IEEE Electrification Magazine - September 2015 - 43

policymakers in Arizona, Colorado,
Connecticut, Iowa, Minnesota, New
Include Storage in
Jersey, New Mexico, Minnesota, and
Broader Context
Oregon have not yet taken policy
When Planning for
Stimulate the
actions but are demonstrating interthe Future
Storage
est with studies, working groups,
Market
Clarify Existing
workshops, and/or pilot programs.
Rules as They
Several states with high penetraApply to Storage
Demonstrate
Interest in
tions of distributed generation and
Storage
increased customer demand for storage paired with distributed generation
facilities are working to clarify and Figure 2. The hierarchy of possible state policy actions on distributed storage.
amend interconnection and net metering regulations to address energy storxx
design rate structures that send appropriate economic
age. For example, Hawaii, California, and New Jersey have all
signals to customers with energy-storage systems
sought, or are seeking, to clarify the application of their interxx
open up markets for ancillary services and demand
connection and net metering policies to storage systems.
response to distributed storage providers and aggregators
Other states have begun to move beyond just exploraxx
ensure distributed energy-storage systems have a clear
tion of energy storage and have elected to provide direct
path to interconnection and are treated fairly by state
stimulus to help facilitate the growth of the market. Califorinterconnection standards
nia's Storage Mandate, which requires investor-owned utilixx
address net energy metering opportunities for storage
ties to meet an overall energy-storage procurement target
systems
of 1.325 GW by 2020, is the most visible and ambitious polixx
consider distributed energy-storage solutions in the
cy aimed at stimulating the storage market to date in the
context of broader distribution planning efforts
United States. New Jersey, New York, Massachusetts, and
xx
coordinate with state authorities to ensure sufficient,
California have chosen to provide direct financial incentives
but not duplicative, oversight of energy-storage sysfor energy storage to stimulate the storage market. With the
tem safety.
exception of California's Self-Generator Incentive Program,
these programs are new and emerging, and the impacts on
Rate Structures
the overall storage market have yet to be measured.
Distributed storage developers have identified rate strucNew York, California, Massachusetts, and Hawaii are all
tures-specifically rates that provide energy-storage cusengaged in complex proceedings aimed to modernize the
tomers with the proper economic signals that enable
grid and plan for the future of the electricity sector. At the
them to offer services to the grid when and where they
heart of each of these proceedings are efforts to modify
are needed-as the most critical regulatory change needexisting policies to enable greater penetrations of DERs,
ed to help facilitate growth in the distributed storage marincluding energy storage. Not only do the proceedings in
ket. Current utility rate structures in most places make it
these four states seek to improve access to storage and
difficult to capture the full value that energy-storage sysbetter integrate it into the grid, but storage is also poised
tems can provide.
to serve as a tool to help regulators and utilities better
Time-of-use rates with sufficiently high differentials
integrate other DERs. Because each state is taking a somebetween on-peak and off-peak periods, designed to discourwhat different approach, the ultimate outcome of the
age energy use during peak periods, are a particularly
efforts being undertaken by these four states is likely to
important innovation in rates that could improve the ability
provide a variety of insights and potential policy
of customers with storage systems to reduce their electricity
approaches for incorporating increased amounts of storbills while helping to minimize the cost of providing peak
age into their respective distribution systems.
system capacity. Some utilities have already begun to create
Key Regulatory Considerations
special rates for electric vehicle owners that encourage
to Advance Energy Storage
them to charge during off-peak periods. The same methodWhile energy storage may be a challenging issue for regulaology could be applied to customers that have storage systors and policy-makers, changes in the electricity sector are
tems on their side of the meter.
now resulting in an increased interest in storage technoloFor commercial and industrial customers with high
gies and, thus, an increased need to address the issue prodemand charges and with sufficiently peaky load profiles, a
actively in the regulatory arena. We believe that there are at
properly sized energy-storage system can help simultaneleast six important considerations that regulators should
ously reduce strain on the energy grid and reduce their enertackle now to start developing an orderly deployment of
gy bills. As regulators evaluate demand charges in existing or
these new technologies, i.e., regulators should
new rate structures, they may want to consider how those
IEEE Electrific ation Magazine / S EP T EM BE R 2 0 1 5

43



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