April 18, 2019: A plan that made batteries eligible for state energy efficiency incentives in Massachusetts, US, should be considered by other states, according to a report published by the Clean Energy Group on April 4.
The state’s Department of Public Utilities approved its three-year energy efficiency plan — which sets energy saving targets, including programs for energy storage and demand management technologies — on January 29.
In terms of financing, Massachusetts’ $2 billion commitment to the plan over three years is second only to California’s $1.4 billion per year, and ahead of New York’s $450 million per year plans.
The report, Energy Storage: The New Efficiency ― How States Can Use Efficiency Funds to Support Battery Storage and Flatten Costly Demand Peaks, was written in response to the plan and covers the process the state made to finalize it.
The report explains how the state has expanded the goals and definition of energy efficiency to include peak demand reduction, and showed that customer-sited battery storage could be used for demand management.
Report author Todd Olinsky-Paul, a project director with CEG, told ESJ the plan was more about cost reductions than decarbonizing the power supply. The state’s demand charge rates equal those in California, with commercial customers in the state paying $20kW-$30kW.
“The main two drivers have been resiliency and cost savings,” he said. “There is some emission reductions that it can achieve with storage by flattening peaks and ridding the state of oil and diesel peaker plants, but that is a long term outcome.
“It’s also about expanding that to think about efficiency. I hope other states follow Massachusetts on this.”
Olinsky-Paul said: “One of the key findings is that the old definition of efficiency needs to be updated.
“As more renewable energy is deployed, reducing peak demand becomes more important. Battery storage can do this, while traditional efficiency measures can’t.
“States need to expand their efficiency plans to embrace peak demand reduction and the new technologies, like battery storage, that can accomplish it.”
Lewis Milford, president of CEG, said: “Storage is now a technology that deserves early stage funding support, a trend that other states should follow to bring down their energy costs and bring more customers into this emerging storage market.”
Incentives outlined in the plan include: offering five-year performance-based incentive commitments to customers installing new storage projects used for demand services during administrator-called ‘events’ such as peak shifting and back-up power.
The report notes that batteries are seen as a better option than traditional demand dispatch technologies such as peaker plants.
There will also be incentives for C&I (Commercial & Industrial) storage systems offering variable load reductions during peak demand times.