“No other policy in play right now” could be “more immediate or more impactful” than a ‘standalone’ Investment Tax Credit (ITC) in the US for energy storage, the CEO of the national Energy Storage Association has said.
Energy-Storage.news spoke with Kelly Speakes-Backman, head of the ESA, for a wide-ranging feature interview. Speakes-Backman said that energy storage right now is enjoying “extremely strong, bipartisan support, from Congress, from our Department of Energy and other administrations such as the Department of Commerce and Environment Protection Agency (EPA).”
One of the reasons why storage is enjoying cross-party support in what appear to be divided times, is that there is growing recognition of the role batteries and other storage can play in creating an efficient, affordable and sustainable grid, the ESA CEO said. Congress will debate the matter this month.
“Energy storage is there to integrate intermittent resources like solar and wind and help enable our grid to get cleaner – of course – but it’s also there for grid operators to improve the efficiency of the grid, to add more resilience.”
At the moment, energy storage projects are eligible for the solar ITC – itself the subject of strong stakeholder advocacy and lobbying at the moment – but only if installed simultaneously and co-located with the solar power generation.
ESA CEO Kelly Speakes-Backman referred to analysis firm Wood Mackenzie Power & Renewables latest quarterly US Energy Storage Monitor report, which highlighted that a storage ITC could boost forecasted installation figures by 2024 by 300MW each year (from 4.8GW to 5.1GW of predicted deployments).
“Frankly, it made sense at the very beginning to have these, the solar-plus-storage [ITC eligible projects]. But storage is applicable to so much more than just being coupled with solar now, that I think it’s important to create a level playing field. The same for solar, the same for CHP, geothermal, fuel cells, all the other technologies that enjoy independent, standalone ITCs, storage is at a point where it’s important that it be counted as a standalone asset,” Kelly Speakes-Backman said.
John Zahurancik, COO at ESS technology provider and integrator Fluence, said that “the oddity people are finding” is that if they put storage in with solar, the significant tax credit the project can get may drive the business case forwards, “but it also might drive me to put the storage in a place where it might not be as useful”.
“That solar facility might be in the middle of nowhere. It doesn’t put it in downtown Los Angeles, or New York City, or downtown Chicago, where I might really need a power source like that. If you give the same benefits to doing it [energy storage] as standalone, people can make the case on their own merits and it’s not about the rest of the renewable part.”
Zahurancik said that a storage ITC may not make or break an industry that is doubtless already growing anyway, but that “the real issue is whether or not it’s going to grow as quickly as it could – and do we want to capture the benefits more quickly?”
“There are benefits in reduced emissions, there are benefits in reduced [system] cost, sometimes those are very dispersed benefits. Our society gets the benefit each time one of these comes in, it’s sometimes difficult to get the benefit back to the person spending the money. So the ITC substitutes for that,” Fluence COO Zahurancik said.
Out of the shadow of solar
“I think it would help to accelerate the market, if only observing what it did for the solar industry, when the solar ITC was first introduced,” Philippe Bouchard, senior VP for business development at zinc cathode battery energy storage manufacturer EOS Energy Storage said.
“We’ve long advocated for a policy framework that allows energy storage to compete on a fair basis with other types of generating and / or transmission and distribution assets, that’s kind of where batteries are unique. We don’t generate electrons and we don’t move electrons from point A to point B, we simply store and provide them at different points of time and you can layer all sorts of value added services on top of that. You can see that the market is growing enormously in the policy framework as it is today, but I think it [a standalone storage ITC] could accelerate that growth and help,” Bouchard said.
“Right now, the way that storage is becoming economic and why you see a lot of solar-plus-storage [in the US] is because it’s basically embedded in the solar PPA price,” Andy Tang, VP for energy storage, solar and integration at Wartsila, said.
“But that has some limitations because you have to make sure that most of the electrons come from the solar panels. I think that this is a place where the role of government to help advance an industry and create a modern power system could be really helpful.”
In a market environment of positive policy steps such as regulator FERC’s Order 841, which instructs grid operators to recognise the multiple benefits of energy storage, the recent US$1.4 billion Senate Bill and Better Energy Storage Technology (BEST) Act which pledged support for R&D and deployment and less positive, such as the recent imposition of 25% tariffs on imported lithium-ion battery products and other goods from China, the storage ITC could add a sort of protective layer of certainty to investment in energy storage, ESA CEO Kelly Speakes-Backman said.
“As we’re working through these regulatory hurdles, and working to unlock the value of storage, there is a bridge that we are looking to walk over,” Speakes-Backman said, with the storage ITC serving as that bridge.
“All we’re looking for is to be accounted for, equal to solar and the other technologies.”