IEEE Electrification Magazine - September 2015 - 42

a recent report by the Interstate
Renewable Energy Council, Inc.
(IREC), this article identifies six nearterm considerations for regulators to
evaluate as they consider how to
deploy energy storage most effectively in their state.

Tracking and Valuing
Distributed Energy Storage

(a)
Figure 1. (a) Rooftop PV installations and (b) a PV inverter.

renewable generation can likely be done using existing
grid-management technologies and techniques. However,
as penetration levels of distributed renewables and other
DERs continue to increase, more significant regulatory
changes and modifications to the topology of the grid may
be necessary. For example, at certain penetrations, the
variability of renewable energy generation can create
planning challenges that may require the electricity system operator to obtain greater amounts of system
reserves to maintain the balance between generation and
load at all times. While utilities are adept at managing
some variability on the electric system, the introduction of
greater amounts of variable generation will require new
management techniques and technologies, many of
which will be dependent upon regulatory approval.
Among the technologies that can facilitate increased
deployment of renewable energy, distributed energy storage, in particular-i.e., storage systems interconnected to
the utility-owned distribution system, on either the customer's or utility's side of the meter-has the potential to
disentangle grid integration challenges while also providing valuable services to the grid and to energy customers.
Energy-storage systems have the potential to add value
across the full span of the electric system, from uses on
the transmission and distribution systems to customerside applications. While some storage technologies have
been marketable for years, and there already are limited
numbers of energy-storage systems deployed across the
electric system, a vastly greater number of systems are
currently under development, particularly in jurisdictions such as Hawaii, California, and the Mid-Atlantic,
which tend to have higher concentrations of renewable
energy deployment.
As states begin to consider how to deploy distributed
energy-storage systems, there will be a need for new regulations and markets to be created to facilitate the deployment of these technologies and to enable the greatest capture of their potential benefits. It is important for technical
as well as regulatory audiences to be aware of the changes
that will be necessary. Building upon research outlined in

42

I E E E E l e c t r i f i cati o n M agaz ine / SEPTEMBER 2015

Since the market for distributed energy storage is still in its infancy, there
is a significant need for regulatory
(b)
guidance and proactive policies to
ensure a smooth rollout of this technology. The states that take proactive
steps to establish the appropriate regulatory, market, and
technical foundations for DERs are less likely to experience
delays or market slow-downs as a result of integration
challenges. Accurately tracking and properly valuing the
benefits of distributed storage is critical to the short- and
long-term market growth of this promising technology,
while also having a significant impact on whether storage
technologies will be deployed in locations that maximize
those benefits for all potential beneficiaries.
Generally, there are between 17 and 28 storage services
or applications highlighted in the technical literature.
There is an extensive and rapidly growing body of
research addressing energy-storage applications, services,
and end-use benefits, which this article will not endeavor
to duplicate. Currently, for most energy-storage systems to
be cost-effective, especially in the organized energy markets, these systems often must be able to create revenue
or reduce costs through the provision of multiple services
or applications, spanning the energy value chain. This
aggregation of compatible, complementary applications is
called stacking. It is important to note that all services cannot be stacked together.

The State of the States on Energy Storage
U.S. state policymakers and regulators are beginning to
focus on the importance of distributed energy storage and
are using various approaches to begin aligning policies
and opening markets to enable energy storage to play a
significant role in the electricity system in the coming
years. As one might expect, the states where distributed
energy storage is being deployed are also the states taking
related policy and regulatory actions. The approaches
taken by states so far are varied in both the mechanisms
they use and the types of issues they attempt to address.
State policy actions on distributed storage generally fall
into one of four categories (see Figure 2).
Many states are just beginning to demonstrate an interest in energy storage and have begun taking exploratory
steps to evaluate the potential costs, benefits, functions,
and regulatory needs. For example, regulators and



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