leader in
clean energy,46 and the establishment of a strong DES industry
supports that goal.
II. obstAcles to the WIdesPreAd AdoPtIon
of des
DES technology has tremendous potential to fix the short-
comings of the nation’s legacy grid system, increase energy
security, and give the United States a lead role in an important
emerging industry. One company in the United States has
already introduced DES units to the market,47 and several more
companies are working to get their DES products ready for
consumers.48So what is the problem? Why incentivize DES if so
many, including utilities and consumers,49 are already on board?
There are several reasons why strengthening incentives for
electricity users to invest in DES seems like a justifiable policy
strategy. First, DES is an emerging technology that has not yet
fully realized economies of scale capable of substantially reducing
per-unit manufacturing costs.50 Secondly, citizens generally must
pay high up-front costs to purchase and install DES units and are
unlikely to earn a positive return on that investment for several
years.51 Third, utilities are increasingly resistant to policies that
promote distributed electricity generation, and this opposition
could similarly stall the growth of DES. Lastly, the manufacture
and disposal of DES units can create environmental harms and the
magnitude of those harms my increase and become substantial as
DES technologies become increasingly common.52
a. hiGh manufacturinG coStS
Because the energy storage industry is new and has not yet
achieved an economy of scale, its manufacturing costs are still
relatively high. Although public and private research on energy
storage has been conducted for decades,53 only recently has
there been signs that the energy storage industry is ready to take
off.54 Manufacturing costs remain the greatest barrier to getting
this fledgling industry fully off the ground.55 Growth in DES has
been particularly slow. Out of the $128 million in battery storage
installed in 2014, only 1% of the storage capacity was installed
in homes.56 Moreover, many DES technologies are emerging
technologies that are still in their early development stages.57
In order to drive down the price of DES units for custom-
ers, development and manufacturing costs must be decreased.
According to one prominent researcher, prices for home batter-
ies will need to drop 75% in order for DES to become widely
adopted.58 Once DES reaches an economy of scale, the price for
DES units will naturally drop. In the interim, however, policies
that provide a financial incentive to the industry will need to
be put in place. These policies will need to specifically include
DES and not just provide incentives for energy storage generally.
b. conSumer buDGetary conStraintS
The high manufacturing costs for DES units result in prod-
ucts that are still prohibitively expensive for many consumers. A
property owner must make up-front payments to purchase and
install a DES unit. While the price point for home-level DES
units is falling, it is still much higher than would be sensible
for an average household’s purchase.59 For example, the Tesla
Powerwall, a battery for residential energy storage, costs $5,500
for the 14 kWh model.60 A consumer who wants a DES unit
may rationally decide to delay purchasing one until prices come
down. It would be many years before a homeowner could recoup
such an investment through savings on the electricity bill alone.
Additionally, a homeowner who does not also have distributed
energy generation will not save money on the electricity bill if he
or she pays a flat rate for electricity.61
c. utility oppoSition
Some utilities fear that the widespread introduction of
Distributed Renewable Generation (“DRG”) and DES will
complicate their role in maintaining the grid and decrease their
revenues.62 When customers install DRG and DES, utilities
lose revenue as those customers buy less energy from the grid.
However, utilities must still make investments in grid infrastruc-
ture.63 Therefore some utilities argue that customers who utilize
DRG but remain connected to the grid for a secure source of
backup power do not pay their fair share of the grid’s infrastruc-
ture costs, which inequitably shifts costs to non-DRG users.64 In
other words, utilities argue that those customers who can gener-
ate and store their own energy unfairly shift the costs of grid
maintenance to those who rely wholly on energy from the grid.
Utilities’ resistance is complicated by the fact that DES
is emerging side by side with another technology, distributed
renewable generation (“DRG”). Unlike the automobile, which
largely displaced the older system for transportation and technol-
ogy like tramcars,65 DES and DRG augment, rather than replace
legacy grids. However, many utilities have proven to be resistant
to DRG introduction.66 These policies also have the potential to
slow the adoption of DES.
Utilities also harbor existential concerns related to DRG
and DES reducing their revenue. As customers install DRG,
particularly rooftop solar panels, they generate their own energy
and thus purchase less electricity from the grid. However, these
customers remain connected to the grid and still benefit from
this connection when they purchase power at night. Because
utilities pay for the installation and maintenance costs of grid
infrastructure through a charge incorporated into the price
33Spring 2017
per kWh of energy they sell67, utility companies argue that
customers who have DRG do not pay their fair share of grid
maintenance costs68. As solar panels and other DRG become
more prevalent, utilities will have an increasingly difficult time
affording the maintenance of the grid, and may fail to operate
profitably. DES further exacerbates this situation, as homes with
both DRG and DES may be able to generate and store enough
electricity to meet all of their energy needs without purchasing
anything from the grid.
Many utilities have already enacted or proposed policies to
discourage the adoption of DRG. If these policies achieve their
goal of discouraging DRG, they will also hinder the adoption
of DES. In Arizona, the Arizona Public Service Co. (“APS”)
attempted to increase its monthly fee for customers who have
rooftop solar panels from about five dollars to about twenty-
one dollars.69 The backlash against the proposal was so strong
that APS ultimately decided to withdraw its request for the
fee increase. However, APS asked the Arizona Corporation
Commission to study the costs of serving solar users70 and is
expected to bring a new rate case in June 2016.71
Utilities have also demonstrated opposition to the implementa-
tion of net metering.72 In Nevada, the Public Utilities Commission
recently voted to increase the service fee for solar users in one
utility’s service area and to decrease the amount of credit that cus-
tomers in that area can receive from net metering.73 These changes
were met with huge opposition. Two large companies that install
rooftop solar decided to pull their businesses out of Nevada, caus-
ing at least 650 people to lose their jobs,74 and solar advocates
have filed a lawsuit against NV Energy for violating the Nevada‘s
fair trade statutes and engaging in consumer fraud, negligence
and unjust enrichment.75 While the commission and NV Energy
argue that solar customers unfairly shift costs for infrastructure
maintenance to non-solar customers, the solar industry contends
that the commission should consider the benefits of solar.76 The
opposition to the changes culminated in referendum proposed by
a solar group that would change the language in Nevada’s statutes
so that the changes would become illegal.77
D. concernS about environmental impactS
Another obstacle to incentivizing DES may be its poten-
tially harmful impacts on the environment.78 As these potential
harms become more apparent, stakeholders are less likely to
support DES development, especially given the appeal of DES
as an eco-friendly technology.79 By identifying these potentially
harmful impacts early, governments can better prevent the harm
and resolve environmental concerns.
Potentially harmful environmental impacts of DES may
include issues with the storage technology’s manufacture and
disposal.80 DES disposal practices can harm the environment
when technologies are discarded in landfills instead of recycled.
Because mining is often cheaper than recycling, producers are
less likely to back recycling efforts.81 A recent study indicated
that particles released by a compound rapidly being incorporated
into lithium batteries may harm natural bioremediation organ-
isms that break down and clean up pollution.82 Accordingly,
researchers have stressed the importance of keeping discarded
lithium ion batteries out of landfills, where they can leak toxic
materials and contaminate the environment.83
III. exIstInG PolIcy strAteGIes for
IncentIvIzInG des
Several state and local entities have already created success-
ful policies to incentivize energy storage. In fact, the energy stor-
age market grew by 185% in 2015, from $134 million in 2014
to $381 million in 2015.84 By 2020, energy storage is projected
to be a $2 billion dollar market.85 This growth is attributed to
have “come largely from a few states and a few big trends” like
California, New York, and Hawaii.86 This Section will provide an
overview of several policies that have been used to incentivize
energy storage.
a. State anD local DeS incentive proGramS
The following case studies provide examples of how states
and utilities can use ex ante regulation to incentivize consumer
adoption of DES. California, New York, and Hawaii, motivated
to meet their Renewable Portfolio Standards and address con-
cerns about grid reliability, have all enacted sweeping policies
for energy storage.87 Vermont utility Green Mountain Power
became the first utility to offer DES directly to its customers
when it entered a partnership with Tesla to sell or rent DES bat-
teries.88 Though the ex ante regulations and policies in each case
study are unique, they are all helpful examples of methods that
can be used to successfully address the barriers hindering the
emergence of DES.
1. Californias inCEntivE Program
California’s Self Generation Incentive Program (“SGIP”)
is one of the oldest and better developed distributed generation
programs in the United States.89 It was established in 2001 to
incentivize, by payments to SGIP participants, new distributed
generation, which could save transmission and distribution
infrastructure costs for utilities that could in turn be passed on
to ratepayers.90 In 2009, as part of its effort to meet greenhouse
gas reduction goals, the California Energy Commission and Air
Resources Board expanded the SGIP to include energy storage
technology as part of its incentive program.91 Under the emerg-
ing technologies category, the SGIP provides advanced energy
storage with a $1.46/W incentive.92 This means that, based on a
portion of generation from a project’s on-site load, participants
using advanced energy storage can be entitled to up-front and
performance-based incentives (“PBI”).93 The program is avail-
able to customers of specific utilities.94 After implementation
of the program, SGIP saw a dramatic increase in the number of
DES applications received.95 California state officials believe
that these projects will “deliver benefits through numerous value
streams including increased customer reliability, reduced cus-
tomer demand, reduced peak energy consumption (arbitrage),
and balancing of intermittent renewable resources such as solar
photovoltaics and wind.96
California also established aggressive energy storage pro-
curement targets in order to promote energy storage. In 2010,
34 Sustainable Development Law & Policy
the California legislature enacted AB 2514, which instructed
the California Public Utilities Commission (“CPUC”) to create
an energy storage procurement target by 2013.97 Shortly after
the bill’s enactment, the CPUC established a procurement tar-
get mandating the addition of 50MW of energy storage within
Southern California Edison territory to meet the long-term
energy needs of the Los Angeles Basin.98 In 2013, CPUC
issued a rule that required the state’s public utilities to procure
1,324MW of energy storage in total by 2020.99
Regulatory programs like these incentivize both utilities
and consumers to implement DES by providing price signals to
the market. Consumers are incentivized by the potential to save
money on their electricity bills. Consumers are provided PBI,
are charged a cheaper rate, and can purchase less energy from
the grid. Utilities are incentivized to implement DES to retain
and attract customers seeking these benefits from other utili-
ties. A utility’s failure to participate would make energy more
expensive as consumers relocated their businesses or homes for
cheaper and greener energy elsewhere.100
2. nEw yorks EnErgy storagE Consortium
The state of New York has also adopted zealous goals for
increasing its use of renewable energy and for becoming a leader
in the energy storage movement. New York’s “state policies,
incentives, and access to private capital” make it “well posi-
tioned to develop its clean energy resources and industry market
share.”101 In 2010, the state created the New York Battery and
Energy Storage (NY-BEST) initiative, a consortium of manu-
facturers, academic institutions, utilities, materials developers,
and other groups that are interested in energy storage technolo-
gies.102 The majority of the consortium members are based in
New York.103 The mission of NY-BEST is to promote growth
of the energy storage industry and establish New York State as
a leader in the industry.104 To achieve this mission, NY-BEST
plans to facilitate connections amongst stakeholders, speed up
the commercialization of energy storage technologies, educate
policymakers, and promote New York manufacturers and intel-
lectuals.105 In 2014, it awarded $1.4 million to several companies
that are performing battery storage research and development.106
NY-BEST also oversees a battery storage test center.107
The New York State Energy Research and Development
Authority (“NYSERDA”) supports the energy storage industry
by administering proposals and providing funding for various
energy projects.108 The agency funds projects which address
New York state and national energy challenges, including those
related to energy storage.109 NYSERDA also established a
Green Bank that connects private funding with renewable energy
projects in need of financing.110 New York’s efforts to foster the
energy storage industry could potentially provide widespread
benefits for customers, utilities, and the state’s economy.
3. hawaiis ClEan EnErgy Program
Hawaii recently adopted ambitious legislation to promote
renewable energy that will encourage the use of both rooftop solar
and DES. On June 8, 2015, Hawaii Governor David Ige signed a
bill that called for the state’s electricity sector to transition entirely
to renewable energy in 30 years.111 The governor, a trained elec-
trical engineer, spearheads the program with the cooperation of
Hawaii’s major utility (“HECO”) and U.S. military bases on the
islands.112 The program is fitting for Hawaii because of the state’s
prolific sunshine and isolation from the U.S. mainland’s energy
grid. Hawaii cannot import energy from neighbors in the same
way that mainland states do. Its geographic isolation has caused
an increase in the cost of traditional energy and propelled it to
be proactive in pursuing energy self-sufficiency goals. Hawaii’s
unique conditions make it a prime laboratory for finding cost-
effective solutions to legacy energy systems.
Part of Hawaii’s cost-effective strategy is a combination of
tariff schemes and energy storage implementation. Utilities in
Hawaii have recommended two tariffs to cope with the addition
of renewables to the grid. The first, known as a Self-Supply
tariff, is for customers who want to self-supply their own solar
electricity on-site. The Self-Supply tariff limits the amount of
electricity these users are allowed to send back to the grid and
does not allow users to be compensated for the electricity they
send to the grid.113 However, these customers do become eligible
for an expedited review of their self-supplying installation, a
process often delayed for months by the utility.114 The second
tariff, known as a Grid-Supply tariff, gives customers a lower
retail electricity rate.115 In addition, customers who choose the
Grid-Supply tariff are allowed to send solar generated electricity
back to the grid for compensation at the wholesale rate.116
An integral part of Hawaii’s strategy has been to implement
DES. In 2013, Hawaii experienced a boom in distributed energy
generation from renewables like solar panels, throwing the grid
into chaos as safety was jeopardized and circuits overloaded.117
To solve this problem, HECO implemented a major utility-
run DES scheme. HECO secured the help of DES specialists
from California who signed up the utility’s customers to install
lithium-ion batteries and DES software.118 Hawaii’s new energy
policies strike a balance between maintaining the grid and pro-
moting renewables. In addition, by actively promoting DES,
Hawaii has helped to resolve both grid security and consumer
affordability concerns.
4. a utilitys PrivatE PartnErshiP in vErmont
Another utility that has promoted rather than resisted the
addition of DES to its customers’ households is Green Mountain
Power (“GMP”) in Vermont. In 2015, GMP became the first util-
ity to sell DES units directly to its customers. GMP advertises
the Tesla Powerwall battery on its website, touting it as “an
opportunity to save money by storing energy when it costs less
off-peak” as well as a backup energy source that can be used dur-
ing a blackout.119 In addition, GMP states that it will use energy
from the batteries during peak demand periods in order reduce
transmission costs and lower prices for consumers.120 The utility
offers three different payment options. Customers can buy a bat-
tery, rent a battery and participate in a utility-shared access pro-
gram, or buy a battery and participate in a utility shared access
program in exchange for a monthly credit on their energy bill.121
35Spring 2017
The shared access options pose a potential win-win situa-
tion for a utility and its customers. The utility is allowed to bor-
row energy from its customers’ batteries to meet demand during
peak periods, lessening the utility’s reliance on peaker plants
and long-distance transmission. Customers can receive credit
on their monthly electricity bill for electricity stored on their
batteries that is used by the utility. The rental option benefits
customers who cannot afford to purchase a battery or who are
renting their property. GMP’s partnership with Tesla, if it is a
success, proves that utilities and DES companies share enough
common interests to form mutually beneficial relationships and
peacefully coexist.
Iv. strenGthenInG IncentIves for des
The right mix of laws and policies could help to acceler-
ate the manufacture and installation of DES so that it becomes
widely used and competitive in the market. The following pro-
posed laws and policies for DES will help achieve four general
goals. First, they will increase financial support for research,
development, and manufacturing of DES technologies so that
they can achieve an economy of scale. Second, they will create
incentives that increase demand for DES technologies. Third,
they will prevent the implementation of policies that aim to
slow or prohibit the use of DES. Finally, they will address the
environmental harms associated with DES. Some of the policies
will take advantage of incentives that are already in place for
renewables, and others will introduce new ideas that are specifi-
cally tailored to DES’ unique role in the energy system.
a. SubSiDy proGramS
Since its inception, the United States energy industry has
been heavily subsidized. Energy subsidies are desirable because
of the sector’s high up-front capital costs and the signif icant
social benefit that electricity provides. DES is no exception to
this pattern of costs and benefits, so it is an attractive candidate
for government subsidy.
1. rEsEarCh anD DEvEloPmEnt grants
Since energy storage technologies are still in their nascent
stages, government funding for research could potentially be a
justifiable means of helping these technologies to more rapidly
mature and reach markets. The federal government is already
significantly funding energy storage technology research that
will surely help toward this goal. In the United States Energy
Storage Competitiveness Act, Congress allocated about $2.7 bil-
lion to the Department of Energy (“DOE”) to support research
and development of advanced storage technologies.122 The Act
specifically orders the Secretary of the DOE to “conduct a basic
research program on energy storage systems to support electric
drive vehicles, stationary applications, and electricity transmis-
sion and distribution.”123
Government funding for research on DES technologies
could be highly effective in helping to get these consumer-
oriented technologies market-ready. One research program, the
Joint Center for Energy Storage Research, headquartered at
DOE’s Argonne National Laboratory has a goal of developing
technologies that store five times more energy than current
batteries do at a fraction of the cost.124 At the Laboratory, the
Argonne Collaborative Center for Energy Storage Science is
working together to do research to solve energy storage prob-
lems.125 Another federal program that is already in place is
the Advanced Research Project Agency–Energy (ARPA-E).
ARPA-E provides funding for short-term research projects and
claims to choose only those projects that have potential to make
“transformational impacts.”126 It is critical that Congress contin-
ues to provide funding for these and other DOE basic research
initiatives until their objectives are met.
Of course, federal research grants have both advantages and
drawbacks as a means of incentivizing investments in energy
storage innovation. Unlike federal tax credits, which can har-
ness market forces and incentivize private investment, federal
programs such as ARPA-E arguably empower federal off icials
to pick the winners of emerging technologies. This top-down
approach could be detrimental if the government picks the wrong
winners and does not give viable competing technologies oppor-
tunities to develop. Still, so long as they are managed carefully,
these programs can have merit as means of driving valuable new
technologies.
2. tax CrEDits anD rEBatEs
Tax credits and other subsidy programs designed to attract
private investment are another important potential means of
driving DES innovation and adoption. A relevant example
of how federal tax credits were successfully used to promote
innovation in a renewable technology is with the wind and solar
industry. In order to spur growth in the wind and solar energy
sector, the federal government implemented policies to make
wind and solar energy projects more financially attractive for
private investors. The Obama administration’s 2009 American
Recovery and Reinvestment Act (“ARRA”) created two large
tax credits for renewable energy: the Production Tax Credit
(PTC) and the Investment Tax Credit (ITC). The PTC provides
a per kilowatt-hour tax credit for renewable energy generated
at qualified facilities.127 The ITC gives companies a tax credit
for a specific percentage of their investment costs in renewable
energy technology.128 For solar and small wind turbines, the tax
credit is 30%.129 The tax credit “encourages private investment
in renewable technologies because it reduces the risk companies
face by offsetting their federal taxes by the amount they invest in
the emerging technologies.”130 The tax credits were considered
to be critical to the growth of the renewable energy industry.131
The federal government has created similar tax credits for
the energy storage industry. ARRA implemented the Advanced
Energy Manufacturing Tax Credit, a 30% investment tax credit,
“to support domestic manufacturing of energy storage” tech-
nologies.132 It is important that this tax credit is applied to DES
technology and not just large-scale energy storage technology.
The tax credit should continue for as long as investment in DES
technologies remains risky. If implemented wisely, it could pro-
vide critical support to the DES industry, like the ITC and PTC
36 Sustainable Development Law & Policy
did for the solar and wind energy industries. State and municipal
tax credits and rebates can similarly spur demand for DES.
b. financinG aSSiStance proGramS
Governments can also help to incentivize the installation of
DES systems by providing financing assistance through property
tax programs or other means. For example, a municipality could
conceivably allow qualifying property owners pay either zero or
little money up-front for the purchase of a DES unit and then
pay for the unit over time through added charges on property
tax bills.
Such property tax schemes, which some jurisdictions have
used to help promote rooftop solar installations and other clean
energy,133 could help more citizens interested in acquiring DES
units to do so. These schemes sometimes include benefits such as
100% financing on qualifying improvements and tax deductible
interest.134 Where these property tax schemes already exist, DES
can be explicitly added as a qualifying clean energy technology.
Jurisdictions that do not already have these property tax schemes
can look to existing programs for guidance in implementing
one. The financing can be made available to both residential and
commercial properties.
Another way governments can incentivize the installation of
DES is through property tax exclusions. The state of California
created a property tax exclusion for certain qualifying active
solar energy systems.135 A state could similarly exclude from
property tax assessments the value of DES units so that the pur-
chasing a DES unit does not increase a citizen’s property tax bill.
Although this method does not directly finance the DES unit, it
encourages consumers to adopt DES by removing the obstacle
of increased property taxes.
Financial assistance for consumers could be a straightfor-
ward way to jumpstart adoption of new DES technologies. These
programs are especially beneficial at this time because very few
people have installed DES units, and many are not even aware
of the technology’s existence. As more consumers adopt DES
and DES prices decrease, these programs can be discontinued
or faded out.
c. utility-level policieS
Utilities can support the growth of DES by establishing
policies and rate structures that benefit the customers who
adopt it. Utility policies such as time-of-use pricing and net
metering can send price signals to customers that encour-
age them to install DES.136 The prohibition of rate structures
and fees that negatively impact customers who install DRG
and DES will provide certainty for consumers and promote
the adoption of these technologies. Ultimately, utilities must
embrace, and not fight, these emerging technologies in order
for their use to become widespread.
1. timE-of-usE ElECtriCity PriCing
One of the most promising ways that utilities can promote
DES unit installations is by making time-of-use power pricing
plans available to their customers. Under time-of-use pricing
plans, customers pay higher per-kWh electricity rates when
overall demand is high and lower rates when demand is low. For
example, if demand is usually highest during the evening hours,
the utility increases the price of electricity during those hours.
Such plans send valuable price signals to customers, encourag-
ing them to change their habits so that they use fewer electrical
appliances during high demand hours.
Customers with DES units can benefit significantly under a
time-of-use pricing scheme, particularly if it is implemented in
conjunction with net metering.137 When customers without DES
units opt in to a time-of-use pricing scheme, they are incentivized
to change their energy consumption patterns by shifting energy
use to off-peak times when energy is less expensive. However,
few customers want to completely stop consuming electricity
during peak hours. For example, a refrigerator cannot be turned
off for hours without food spoiling, and sometimes dinner needs
to be cooked at a certain hour. DES helps to address this prob-
lem. When a customer with a DES unit opts in to a time-of-use
pricing scheme, that customer can buy all of his or her power at
the low off-peak price and then use power from the battery when
the on-peak price is in effect. In addition to potentially reducing
the customer’s energy bill, under this scenario, the time-of-use
pricing plan lowers the customer’s demand on the grid to zero for
the on-peak period.
Of course, as DES units become more commonplace, time-
of-use pricing could gradually become a less potent means of
driving DES investment. As more customers install DES units
and opt in to time-of-use pricing schemes, the demand for grid-
supplied electricity will likely become more smooth across
the day and year, and the gap between off-peak and on-peak
electricity prices will likely decrease. Accordingly, time-of-use
pricing schemes should be seen as a temporary measure. They
are crucial for incentivizing the installation of DES units and
alleviating the peak load on the grid in the short term, but they
are not well suited to serve as a permanent policy strategy.
It is possible that some people will oppose time-of-use pric-
ing, even as a temporary measure. One could argue that time-of-
use pricing disproportionately impacts vulnerable populations,
such as the elderly, who may have less flexibility in changing
the times they use electricity. If such opposition occurs, utilities
could consider making time-of-use pricing optional at first to
allow customers the time to change their habits and to purchase
DES units. Once customers become accustomed to time-of-use
pricing, utilities can make it mandatory. Utilities may choose to
provide exceptions for certain customers if it is found that time-
of-use pricing would have adverse effects on vulnerable or low-
income populations. Alternatively, states can make tax credits or
subsidies available to address this problem.
2. storagE nEt mEtEring Programs
Net metering is a utility billing approach that allows a
customer to receive credit for electricity he or she sends to the
grid.138 Under a net metering program, a utility installs a two-
way meter in a customer’s home that measures electricity com-
ing into and out of the home.139 The customer is credited for the
electricity that the home sends back to the grid and is charged
37Spring 2017
only for the “net” electricity used.140 For example, a residential
user with more energy in her home’s battery than she needs can
offset the home’s electricity bill by sending excess energy back
to the grid.
Net metering schemes are also essential for enabling utility
shared access programs. Utility shared access programs allow
utility companies to both store electricity on and take electric-
ity from their customers’ DES units. To be effective, the shared
access program must allow the utility to store and take electricity
without approval from the customer. The amount of electricity
stored or taken should be limited to a certain percentage of the
DES unit’s capacity so that the customer can enjoy the benefits of
the DES unit at all times. Utility companies should be required
to compensate customers for electricity they take and for the
ability to store excess electricity customers’ DES units. Rather
than developing a separate scheme for this access, the simplest
method of ensuring fairness for customers is to use net metering
regulations to govern this relationship.
It should be noted that some negative consequences of util-
ity shared access programs may arise for customers with both a
DES unit and rooftop solar panels. For example, utilities could
force customers to purchase some amount of energy during
the morning when demand for power is low but the sun is also
shining. This reduces the amount of solar energy that customers
could store, potentially forcing customers to sell excess energy
to the grid sooner in the day and at a lower price than they oth-
erwise would. Similarly, if the utility company buys too much
power from customers during an evening peak period, there may
not be enough sunshine remaining in the day to charge their
DES units enough to power their homes overnight, forcing them
to buy energy overnight. For these reasons, utility companies
should be allowed to gain access only to a percentage of any
given customer’s energy reserves.
As time-of-use pricing incentivizes widespread adoption
of DES units and gives way to a real-time pricing scheme, net
metering regulations will be critical to the way that the real-time
energy market functions. When there are enough DES units
installed with smart technology that enables them to buy, sell,
and store energy, net metering regulation will determine the way
that those transactions occur and the costs imposed on them.
3. DEs-friEnDly ratE struCturEs
Another important means of incentivizing greater adoption
of DES technologies is to ensure that utility rate structures do not
deter customers from purchasing DES devices.141 For example,
suppose that a customer is considering whether to purchase a
rooftop solar system and a DES unit. The customer will have
to pay up-front costs and will want to know how long it will
take to recover those costs. If the utility imposes special monthly
charges on the customer’s account or charges higher rates to cus-
tomers with DES and DRG, it will take much longer for those
customers to recover their initial investment, and many custom-
ers may decide that such an investment is not cost-effective. The
pace of growth for DRG and DES will depend in large part on
whether utilities are permitted to charge special fees for custom-
ers who use these technologies.
Although utilities have not yet proposed special fees or rates
for customers who install DES, such charges are a possibility
in the future. AS DES systems become more widespread, some
utilities may feel threatened by DES because of its potential to
help some customers exit the grid entirely or purchase far less
electricity from the grid. Widespread adoption of DES could
help utilities in the long run as it becomes more widespread and
smooths the demand curve. However, in the interim, utilities will
still rely costly peaking plants and likely want some custom-
ers paying the high prices when demand is high. Accordingly,
policymakers should be vigilant not to allow utilities to charge
special fees or otherwise penalize customers who install DES
technologies.
D. StoraGe portfolio StanDarDS
Renewable Portfolio Standards (“RPS”) have been highly
successful at speeding up the installation of renewable energy
generation facilities in the United States.142 Analogous Storage
Portfolio Standards (“SPS”) could be used similarly to acceler-
ate the adoption of DES.
RPS policies generally obligate retail electric suppliers to
install enough renewable generation facilities so that a certain
percentage of all of the electricity that that utility generates
comes from renewable resources.143 Some RPS policies go
further by taking measures to actively incentivize the develop-
ment of a particular type of renewable resource. For instance,
some RPS policies require that some percentage of the renew-
able generation requirement be filled by a particular type of
technology such as solar or wind.144 Policies in other jurisdic-
tions multiply the credit toward RPS goals for certain favored
renewable technologies.145
A successful SPS scheme should impose requirements
based on a percentage of the grid’s overall electricity capacity
within a given utility service area. Each state should determine
how much energy storage capacity is necessary to achieve its
desired improvements in grid security. Policymakers could
choose either of two methods to decide what amount of energy
storage to require on the grid.
The first method is to require a certain percentage of the
utility’s total generation capacity to be matched by an equal
amount of storage capacity. One great advantage of this method
is its simplicity. Utility companies are aware of their overall
generation capacity, and this knowledge is typically available to
the public,146 so the quantitative requirements would be easy to
determine and to track as storage capacity is installed. Fixing the
required amount of storage to a percentage of overall generation
capacity also allows for the storage requirement to grow with the
energy grid.
The second method is to require an amount of storage capac-
ity to be installed equal to a certain generation capacity over a
specified period of time. This could be the amount of energy
generated by a particular peaking plant on its annual peak day.
This method is distinctly better for phasing out old or inefficient
38 Sustainable Development Law & Policy
generation plants, especially peaking plants. Installation of an
amount of storage equal to the highest per-day output that a peak-
ing plant must produce would allow for the utility company to
decommission the peaking plant and replace its output with stored
energy. Measures like this could be adopted on a per-plant basis
alongside development of renewable energy generation facilities.
It is possible in theory to mix these two methods within the
same policy. The policy could begin by setting a baseline storage
capacity requirement per the first method. Once that baseline
or a predetermined portion of it has been met, the SPS could
expand per the second method so as to more rapidly decommis-
sion outdated fossil fuel burning power plants. Each state should
consider both methods when adopting policy to create the SPS
regime most favorable to its individual energy situation.
An SPS policy that merely requires a certain percentage of
energy storage on the grid would heavily favor the installation of
centralized energy storage over DES. If SPS policies strictly fol-
low in the footsteps of their RPS progenitors, the burden would
fall on the utility companies to install energy storage. Utility
companies installing storage have little incentive to distribute
that storage across their service area, much less within custom-
ers’ homes, when they could install all of it in just a few locations
and under their own control. Of course, DES arguably increases
grid security and resilience more than centralized energy storage
does because it spreads energy storage throughout a utility terri-
tory rather than confining it to just a handful of locations.147 SPS
policies that incentivize utility companies only to install central-
ized energy storage miss the opportunity to use DES to further
strengthen the grid.
Relying on utilities to install the nation’s energy storage
capacity is also arguably undesirable from a cost perspective. To
fund the purchase and installations of that storage capacity, utili-
ties would need to increase the rate which they charge to their
customers148. Utility companies already complain that when
too many customers operate rooftop solar panels, the resulting
loss in revenue makes it more difficult for them to afford the
maintenance necessary to operate their existing infrastructure.149
Raising electricity rates to pay for energy storage could be politi-
cally difficult and suboptimal from a policy perspective.
Policymakers could address these challenges and ensure
that DES makes up a significant proportion of all energy storage
development by including DES “carve-out” provisions in SPS
policies. The carve-out provisions would require that some mini-
mum percentage of the total energy storage capacity installed to
meet SPS goals be in the form of residential or commercial-scale
DES systems. Establishing such SPS policies and DES carve-
outs alongside utility shared access programs150 could drive
rapid growth in DES development. At the same time, it would
still give utilities the control they need to smooth energy demand
and ensure grid stability.
Incentivizing utility customers to purchase their own DES
units is arguably a more appealing method of funding the addi-
tion of storage capacity to the grid. Shifting the cost of the major-
ity of energy storage development to customers who choose to
purchase their own DES units could allow for the grid’s storage
capacity to grow sustainably and with less significant impacts on
electricity rates. In conjunction with net metering, time of use
pricing, and utility shared access programs, such an approach
could incentivize efficient growth in DES development while
giving grid operators the ability to utilize that increasing energy
storage capacity to smooth energy demand.
e. reGulationS to aDDreSS DeS’
environmental harmS
The potential environmental harms associated with
DES151 can largely be prevented through ex ante regulations.
Policymakers can proactively protect against environmental haz-
ards associated with DES technology by creating a robust recy-
cling infrastructure for the materials used in DES. Regulations
carefully designed to accomplish this can ensure that DES
retains its eco-friendly appeal and positive public image.
The federal government has established specific guidelines
for responsible practices that protect the environment from haz-
ardous waste. The Environmental Protection Agency (“EPA”)
has developed hazardous waste recycling regulations to promote
and require reclamation of materials which are safe to dispose of
in the environment.152 These regulations can be extended to DES
and can require that specific guidelines are followed for DES
technology disposal and recycling. Responsible practices would
cover the transport, treatment, storage, disposal, recycling, and
corrective action for hazardous DES materials.153
State governments could likewise hold DES producers
accountable for environmental impacts. States can mandate that
DES producers help to fund a recycling infrastructure for DES
systems. States could require that manufacturers fund the collec-
tion and recycling of DES batteries, advertise such programs to
consumers, and report on their progress.154 States could impose
civil penalties on DES producers who violate these requirements
and increase the penalties for repeated offenses.155 Although it
may be less expensive in many instances for producers to mine
new materials for DES rather than recycle them, subsidies or tax
credits for DES recycling could provide the additional incentive
needed to get producers to lead in recycling efforts.156 In sum-
mary, governments can and should take proactive steps to ensure
that the growth of DES is not stunted by concerns about the
potential environmental harms associated with DES technology.
f. promotinG the uSe of DeS in remote areaS
As DES makes micro-grids and DRG more effective, some
rural areas may eventually be able to go “off-grid” and rely solely
on energy they generate and store on site. Policies that encour-
age energy independence for remote areas through the use of
DES and other technologies could ultimately benefit utilities and
customers alike. Utility customers could have a more resilient
system that was less susceptible to blackouts or brownouts, and
utilities would save money by not needing to service proper ties
in remote areas. In addition, utilities would be spared from hav-
ing to build costly new transmission lines to rural areas with few
customers to foot the bill.
Two plausible candidates for eventually going off-grid are
small rural communities and many of the nation’s remote national
39Spring 2017
parks. Some rural electricity customers are often serviced through
utilities that must build dozens of miles of transmission and dis-
tribution lines just to connect them to the grid. Eventually, state
public utility commissions might consider policies that allow
utilities to refuse rural customers if they can show that an off-grid,
renewable energy system is adequate and cost-effective.
Like rural customers, national parks are often located in
remote areas that must be serviced by utilities.157 The National
Park Service (NPS) operates and maintains over 600,000 struc-
tures in almost 400 national parks.158 Rather than relying wholly
on utilities, NPS could determine which parks were capable of
using DRG and DES technology or micro-grids and begin work-
ing to transition park infrastructure to be off-grid.
conclusIon
DES technologies have tremendous potential to smooth
peaks in energy demand, increase grid security, and address
the intermittency problems associated with distributed solar
power, all while making the entire energy system more efficient.
However, several roadblocks continue to slow the growth of DES
markets in the United States. Fortunately, a wide range of policy
tools is available to help drive the development and adoption of
DES technologies.
Among the most promising policy strategies for driving
DES growth are time-of-use pricing structures, storage net
metering programs, tax credits programs, and SPS programs
with DES carve-outs designed to incentivize utilities’ support
of DES installations within their territories. Analogs to most of
these policy strategies have already done much to drive astound-
ing growth in distributed solar energy throughout the United
States over the past decade. Adapting them to promote DES is
the next obvious step toward helping the nation’s legacy grids
and increasingly outmoded electricity structure transition into a
more sustainable and modern system.
enDnoteS
1 See intl enerGy aGency, technoloGy roaDmap: enerGy StoraGe 5
(2014), https://www.iea.org/publications/freepublications/publication/Technolo-
gyRoadmapEnergystorage.pdf.
2
See u.S. Dept. of enerGy, Southern california eDiSon company
tehachapi winD enerGy StoraGe proJect (May 2014), http://energy.gov/sites/
prod/files/2015/05/f22/SoCal-Edison-Tehachapi-May2014.pdf.
3
See Mariya Soshinskaya et al., Microgrids: Experiences, Barriers and
Success Factors, 40 renewable & SuStainable enerGy revS. 659, 661 (2014)
(describing that the basic concept of microgrids, despite a variety of definitions,
“is to aggregate and integrate distributed energy resources (DER) . . . distrib-
uted storage (DS) and loads . . .”).
4
See About Microgrids, microGriD inSt., http://www.microgridinstitute.
org/about-microgrids.html (last visited Apr. 17, 2017) (“Typical examples [of
campus microgrids] serve university and corporate campuses, prisons, and mili-
tary bases.”); see also Niles Barnes, Smart Microgrids on College & University
Campuses, aaShe bloG: campuS SuStainability perSpectiveS (May 18, 2011,
12:30 PM), http://www.aashe.org/blog/smart-microgrids-college-university-
campuses (providing examples of specific universities that employ microgrids
to manage electricity on campus).
5
See discussion infra Section IV.C.1.
6
See discussion infra Section IV.C.2.
7
See Rich McCormick, Tesla’s Huge New Batteries Will Store Power for
Amazon, Target, and Others, the verGe (May 1, 2015), http://www.theverge.
com/2015/5/1/8527699/tesla-battery-amazon-target-for-renewable-energy.
8
Id.
9 Joel b. eiSen et al., enerGy, economicS anD the environment 66 (2015);
see also u.S. Dept of enerGy office of electricity Delivery & enerGy
reliability, uniteD StateS electricity inDuStry primer 6 (2015), https://www.
energy.gov/sites/prod/files/2015/12/f28/united-states-electricity-industry-primer.
pdf (defining the traditional structure of the electricity grid) [hereinafter Dep’t
of Energy].
10
See id. at 67.
11
See id.
12
See id.
13
See id.
14
See id.
15
See id.
16
See id.; see also Dep’t of Energy, supra note 9, at 12 (explaining that peak-
ing plants can be taken on and offline quickly).
17
See eiSen, supra note 9, at 67; see also Dep’t of Energy, supra note 9, at 12
(explaining that although natural gas-fired plants have higher fuel costs, they
also have a faster start up time).
18
See eiSen, supra note 9, at 68.
19
See id.
20
Id.
21
Id; see also Dep’t of Energy, supra note 9, at 90 (defining “Spinning
Reserve” as Electric generating units connected to the system that can automati-
cally respond to frequency deviations and operate when needed”)
22
Id.
23
Id. at 69; see also Dep’t of Energy, supra note 9, at 13 (diagramming the
electricity supply chain) (particularly Figure 12).
24
See id; see also u Dep’t of Energy, supra note 9, at 15 (providing back-
ground on substations’ role in linking transmission and distribution networks).
25
See id.
26
Victoria Johnston, Storage Portfolio Standards: Incentivising Green Energy
Storage, 20 J. of envtl. & SuStainability l. 25, 47 (2014) (describing the
limitations of the current electricity system).
27
See id. at 50.
28
eiSen, supra note 9, at 67.
29
See Glossary of Terms Used in NERC Reliability Standards, n. am. elec.
reliability corp., (Apr. 4, 2017), http://www.nerc.com/pa/stand/glossary%20
of%20terms/glossary_of_terms.pdf (defining “Spinning Reserve” as “Unloaded
generation that is synchronized and ready to serve additional demand”).
30
See eiSen, supra note 9, at 74.
31
See Johnston, supra note 26, at 47; see also Glossary, u.S. Dept of
enerGy info. aDmin., http://www.eia.gov/tools/glossary/index.cfm?id=P (last
visited Feb. 2, 2016) (defining “[p]eak load plant” as “[a] plant usually housing
old, low-efficiency steam units, gas turbines, diesels, or pumped-storage hydro-
electric equipment normally used during the peak-load periods”).
32
See eiSen, supra note 9, at 74 (“When demand is modest, the cheapest gen-
erators are able to satisfy it, resulting in modest prices. However, during peak
periods, all generation resources—even the most expensive—must be called
upon.”); see also u.S. Dept enerGy info. aDmin., supra note 32; see also N.
Am. Elec. Reliability Corp., supra note 30.
33
See Dep’t of Energy, supra note 9, at 12 (“[N]atural gas-fired plants . . .
have faster start up times but typically higher fuel costs.”).
34
See, CPUC Improves and Streamlines Self-Generation Incentive Program,
cal. pub. utilS. commn (Sept. 8, 2011) http://docs.cpuc.ca.gov/PUBLISHED/
NEWS_RELEASE/142914.htm; see also Marianne Levelle, After Hurricane
Sandy, Need for Backup Power Hits Home, nat. GeoGraphic (Oct. 29, 2013)
http://news.nationalgeographic.com/news/energy/2013/10/131028-hurricane-
sandy-aftermath-need-for-backup-power/ (referencing a backup solar energy
project in Brooklyn, NY).
35
See Johnston, supra note 26, at 51.
continued on page 48

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