Why US storage promises may not be fulfilled

By BEN COOK

  • Interconnection queues jeopardising US storage deployment 
  • 77% of projects waiting for connection don’t get built
  • Industry calling for ‘fast, efficient and cost-effective’ connection process

It’s anticipated that the introduction of the Inflation Reduction Act (IRA) will lead to a dramatic increase in the deployment of energy storage in the US.

It’s not hard to see why. The legislation made available $369 billion for clean energy projects, including storage. Unsurprisingly, expectations are high for the US storage sector.

Research company Bloomberg BNEF has been particularly bullish. It said the law would drive roughly 30GW/111GWh of energy storage build from 2022 to 2030. To put this in context, BNEF said last month that there would be an additional 13% of global energy storage capacity by 2030 – compared to previous estimates – primarily due to “ recent policy developments”, among the most notable of which was the IRA.

But BNEF did add a caveat. It said that, while the IRA had boosted growth projections, supply constraints could “cloud deployment expectations” until 2024.

Why storage deployment is in doubt

It’s true that supply chain problems do pose a major obstacle for future storage deployment. As American Clean Power has highlighted, with regard to lithium-ion batteries, the electric vehicle sector is purchasing ten times as many batteries as the stationary storage sector – this means that, even if a storage developer can afford the price of batteries, automotive equipment manufacturers can “sign contracts for much higher volumes and crowd them out”.

But the stationary storage sector faces another, equally pressing problem.

And that problem is interconnection.

The fact is that data concerning energy storage transmission interconnection in the US makes for very discouraging reading.

Queues getting longer

By way of background, electric transmission system operators require projects that need to connect to the grid to complete a series of impact studies before they are built. The purpose of this process is to identify what new transmission equipment or upgrades will be needed in order for a project to be able to connect to the system and then assign the cost of that equipment. The projects involved in this process are effectively interconnection queues. 

Figures supplied by Berkeley Lab – a US Department of Energy Office of Science national laboratory managed by the University of California – showed that, at the end of 2021, more than 1,400GW of generation and storage capacity was in interconnection queues in the US. And more than 90 per cent of this capacity is renewables, such as solar, wind and battery storage. Indeed, storage makes up 427GW of that total. It’s also worth noting that solar and battery storage are, by some margin, the fastest growing resources in the queues. Combined, they accounted for nearly 85% of new capacity entering the queues in 2021.

Furthermore, as Berkeley Lab has pointed out, the interconnection queues are getting longer.

Most projects don’t get built

Not all the projects in the queues will come to fruition, in fact the majority of them won’t. “Most projects that apply for interconnection are ultimately withdrawn, and those that are built are taking longer on average to complete the required studies and become operational,” according to Berkeley Lab.  

Indeed, Berkeley Lab figures show that only 23% of the projects seeking connection from 2000 to 2016 have subsequently been built. The laboratory has also concluded that “completion percentages appear to be declining”.

Additionally, interconnection wait times are also increasing. Berkeley Lab said that, among the regions with available data, the typical duration from connection request to commercial operation increased from around 2.1 years for projects built in 2000-2010 to approximately 3.7 years for those built during the period 2011 to 2021.

How to make storage connection easier

So, what’s the solution?

Organisations such as Batries (Building A Technically Reliable Interconnection Evolution for Storage) – which is supported by the Department of Energy’s Solar Energy Technologies Office and led by the Interstate Renewable Energy Council – are calling for a number of reforms, including:

  • Access to a fair, efficient, and cost-effective interconnection process for interconnection customers that gives them “maximum freedom to interconnect their storage assets in a manner that meets their needs (for example, having the flexibility to respond to price signals)”.
  • More US states developing distributed energy resources (DER) interconnection procedures that are more accommodating to storage and thus reduce time, cost and technical barriers to storage integration – for example, most interconnection rules either permit or require utilities to evaluate the impacts of storage on the grid with the assumption that storage systems will export their full nameplate capacity at all times. This assumption doesn’t reflect how storage is typically operated and thus creates an unnecessary barrier to storage interconnection.
  • The tailoring of interconnection procedures to each jurisdiction’s DER market conditions — for example, when the speed of DER deployment outpaces the grid’s existing hosting capacity or utilities’ ability to process applications. The lack of tailored procedures leads to serious queue backlogs and high grid upgrade fees that become barriers to interconnection.

We are indeed on the verge of a brave new world for energy storage. But the storage dream could quickly evaporate if more isn’t done to speed up interconnection processes. Providing funding for new storage is one thing, but that funding will go to waste if projects ultimately fail in their attempts to connect to the grid.

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