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US administration: Energy storage and other grid investments vital to security and resilience

US administration: Energy storage and other grid investments vital to security and resilience

US energy secretary Ernest Moniz.

Energy storage should be properly valued and supported at federal level in the United States, according to a government document analysing and evaluating energy policy released by officials of the outgoing Obama administration.

The Quadrennial Energy Review (QER), a directive ordered by the president in 2014, is on its second instalment, with the first instalment published in April 2015. Although the name implies it be published once every four years, the review’s task force’s work is ongoing and therefore published in these instalments. The documents are designed to inform policymakers and will therefore undoubtedly be on reading lists for President-elect Donald Trump’s incoming administration.

While the April 2015 instalment, titled “Energy, transmission, storage and distribution infrastructure” looked at pipelines, wires and other aspects of the whole energy network in the context of how it could be modernised “to promote economic competitiveness, energy security and environmental responsibility”, the latest instalment looks at these three key areas within the confines of the electricity sector. Titled “Transforming the nation’s electricity system”, the report projects out to 2040 and makes more than 70 recommendations that it says “must be implemented to optimise and modernise the electricity sector”.

Looking at electricity from generation to end use, the report lauds progress made in certain areas, such as the rapid growth of environmental technologies as an industry in the US, quoting that 1.6 million people are employed in this sector, raising revenues of US$320 billion and exports worth US$51 billion, according to 2015 figures. It also highlights that in the US, air pollution has fallen even as electricity generation has grown between 1970 and 2014.

Among other key findings, it also recognises the growing need for system flexibility as more variable generation from renewables is added to the grid, which is transitioning from controllable generation and variable load to variable generation. This requires better controllable load, the report states, and cites energy storage, along with fast ramping natural gas generation and demand response as among a “number of flexibility options”.

From an economic and industrial standpoint, the report finds that the proliferation and combination of distributed generation such as solar PV, smart home devices and electric battery storage is leading to new business opportunities, which it says will “require a wide array of skills”.

Recommendations

The QER recommends that the electricity system is viewed as a critical resource in terms of national security and that standards for reliability need to be upheld and reevaluated as necessary. The presidential office needs to be informed of potential security breaches, it says, through information collected by the Department of Energy (DOE).

It also recommends ongoing investment in grid modernisation, which it says could cost between US$350 billion to US$500 billion, projected out to 2040. Tax incentives for deployment of clean energy technologies are considered a significant part of this investment. Financing options for this grid modernisation process need to be increased, including a recommendation to expand the DOE’s existing loan guarantee programme to make it “more flexible to assist in the initial deployment of innovative grid technologies and systems”.

More programmes are needed, it says, to demonstrate innovative technologies, particularly for the benefit of utilities, which will be called on to invest in them over time, as well as for the benefit of would-be investors. This includes technologies which optimise and integrate distribution system technologies, of which energy storage is one, along with smart-inverter networks and dynamic protection schemes to manage reverse power flows, which are likely to be an increasingly important component of the distributed grid. Existing DOE programmes looking at energy storage, microgrids and other distributed technologies should be leveraged to provide technical assistance to these newer and expanded demonstrations.

Recognising the increasingly transactive nature of the grid, the QER states that the elements of a 21st Century electricity network should be properly valued. From state level down to local level, the QER also recommends that in building out capacity, federal assistance should be given where states and small utilities are confronted with the need to incorporate variable energy resources, energy storage, energy efficiency and demand response into their networks.

One difficulty with investing in energy storage is that it is often difficult to quantify its value and who should own or operate it. At national level the QER’s authors maintain that a Federal Advisory Committee should be created, to examine and advise on wholesale, retail rates and tariffs. This will include pricing mechanisms where utilities can recover costs of investments from ratepayers, it will also “evaluate and make recommendations where appropriate…on state and Federal roles in pricing and operation of distributed energy resources (DER), [energy] storage and microgrids” as well as the role of aggregators.

The report also recommends that incentives are provided for energy storage as a key aspect of energy security and resiliency, especially in light of expected extreme weather events. It remains to be seen how closely the incoming administration will scrutinise the QER, containing as it does further recommendations that include an increase in US and Mexican cooperation on reliability.