Dec 2nd 2015 | Posted in State by Peter Partheymuller

Energy storage mandate to serve as pilot for other states

puc_logo2In June, the Oregon state legislature passed a law requiring the state’s two largest electricity providers to have a minimum of 5 megawatt hours (MWh) of energy storage in service by Jan. 1, 2020.

The law is significant, industry leaders say, because it will provide guidance for how regulators should value various energy storage technologies. It also allows for any type of storage technology without favoring one over the others. That means that anything from batteries to flywheels to thermal storage options are included. The shrinking cost of batteries, though, does give that technology a boost. The Oregon project will give energy storage companies interested in doing business with government nationwide guidance on what to expect in the future.

Officials with the Oregon Public Utility Commission (OPUC) will spend 2016 determining procedures for the electric companies. The OPUC needs to have those procedures in place by January 2017. The electric companies, in turn, will need to present their proposals to the commission by January 2018. In addition to the flexibility in terms of storage technologies, the law allows the electricity providers to pitch a single storage system or multiple systems. That could be useful because experts have suggested that true cost savings will likely come from a combination of methods rather than just one.

The question of value is one that dogs the industry, because it has not yet been able to identify what exactly that means due to the nature of such a new technology. Among the issues is the fact that there is still uncertainty regarding the reliability of energy storage technologies. Can stored energy provide more than just patches to an electric grid? One energy storage company official has said that it’s necessary to know “the service the storage provides to the system.” The value lies in being able to rely on that service for more than short bursts, she explained. “Is it a 15 minute duration or a four hour duration? And what are the charging-discharging requirements?”

The significance of that can be explained a bit by the difference between a megawatt (MW, the measurement of energy produced) and a megawatt hour (the measure of energy discharged over a period of one hour).

“A 5 MW storage battery capable of storing 50 MWh could supply 5 MW to the grid for up to 10 hours (5 MW X 10 hours = 50 MWh),” one industry consultant said. “Whether 5 MW can be sustained for a second, a minute, an hour or a day makes a very large difference.”

These are the types of questions that the Oregon mandate will help industry officials answer. The law directs the OPUC to “examine the potential value” of energy storage in six areas. Those include deferred infrastructure investment, reduced need for adding generation capacity for times of peak demand and improved transmission or distribution system reliability.

The answers Oregon comes up with will be of interest to state regulators and utilities executives nationwide. They will no doubt also provide public-sector contracting opportunities for interested companies. To discover where those might come, contact SPI‘s team of procurement experts.