Energy Storage: Information on Challenges to Deployment for Electricity Grid Operations and Efforts to Address Them

Power plants' electricity output must be matched continuously with demand, which varies depending on the time of day and year. To maintain a reliable supply of electricity, operators of the electricity grid—a complex network of power plants and power lines managed by utility companies and other operators—take steps to ensure power plants are available to generate electricity when needed. Increasingly, renewable sources of energy, such as solar and wind, are being integrated into the grid.

Energy storage allows for electricity to be stored and used later when it is needed and could change the operating capabilities of the electricity grid. Batteries and other energy storage technologies can store energy in one form—such as chemical, mechanical, or thermal energy—and transform that energy to generate electrical power at a later time.

GAO was asked to provide information on the role of energy storage in grid operations. This report describes (1) how energy storage can be used to enhance grid operations and performance; (2) factors that affect the deployment of energy storage for grid operations; and (3) federal and state policies and other efforts that address the deployment of energy storage. GAO reviewed studies published from 2012 through 2017; and interviewed 41 stakeholders, including officials from government agencies and representatives of industry and other groups based on their knowledge of energy storage and grid operations.

Energy storage can be used in various ways to enhance the reliability, resilience, and efficiency of grid operations, according to studies GAO reviewed and stakeholders GAO interviewed. Such storage can be deployed throughout the electricity system and act as a generation, transmission, distribution, or customer-sited asset to provide various services, address operational challenges and needs, and potentially reduce costs, as shown in the figure below. For example, storage can help grid operators address supply disruptions and the variability of renewable energy resources, such as solar and wind; relieve transmission congestion; defer the need for transmission or distribution system upgrades; and provide backup power during a power outage.

Examples of Potential Storage Applications on the Electricity Grid

Various factors affect energy storage deployment. These include industry and technology readiness, safety concerns and stringency of siting requirements, increasing use of renewable resources, cost-competitiveness of storage and challenges with quantifying the value of storage, and the regulatory environment, according to studies GAO reviewed and stakeholders GAO interviewed. For example, industry and technical challenges include uncertainty about the performance of certain technologies over time and in various operating conditions.

Federal and state policymakers have used various policies and other efforts to encourage the deployment of storage and address market barriers. For example, the Department of Energy has undertaken various efforts, including research and development focused on improving factors that affect the cost and capacity of certain storage technologies. In addition, the Federal Energy Regulatory Commission has issued proposed and final rules to address market barriers to storage deployment in wholesale markets. Lastly, state policies and other efforts that aim to encourage the deployment of storage or to address market barriers include establishing mandates and targets for storage adoption, revising planning requirements, and offering financial incentives and funding.

Electricity is supplied through a complex network of power plants and  power lines—the electricity grid—managed by utility companies and other  operators. The operation of electric power systems involves a complex  process of forecasting the demand for electricity, and scheduling and  operating power plants to meet that varying demand. Generally, electricity  cannot be easily stored, so power plants’ electricity output must be  matched continuously with demand, which varies significantly depending  on the time of day and year. To maintain a reliable supply of electricity,  operators of the electricity grid take steps to ensure that power plants are  available to generate electricity when needed. The ability to store  electricity more easily could change the operating capabilities of the  electricity grid.

The traditional model for generating and selling electricity in the United  States is changing. According to the Department of Energy (DOE), the  electric utility industry, regulators, and other stakeholders are working to  understand the role of energy storage in grid operations and how to  integrate it into the grid. Simultaneously, utilities in the United States are  investing in an aging grid with a growing segment in need of replacement  and modernization. One trend across the electric sector is a reduced  reliance on large, central power plants and greater use of more diverse  resource portfolios. The increasing use of variable energy resources such  as wind and solar power, the interaction of distributed energy resources— including energy storage—with traditional generation sources, and the  changing role of electricity customers have increased the complexity of  matching electricity supply with demand at all times.

Batteries and other energy storage technologies can store energy in one  form—such as chemical, mechanical, or thermal energy—and transform  the energy to generate electrical power. Energy storage technologies are  in various stages of development and deployment, and activities are  under way in the United States and elsewhere to improve the economic  and technical performance of storage options. Historically, electricity  storage has consisted of pumped hydroelectric storage projects, which  pump water to higher-elevation reservoirs when electricity demand is low  and allow it to flow downhill through electricity-generating turbines when  demand increases. Other energy storage technologies include electrochemical technologies such as batteries (lead acid, lithium ion,  sodium sulfur, and flow); electromechanical technologies such as flywheels (mechanical  devices that harness rotational energy to store and deliver energy)  and compressed air energy storage (that uses electricity to compress  air, then release it through a turbine to generate electricity later); and other forms of storage such as thermal storage.

The Federal Energy Regulatory Commission (FERC), which regulates  interstate electricity transmission and oversees wholesale interstate  electricity markets, plays a role in addressing barriers to competition in  electricity markets as part of its statutory duty to ensure that market rates  are just and reasonable and not unduly discriminatory or preferential.  State entities, such as public utility commissions, regulate utility  management, operations, electricity rate structures, and capacity  acquisition within their state. Additionally, in some regions, regional  transmission organizations manage electricity transmission and  wholesale electricity markets. DOE conducts research and development  and provides analytical support for federal and other efforts that support  energy storage’s role in modernizing the electricity grid.

You asked us to review issues related to the role of energy storage in grid  operations. This report examines (1) how energy storage can be used to  enhance grid operations and performance; (2) factors that affect the  deployment of energy storage for grid operations; and (3) federal and  state policies and other efforts that address the deployment of energy  storage.

To address the first two objectives, we reviewed studies and documents  from research institutions, such as DOE’s national laboratories, FERC,  and stakeholder groups. The studies we reviewed were published from  2012 through 2017, the five most recent years for which studies were  available, and we identified them by conducting database and Internet  searches and asking stakeholder groups for recommendations.  Specifically, we searched sources including ProQuest and WorldCat,  among others, and the websites of national laboratories. We selected  studies to review based on their relevance to energy storage, its role in  grid operations, and factors affecting deployment of storage for grid  operations. We selected 29 studies from the Congressional Research  Service (CRS); DOE; national laboratories; government-sponsored  research; non-governmental organizations such as nonprofits and  research institutes; industry associations; and peer-reviewed scientific  and trade journals. We reviewed the methodologies of these studies and  determined that they were sufficiently sound for describing the ways  energy storage can be used to enhance grid operations and factors  affecting deployment. We also reviewed other documents including FERC  proposed and final rules, guidance, and conference and meeting  transcripts; reports from state agencies, DOE, and national laboratories;  and industry papers and reports on topics relevant to our work. We  identified the ways energy storage can be used to enhance grid  operations and the factors affecting deployment often cited by  stakeholders, studies, and documents. Given our methodology, we may  not have identified every relevant study and every potential use of storage  and factor that affects deployment of storage, therefore our findings may  not be generalizable to all energy storage technologies but provide  examples of such technologies.

To address the third objective, we reviewed and described documentation  of energy storage efforts at DOE and relevant FERC orders and proposed  and final rules addressing the deployment of storage. In addition, we  reviewed documentation of Internal Revenue Service efforts to solicit  comments on regulations that affect how a tax credit can be used for  storage projects. We identified state policies and efforts addressing  storage deployment by reviewing documents from federal and state  agencies, stakeholder groups, relevant databases, and industry news  sources and asking stakeholders. To describe these state policies and  efforts, we reviewed state government documents, reports, policies, and  legislation. Given our methodology, we identified examples that illustrate  the range of state policies and other efforts that may encourage the  deployment of energy storage or that address market barriers; however,  these examples do not represent a comprehensive list of all state policies  and efforts.

For all of the objectives, we conducted interviews with officials and  representatives of 41 stakeholder groups including federal and state  government agencies, industry, and other stakeholders. Specifically, we  interviewed officials and representatives from 4 federal agencies (DOE,  FERC, CRS, and the Internal Revenue Service); 3 national laboratories  (the National Renewable Energy Laboratory, the Pacific Northwest  National Laboratory, Sandia National Laboratories); 8 state government  agencies; 11 grid operators and utilities; 7 industry associations; 2  nongovernmental organizations; and 6 other market participants,  including storage project developers and consultants. We identified  stakeholders that were knowledgeable about energy storage, grid  operations, and state and federal policies and other efforts by reviewing  prior GAO and CRS reports; the 29 studies from research institutions,  such as DOE’s national laboratories, and other groups; and by asking  stakeholder groups for recommendations. Because this was a  nonprobability sample of stakeholders, views are not generalizable to all  potential stakeholders. For interviews with state entities, we selected a  nonprobability sample of four states that have policies encouraging  storage deployment, which stakeholders identified as leading in the  development and establishment of such policies, and that vary based on  geographic location because factors affecting deployment tend to vary in  different parts of the country. We also considered information on the  extent of energy storage deployed in the state. Throughout the report, we  use the following categories to quantify statements identified by studies  and stakeholders: “some,” which we define as two to five studies and  stakeholders collectively; “several,” which we define as six to 10 studies  and stakeholders collectively; and “many,” which we define as more than  10 studies and stakeholders collectively.

We conducted this performance audit from April 2017 to May 2018 in  accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.

This section describes (1) electricity grid functions, operations, and  planning; (2) energy storage operational characteristics, technologies,  and deployment; and (3) the electricity regulatory framework.

Electricity Grid Functions, Operations, and Planning

The electricity grid involves four distinct functions: generation, electricity  transmission, electricity distribution, and grid operations (see fig. 1).  Electricity is generated at power plants by burning fossil fuels; through  nuclear fission; or by harnessing renewable sources such as wind, solar,  geothermal, or hydropower. Once electricity is generated, it is sent  through the electricity grid, which consists of high-voltage, high-capacity  transmission systems, to areas where it is transformed to a lower voltage  and sent through the local distribution system for use by residential and  other customers. Throughout this process, a grid operator, such as a local  utility, must constantly balance the generation and consumption of  electricity. To do so, grid operators monitor electricity consumption from a  centralized location using information systems, and send minute-by- minute signals to power plants to adjust their output to match changes in  the demand for electricity.

As we previously reported, continuously balancing the generation and  consumption of electricity can be challenging for grid operators because  customers may use sharply different amounts of electricity over the  course of a day and throughout the year. For example, in many areas,  customer demand for electricity rises throughout the day and reaches its  highest point—or peak demand—in late afternoon or early evening.  Throughout the day, grid operators direct power plants to adjust their  output to match changes in demand for electricity. Grid operators typically  first use electricity produced by baseload power plants that are the least  expensive to operate, then progressively increase the supply of electricity  generated by power plants that are more expensive to operate as needed  to match increases in electricity demand. As a result, providing electricity  to meet peak demand is generally more expensive than during other parts  of the day, because to do so, grid operators use power plants that are  more expensive to operate. Peak periods are generally short and account  for only a few hours per day and, overall, a small percentage of the hours  during a year, but can significantly contribute to the overall costs of  serving customers.

Grid operators conduct planning to assess the adequacy of existing grid  infrastructure, identify capacity needs, and evaluate the cost and  effectiveness of potential solutions to address these needs. As we  previously reported, to ensure that grid infrastructure has sufficient  capacity to meet future peak demand, grid operators typically develop  forecasts of future electricity demand based on historical information  about customer electricity use combined with assumptions about how  customer demand will change in the future based on population growth,  economic conditions, and other factors.

Utilities deal with uncertainty partly by producing a range of forecasts  based on demographic and economic factors, and by maintaining excess  generating capacity, known as reserves. Models help utilities choose the  least-cost combination of generating resources to meet demand. If  demand forecasts are too high or low, a utility could end up with more or  less generating capacity than it needs to serve its customers reliably, or it  could end up with a mix of generating capacity that is not cost effective.  These outcomes can affect electricity rates as well as the utility’s financial  situation. To meet demand for electricity, utilities can construct new  plants, upgrade existing plants, purchase power from others, build new  transmission and distribution lines, and provide incentives to customers to  reduce and shift their demand for electricity through energy efficiency or  demand-response programs. In addition, utilities may use time-based  pricing—prices that vary throughout the day and year to reflect the costs  of serving consumers—to encourage consumers to lower their electricity  use at times of high prices or shift their use to times of the day when  prices are lower, which can lower their electricity bills.

Energy Storage Operational Characteristics, Technologies, and Deployment

Energy storage includes a number of different technologies that have the  ability to store energy for use at a later time. Energy storage systems can  be designed with a range of technologies, such as pumped hydro,  compressed air, batteries, and flywheels, according to DOE. Each  technology has its own performance characteristics that make it more  suitable for certain grid services than for others. Specifically, compressed  air and pumped hydro are capable of discharge times—the length of time  that a storage device can discharge electricity—in tens of hours and have  large capacities that can reach 1,000 megawatts (MW). According to  DOE and CRS, storage projects involving these types of technologies  generally have unique siting requirements, including specific geographical  features, or long construction times. In contrast, other storage  technologies such as batteries and flywheels are smaller in terms of  capacity and have shorter discharge times, ranging from a few seconds to  several hours, and these technologies can generally be built without  specific geographical features at the site. These energy storage systems  are comprised of storage technologies and other system components  such as inverters, wiring, temperature regulation, and other equipment.

According to DOE’s Global Energy Storage Database, about 24 gigawatts  (GW) of grid-connected energy storage were in operation in the United  States and about 2 GW of storage capacity was under development as of  March 20, 2018. Pumped hydro comprises about 93 percent of this  storage capacity in operation. Many of the operational pumped hydro  systems in the United States were commissioned during the 1960s  through the 1980s; the most recent became operational in 2012. See  figure 2 for information about the proportion of energy storage capacity in  operation or under development in the United States that comes from  certain types of technology.

While pumped hydro comprises the majority of energy storage in  operation, batteries are driving the recent growth in energy storage. Since  2013, the capacity of utility-scale (1 MW or greater) battery deployments  grew by 283 percent (from about 185 MW to about 709 MW), though such  utility-scale batteries comprised about 0.07 percent of utility-scale  generating capacity on the U.S. electric grid, according to data from the  Energy Information Administration. See figure 3 for information on the  capacity of utility-scale battery installations each year from 2003 through  2017.

Figure 4 shows how grid-connected storage of all technology types was  distributed nationwide as of March 20, 2018, according to DOE’s Global  Energy Storage Database.

Responsibility for regulating the electricity industry is divided between the  states and the federal government. Most electricity customers are served  by electric utilities on the retail level that are regulated by the states,  generally through state public utility commissions or equivalent  organizations. As the primary regulator of electricity on the retail level,  state public utility commissions have a variety of responsibilities, such as  approving utility investments in generation and distribution assets, the  rates retail customers pay, and how those rates are set. Before  electricity is sold to retail customers, it may be bought, sold, and traded in  wholesale electricity markets that the federal government oversees  through FERC. FERC is responsible for overseeing regional  transmission organizations’ (RTO) development and operation of  markets to ensure that wholesale electric rates are “just and reasonable”  and not “unduly discriminatory or preferential.” To do so, FERC reviews  and approves RTO market rules and monitors the competitiveness of  RTO markets. Figure 5 indicates the location of major RTOs that have  developed in certain regions of the United States.

RTOs serve as grid operators by managing regional networks of electric  transmission lines and also operate wholesale electricity markets to buy  and sell services needed to maintain a reliable grid. These markets  include  capacity markets—auctions through which owners of power plants  can be compensated for agreeing to make their plants available to  provide electricity at a specified time in the future—designed to  incentivize the building and retention of enough generation and other  resources to meet future power demands; energy markets for scheduling which power plants will generate  electricity throughout the day to maintain the balance of electricity  generation and consumption, and at what prices; and ancillary services markets, which are designed to maintain electric  reliability and ensure that supply and demand remain in balance from  moment to moment so that grid operators can deliver electricity within  technical standards, such as at the right voltage and frequency.

RTOs are responsible for developing and implementing market rules,  approved by FERC, that provide the framework for the design and  operation of wholesale electricity markets. RTO market operations  encompass multiple services that are needed to provide reliable and  economically efficient electric service to customers. Each of these  services has its own parameters and pricing. The RTOs use markets to  determine the providers and prices for many of these services.

In regions of the country without RTOs, electric utilities generally serve in  the role of grid operator. In these regions, the local utility often integrates  the delivery of electricity services—energy to maintain the balance of  electricity generation and consumption, capacity to meet demand, and a  range of ancillary services. Utilities in these regions may build and  operate power plants to provide electricity to serve their retail customers.  These utilities may also buy electricity from other power plant owners.

Energy Storage Can Be Used in Various Ways to Enhance the Reliability, Resilience, and Efficiency of Grid Operations

Energy storage can be used in various ways to enhance the reliability,  resilience, and efficiency of grid operations, according to studies we  reviewed and stakeholders we interviewed. Storage can be deployed  throughout the electricity system and act as a generation, transmission,  distribution, or customer-sited asset to provide various services, address  operational challenges and needs, and potentially reduce costs. For  example, storage can help grid operators address supply disruptions,  relieve transmission congestion during periods of high demand, defer the  need for transmission or distribution system upgrades, and provide  backup power during a power outage. Figure 6 illustrates examples of  potential applications across the electricity grid.

Energy storage can support the reliability of grid operations by helping  grid operators respond to fluctuations in electricity supply resulting from  the variability of renewable energy resources, such as solar or wind, or  disruptions to the grid, such as the loss of a transmission line or a  generating unit. Specifically, according to some studies we reviewed, the  fast-ramping nature of some storage technologies that can change  generation output quickly—within a few seconds or minutes—makes  them suitable for addressing short-term changes in variable energy  generation resources (referred to as variable resources) such as when  the sun sets and output from solar resources quickly declines. Moreover,  storage can provide ancillary services needed to maintain system  reliability and support the transmission of electricity. Specifically,  according to some studies we reviewed, storage can provide frequency  regulation services—which entail moment-to-moment reconciliation of the  difference between supply and demand—to maintain the stability of the  system. The services that storage provides can be performed by  traditional assets but because certain storage technologies are fast- ramping they can be better-suited to provide certain services, according  to several studies we reviewed and stakeholders we interviewed.

Systems with a large portion of generating capacity from variable  resources can face reliability challenges because the intermittent nature  of these sources can cause fluctuations in voltage and frequency,  according to some studies we reviewed. Grid operators are adopting  storage to support increasing use of renewable energy and address the  associated challenges. For example, in 2017, San Diego Gas & Electric  deployed a 30 MW energy storage facility at its Escondido substation to  help improve regional reliability and support greater amounts of  renewable energy in the region’s energy supply (see fig. 7). According  to San Diego Gas & Electric, the Escondido storage facility is helping to  enhance grid reliability and increase the use of renewable energy; the  facility is capable of the equivalent of serving 20,000 customers over a  period of 4 hours.

Similarly, in 2017, according to Tucson Electric Power documents, the  utility installed two 10 MW battery storage projects to support its ability to  achieve long-term renewable energy goals without compromising the  reliability of service. According to representatives from the utility, the  projects provide frequency control and voltage support and the  deployment shortened the reaction time to system disruptions and  supported the utility’s compliance with reliability standards in its role as  balancing authority.

Storage can also provide services that support resilience by helping the  grid adapt to changing conditions and potentially disruptive events and, if  a disruptive event occurs, to rapidly recover, according to several studies  we reviewed and stakeholders we interviewed. Specifically, in the event  of an outage during which power sources or power lines become  unavailable, storage can respond quickly to provide backup power or  black start services—the provision of the power necessary to restore a  generation plant when power from the grid is unavailable during a major  outage. In addition, storage can also support microgrids—systems that  can connect and disconnect from the grid depending on operating  conditions—that could maintain power for a small area independent of the  grid. For example, in 2015 a Vermont utility installed a 4 MW energy  storage system in conjunction with a 2.5 MW solar project at a school that  serves as an emergency shelter. In case of grid failure or an extended  emergency, the facility can separate from the rest of the grid and operate  independently. In addition, in 2016 in Massachusetts, the Sterling  Municipal Light Department installed a storage system that can isolate  from the main grid in the event of a power outage and provide emergency  backup power to the Sterling police station and dispatch center, a facility  providing first responder services. In the event of an outage, the 2 MW  storage system could provide the police station with up to 12 days of  power, according to the utility.

Storage also has the potential to improve efficiency of grid operations and  help reduce operating costs, according to studies we reviewed and  stakeholders we spoke with. For example, storage has the potential to  reduce costs by capturing energy generated during low-cost periods to be  used to meet demand later during more expensive periods, according to  studies we reviewed. Specifically, energy time-shift, also referred to as  arbitrage, involves utilities purchasing inexpensive electric energy,  available during periods when prices or system marginal costs are low, to  charge the storage system so that the stored energy can be used or sold  at a later time when the price or costs are high. In addition, storage can  help make the capacity of variable resources more consistent by storing  electricity during periods of high generation, such as a sunny afternoon,  and releasing it later during periods of high demand, such as the early  evening. Moreover, storage can provide similar energy time-shift by  storing excess energy production from renewable sources, which could  otherwise be curtailed.

Storage also has the potential to reduce costs by avoiding or delaying  investments in infrastructure. Specifically, storage may be used to reduce  the capacity demands on existing generation, transmission, and  distribution infrastructure. As a result, according to many studies and  stakeholders we interviewed, utilities may be able to avoid or delay  investments in generation, transmission, and distribution infrastructure  that would otherwise be necessary to maintain adequate supply. For  example, in 2017, a utility that serves customers in Massachusetts  announced plans to install a 6 MW energy storage system with an 8-hour  duration alongside a new diesel generator on Nantucket Island to provide  backup power and postpone the need to construct a costly submarine  transmission cable to bring electricity from the mainland to meet  anticipated growth in electricity demand. In some cases, an investment in  a storage system could be a more cost-effective way to manage peak  demand, and in such cases, utilities could reduce the need for operation  of peaking resources or investment in new peaking resources, such as a  natural gas plant.

Additionally, according to many studies we reviewed and stakeholders we  interviewed, storage can help customers reduce demand charges.  Demand charges are fees included on electricity bills in many parts of the  country to cover the cost of ensuring that sufficient generation and  transmission resources are available to serve customers during periods of  peak demand. Energy storage provides an opportunity for potential  savings by helping a customer to manage their peak demand. Using  storage can also allow some utilities to avoid charges that they might  incur when purchasing wholesale electricity to serve their customers  during a system’s peak demand; this could allow them to pass savings on  to their customers in the form of lower rates. For example, although the  Sterling, Massachusetts, Municipal Light Department installed its storage  system to provide emergency backup power, the primary benefits of the  project since its installation have resulted from using it to reduce peak  demand which has reduced the utility’s transmission charges, and, in  turn, has allowed it to reduce rates paid by its customers, according to  utility representatives.

Various Factors Affect the Deployment of Storage for Grid Operations, Including Industry and Technology Readiness, Cost- Competitiveness, and the Regulatory Environment

Studies we reviewed and stakeholders we interviewed identified a variety  of factors that affect energy storage deployment. These factors include  industry and technology readiness, safety concerns and stringency of  siting requirements, increasing use of renewable resources, the cost- competitiveness of storage and challenges with quantifying the value of  storage, and the regulatory environment.

Grid operators and utilities have limited experience with storage and face  technical challenges integrating storage into existing systems, according  to studies we reviewed and stakeholders we spoke with. For example,  according to some studies and stakeholders, grid operators may not have  experience planning for the integration and operation of storage and they  may not consider it as an option. The models that grid operators typically  use to help make decisions about investments in generation, transmission  and distribution infrastructure are based on traditional resources with  better-understood capabilities. Moreover, storage can be more  challenging to integrate than other resources, such as solar, because it  changes its function in the system from charging—consuming electricity— to discharging—generating electricity, according to some stakeholders.

Because storage must provide power when called upon but also must be  recharged from another resource at a later time, tools that planners rely  on must keep an accurate accounting of the amount of energy stored and  available to supply power to meet demand. According to one stakeholder,  installation of storage requires grid operators to develop operating  requirements and identify control and mitigation strategies for proper  coordination with larger grid operations. In addition, existing utility  systems may not be designed to incorporate storage and may require  customization to integrate storage, according to several stakeholders.

Industry and technical challenges affecting deployment of storage include  uncertainty about the performance of certain storage technologies over  time and in various operating conditions. Energy storage systems  generally are expected to last for a decade or more, but the actual  degradation of battery storage under various conditions is still largely  unknown, according to some studies we reviewed and stakeholders we  spoke with. The electric utility industry has historically been slow to adopt  new technologies and, unless new storage technologies prove highly  reliable, utilities may be slow to deploy these assets, according to several  studies we reviewed and stakeholders we spoke with.

Safety Concerns and Stringency of Siting Requirements

Although the adoption of storage has been increasing, safety codes and  standards for storage are still under development, and questions have  been raised about safety risks and how to mitigate those risks, according  to studies we reviewed and stakeholders we interviewed. Efforts are  under way to ensure that safety codes and standards address energy  storage systems, but these types of standards tend to lag behind the  development of storage technologies, according to some studies and  stakeholders. Until existing codes and standards are updated, or new  ones are developed and adopted, entities seeking to deploy energy  storage or needing to verify a storage system’s safety may face  challenges with applying existing codes and standards, according to  some studies we reviewed.

In addition, concerns about the operational safety of large storage  systems as a fire hazard can be a barrier to their deployment in urban  areas or in proximity to other grid resources such as substations, and  local entities such as fire departments may not allow the deployment of  storage on certain sites. Moreover, local jurisdictions and emergency  responders, along with storage system installers, insurers, and others  may not have a complete understanding of the hazards associated with  storage and best approaches to addressing these hazards, such as the  appropriate fire protection measures, according to some studies and  stakeholders. In addition, local entities’ review of energy storage systems,  for example, can add additional time to the permitting process, given that  these entities may not be familiar with storage systems and potential  safety concerns, according to some studies.

On the other hand, in some locations siting requirements may be less  stringent for some types of energy storage projects than for other  resources such as a large power plant that must comply with more  stringent environmental requirements, according to some studies and  stakeholders. In some cases, according to some studies, the permitting  process may be simpler for storage projects and construction timelines  considerably shortened for a variety of reasons, including that energy  storage systems do not need to complete modifications to comply with air  quality standards because they do not produce emissions. In addition,  certain storage projects require a much smaller footprint than  conventional power plants, whereas building new power plants or  transmission lines can involve large land requirements.

As mentioned previously, storage can help address reliability issues  associated with the variability of renewable energy generation resources  making them attractive to grid operators. Consequently, the increased  use of solar and other renewable energy resources has in turn  encouraged the installation of storage, according to some studies we  reviewed and stakeholders we interviewed. According to the Energy  Information Administration, utility-scale solar installations grew at an  average rate of 72 percent per year between 2010 and 2016, faster than  any other generating technologies. Moreover, increasing use of these  resources is expected to continue, which could drive the adoption of  storage deployment in the future, according to some studies we reviewed  and stakeholders we spoke with. The Energy Information Administration  estimated in January 2018 that nearly half of the approximately 25 GW of  new utility-scale electric generating capacity added to the grid in 2017  used renewable technologies, particularly wind and solar.

Moreover, according to some studies and stakeholders, states with  aggressive renewable portfolio standards—such as Hawaii, which aims to  achieve 100 percent renewable sources by 2045—will need to adopt  storage resources to meet those goals. In addition, California’s  renewables portfolio standard includes targets of 33 percent by 2020 and  50 percent by 2030. According to some stakeholders and documents we  reviewed, California is experiencing excess solar and wind generation  and curtailment at certain times of the day and year and, as the state  moves toward a target of 50 percent renewables, storage could help  address these challenges. According to some stakeholders we spoke  with, long-duration technologies will support greater integration of  renewable energy on the grid. As mentioned previously, pumped hydro  and compressed air energy storage can provide long duration storage,  and other technologies, including flow and lithium ion batteries, have the  potential to provide for long duration storage, according to some studies  we reviewed and stakeholders we spoke with.

Cost-Competitiveness and Challenges with Quantifying the Value of Storage

Grid operators’ decisions to invest in energy storage must consider both  costs and benefits. While the cost of some technologies has fallen in  recent years, the cost of storage systems—including all the system  components, installation, and integration costs—is still high when  compared to more traditional resources available to electric utilities,  according to many studies we reviewed and stakeholders we spoke with.  On the other hand, the adoption of storage for certain purposes, such as  supporting increased use of renewable resources or providing backup  power, includes potential benefits such as reducing greenhouse gas and  other harmful emissions, or enhancing the resilience of the grid.

While the cost of lithium-ion batteries has declined in recent years, the  storage device is one component of a storage system, and estimates of  the device’s share of the total cost of an energy storage system range  from about 25 percent to 50 percent of the total costs, according to  studies we reviewed. According to some stakeholders, the cost of the  system components and other costs to integrate storage with the grid can  be substantial and are not declining as quickly as the cost of storage  devices. In addition to the cost of the storage device, other system  component costs include power conversion electronics, software, and  monitoring and control systems, among others, that are essential to  maintain the health and safety of the entire system, according to some  studies.

Moreover, valuing investments in energy storage must consider both the  cost and benefits, but assessing the potential benefits and costs of  storage can prove challenging, according to several studies we reviewed  and stakeholders we spoke with. These challenges identified in these  studies and by these stakeholders include the following:

Quantifying benefits. Benefits can be difficult to quantify, as they  depend on the application, location, and ability to capture multiple  benefits. Specifically, the compensation for services that storage can  provide reflects local market conditions, and these vary across  regions. In addition, the value of certain storage applications can be  harder to quantify than for others. For example, if a utility is  considering deployment of storage in order to defer an investment in a  transmission and distribution infrastructure upgrade, then determining  the value of the storage asset involves analyzing the avoided cost of  that investment, which is quantifiable. However, it is more difficult to  quantify the value of less tangible benefits of storage, such as  improvements to operational flexibility and grid resilience, which are  not monetized and therefore are difficult to quantify.

Life expectancy. For certain storage technologies, much is still  unknown about their useful life, which depends on the number of  charge and discharge cycles, among other things. Reliable estimates  of the expected life of an asset are necessary for accurately  estimating lifecycle costs and benefits. Given the fact that battery  technologies are evolving, the lack of data makes it more challenging  for utilities to estimate expected costs and benefits to justify their  investment expense.

Limited information on cost. Sufficient information on the cost of  storage systems is not readily available, limiting utilities’ ability to  include storage in modeling and investment decisions, according to  some stakeholders. Energy storage price and cost data vary among  sources because of aggregation to protect proprietary interests, which  unit is chosen to present price and cost data, and limited information  about how projects operate. Specifically, information on the  operational conditions, specifications, and performance of energy  storage systems is difficult to obtain. In addition, according to some  studies we reviewed, uncertainty exists about the future cost outlook  and pace of technological maturity.

The regulatory environment can pose barriers to the deployment of  energy storage. Specifically, market rules and regulations do not always  clearly address whether entities may own and operate storage assets and  how, if at all, the cost of investments in storage assets can be recovered,  according to several studies we reviewed and stakeholders we  interviewed. In addition, each RTO establishes the rules in a different  way, and their implementation of reforms to accommodate storage varies,  according to studies and documents we reviewed and stakeholders we  spoke with. According to a FERC document, under current market rules,  resource bidding parameters—the physical and operational constraints  that a resource identifies when submitting offers to sell services in  electricity markets—vary greatly among the RTOs. Moreover, state  regulators and RTOs may be slow to change their policies and rules to  address energy storage, and delays in such changes hinder deployment,  according to some studies we reviewed.

In RTO regions, some states do not allow utilities to own generation  assets, and when storage is classified as a generation asset, an electric  utility can be prevented from owning storage. Moreover, when market  rules do not clearly define what type of asset they consider storage to be,  this can make it difficult to determine whether storage can participate in  the market or to receive compensation, making storage in that market  financially unviable, according to some studies and stakeholders. One  RTO, the California Independent System Operator (ISO), has established  participation models to accommodate resources, such as storage, that  are operationally unique. In addition, uncertainty exists about the ability  of storage project owners to recover costs of storage used for multiple  applications, according to documents and studies we reviewed and  stakeholders we spoke with.

Moreover, the variation in rules and regulations across regions makes it  difficult for energy storage project developers to navigate different  potential markets because each has its own characteristics, stakeholders,  regulations, and market designs, according to some stakeholders.  Storage project developers must keep abreast of the activities of multiple  regulatory agencies and the variation by region makes potential revenue  streams difficult to predict. In addition, according to one study we  reviewed, the inconsistency of rules adds a level of complexity for project  developers that want to deploy storage resources across multiple markets  because they must conduct separate analyses to determine the  regulatory outlook, market requirements, and profit potential in each  region.

Various Federal and State Policies and Other Efforts Aim to Encourage the Deployment of Energy Storage and Address Market Barriers

Federal and state policymakers have used a variety of policies and other  efforts to encourage the deployment of storage and address market  barriers. For example, DOE has undertaken various efforts in response to  several challenges to the deployment of storage, but funding to continue  these efforts is uncertain. In addition, FERC has taken steps to address  market barriers to storage deployment in wholesale markets but the final  impact of these steps depends on implementation by RTOs. Moreover,  the Department of the Treasury and the Internal Revenue Service (IRS)  are considering changes that could clarify the eligibility of energy storage  for a tax credit. Lastly, state policies and other efforts aim to encourage  the deployment of energy storage or to address market barriers; these  include establishing mandates and targets for storage adoption, revising  interconnection rules and planning requirements, and offering financial  incentives and funding.

DOE Has Undertaken Various Efforts to Address Challenges Affecting Storage Deployment, but Funding to Continue these Efforts Is Uncertain

According to documents we reviewed, DOE has undertaken various  efforts in response to the challenges to deploying energy storage  identified in a 2013 report, including challenges concerning the safety  and reliability of such storage, its acceptance by industry, the regulatory  environment, and cost-competitiveness.

Efforts to Address Safety and Reliability Challenges. In 2017,  DOE developed, through its Pacific Northwest National Laboratory  (PNNL) and Sandia National Laboratories, the DOE safety roadmap,  which established a goal to foster confidence in the safety and  reliability of energy storage systems. The roadmap built on previous  efforts including an Energy Storage Safety Forum that Sandia held in  2017 for stakeholders to share information and identify future needs.  The objectives of the roadmap include research and development,  codes and standards, and collaborative resources with a focus on  electrical safety, fire and smoke hazard detection and mitigation,  health and environmental hazards, natural and man-made disasters,  ventilation and thermal management, and system controls. The  roadmap aims to cover the development of energy storage systems  through their decommissioning or refurbishment and includes design,  installation, commissioning, operation and maintenance, repair,  decommissioning, and reuse.

DOE has also supported efforts to develop and deploy energy storage  safety codes with industry groups, according to documents we  reviewed. For example, DOE established working groups focused on  safety and standards, including the Energy Storage Systems Safety  Working Group, which aims to facilitate the timely development and  deployment of safe energy storage systems by implementing the DOE  safety roadmap through collaboration with stakeholders. In addition,  as part of these efforts, a DOE working group on codes, standards,  and regulations monitors the development of standards and model  codes and provides input to those activities. Additionally, DOE  coordinates with industry-led and international code-setting agencies  such as the National Fire Protection Association and the International  Code Council, as well as companies that conduct testing. In addition,  PNNL published several resources including an inventory of codes  and standards, an overview of the development and deployment of  codes and standards, and a compliance guide. The compliance  guide prepared by PNNL and Sandia, which includes safety codes  and standards, aims to facilitate the timely deployment of storage  systems and assist with documenting compliance with current safety- related codes and standards and verifying compliance with codes and  standards.

Efforts to Support Industry Acceptance. DOE has provided  technical assistance and funded demonstration projects to help  utilities and other entities install, procure, and evaluate storage  projects, according to documents we reviewed. For example, DOE  provided funding and technical support in the deployment of a storage  project at an emergency shelter in Vermont that can separate from the  rest of the grid and operate independently in case of an emergency.  DOE also supported the development of documentation and tools to  assist utilities in the design, deployment, and operation of energy  storage systems including valuation models, procurement guidelines,  commissioning procedures, and data acquisition guidelines. In  addition, Sandia published guidance to provide information for  municipalities on the elements that should be included in a solicitation  for procurement and installation of an energy storage project and a  handbook to provide information and tools to guide investors’  evaluations of energy storage opportunities. DOE has a proposal  under way for a study to gather pricing information for energy storage  technologies that will be used as part of future updates to the  handbook. DOE also held a financial summit in June 2017 to provide  information to the financial community on solicitations and contracts.  In addition, to evaluate storage projects, DOE and the Washington  Department of Commerce established a memorandum of  understanding to have PNNL characterize and analyze the technical  and economic attributes of storage projects. DOE also supports new  deployments through funding, including the Grid Modernization  Laboratory Consortium awards aimed at integrating conventional and  renewable sources with energy storage.

Provide Technical Assistance to Regulators. According to  documents we reviewed, DOE has hosted workshops and provided  technical assistance for several state public utility commissions and  other entities aimed at providing them with information on storage  technology development, project procurement, and valuation. In  addition, in 2012 Sandia developed guidance for state regulatory  authorities and planning personnel to provide information about  opportunities for energy storage to play a greater role in the electricity  grid.

Research and Development to Improve Cost-Competitiveness.

DOE’s Energy Storage Program’s research and development  activities focus on improving materials and system factors that affect  the cost, efficiency, and capacity of certain energy storage  technologies, including flow batteries. DOE’s fiscal year 2018  budget request includes a performance goal to improve the cost- benefit ratio of storage to compete with current peak generation  resources and, by 2020, increase to 5 percent the commercial use of  grid-scale storage to buffer renewables.

A DOE advisory committee in 2016 conducted an assessment of DOE’s  energy storage-related research, development, and deployment programs  that produced 15 recommendations. The recommendations included,  among others, improving the visibility of DOE’s efforts; addressing the  need for storage models and studies of market impediments; and  providing additional funding and resources for energy storage research,  development, and deployment programs.

While DOE has undertaken a range of efforts over the past several years  to address challenges to deployment, future funding of these efforts is  uncertain. In 2017, DOE allocated $31 million to work on energy storage  within its Office of Electricity Delivery and Energy Reliability. DOE’s  fiscal year 2018 budget request proposed reducing this funding by about  74 percent, to $8 million, and proposed eliminating, among other efforts,  work related to engagements with states, utilities, and storage providers for  conducting tests and trials; engagements with state and federal regulatory officials on efforts to  understand regional market barriers to deployment;  validation of system performance and analysis of regional use cases;  support to states and regional entities for the procurement,  commissioning, and analysis of deployed systems;  the development of enhanced tools and data for sharing with industry  for the development and use of grid-scale batteries; and participation in both industry-led and international codes and  standards development.

Because fiscal year funding through March was provided under  continuing resolutions, energy storage funding remained on par with fiscal  year 2017 levels for the first half of the fiscal year, and the Consolidated  Appropriations Act, 2018, increased funding for energy storage to $41  million. However, DOE’s fiscal year 2019 budget request again proposes  reducing the funding for energy storage work to $8 million. According to  DOE’s fiscal year 2019 budget request, DOE plans to focus on  accelerating the development of new materials and technologies that can  lead to improvements in the cost and performance of utility-scale energy  storage systems and accelerate the adoption of energy storage systems  into the grid infrastructure.

FERC Has Taken Steps to Address Market Barriers to Storage Deployment, but the Final Impact of these Efforts Depends on Implementation by RTOs

FERC has taken several steps to address market barriers to energy  storage deployment, but the impact of these efforts will depend on  implementation by RTOs. In March 2018, FERC published a final rule that  aims to address barriers to integrating storage into organized wholesale  markets. The rule requires that RTOs establish participation models  consisting of market rules that recognize the physical and operational  characteristics of electric storage resources to facilitate their participation  in the RTO markets. In prior years, FERC issued several orders that  also aimed to address barriers to storage participation in organized  wholesale electric markets. For example, FERC Order 792—issued in  2013—revised the definition of a small generating facility in the pro forma  Small Generator Interconnection Agreement—which establishes the  terms and conditions for interconnection of resources no larger than 20  MW—to specifically include energy storage devices. In addition, FERC  Order 755—issued in 2011—required RTOs to compensate frequency  regulation resources in a manner that acknowledges the performance of  faster-ramping resources, such as batteries and flywheels.

Additionally, in May 2018, FERC published a final rule that revised the  definition of a generating facility in the pro forma Large Generator  Interconnection Procedures and pro forma Large Generator  Interconnection Agreement—which establishes the terms and conditions  for interconnection of resources larger than 20 MW—to explicitly include  electric storage resources. FERC also published guidance in February  2017 on the ability of electric storage resources to provide transmission or  grid support services at cost-based rates, while providing other electric  storage services, such as power sales, at market-based rates.

According to some studies we reviewed and stakeholders we spoke with,  FERC orders have helped alleviate some of the barriers to storage  participation in wholesale markets, but the impact of these orders  depends on RTO implementation. Moreover, RTO implementation of  FERC’s requirement to establish participation models to accommodate  storage may not occur until the end of 2019 or later. Figure 8 shows the  timeline of key FERC efforts that aim to address market barriers to the  deployment of storage and time frames for implementation from  November 2016 through 2019.

According to FERC’s final rule, RTO implementation of the requirement to  establish participation models could take 21 months from the publication  of the final rule. RTOs will need to develop the participation models,  obtain input through their stakeholder review processes, and may need to  update modeling and dispatch software.

IRS May Revise Regulations to Clarify the Eligibility of Storage for a Tax Credit

Treasury and the IRS are considering changes that could clarify the  eligibility of energy storage for a business tax credit under section 48 of  the Internal Revenue Code, according to IRS documents. Currently,  customers who install storage systems may be eligible for this tax credit  when they use the storage system to store energy from renewable energy  systems more than 75 percent of the time; however, at this time there is  no federal tax incentive for stand-alone storage. Since 2011, the IRS  has issued some written determinations that the storage portion of a  renewable energy system would be eligible for the credit. However, only  the specific taxpayer addressed by a determination can rely on it as  precedent.

In October 2015, Treasury and IRS solicited comments from the public on  how to define certain types of property that qualify for this tax credit,  including whether property such as storage devices may also be  considered energy property. According to IRS documents, comments  filed in response requested revisions to the tax credit that include, among  other things, providing a technology-neutral definition of energy storage  property, providing a specific list of types of energy storage property that qualify for the credit, and determining that storage is eligible for the credit  on a stand-alone basis. According to some stakeholders we interviewed,  the requirement for storage to be paired with renewable energy to obtain  the tax credit is limiting because there are other potential applications and  benefits storage can provide to the grid that are unrelated to renewable  energy integration. Additionally, one stakeholder we spoke with said that  regions with relatively small renewable energy resource capacities are  unable to receive federal support for energy storage, even though it may  benefit their grid.

State Policies and Other Efforts Include Mandates and Targets, Revision of Rules and Planning Requirements, and Financial Incentives and Funding

Through interviews with stakeholders and our review of documents, we  identified examples of state policies and other efforts that have  encouraged the deployment of energy storage or aim to address market  barriers. Appendix I includes a detailed list of state policies and other  efforts encouraging deployment of energy storage we identified. In  summary, these policies and other efforts include:  Mandates and Targets. Several states have established or proposed  mandates or targets that require or encourage electric utilities to procure  a specific amount of energy storage capacity. States have taken a range  of approaches to implementing these mandates and targets. For  example:

The California Public Utilities Commission requires investor-owned  utilities to collectively procure 1.3 GW of energy storage by 2020.

Oregon is in the process of implementing a requirement for certain  utilities serving more than 25,000 retail customers to procure energy  storage systems with at least 5 megawatt hours of energy storage  capacity by January 1, 2020.

The Massachusetts Department of Energy Resources adopted a 200  megawatt-hour energy storage target for electric distribution  companies to collectively meet by January 2020.

In November 2017, New York State enacted legislation requiring the  state public service commission to adopt an energy storage target. In  January 2018, the Governor of New York announced an energy  storage goal of 1.5 GW by 2025.

A number of other states are also considering the adoption of targets  for storage capacity in the state.

Mandates and targets that require or encourage utilities to procure energy  storage can help create certainty in the market for energy storage by  assuring that there is a demand for storage, according to some  stakeholders we interviewed. Additionally, according to one document we  reviewed, mandates and targets may impact deployment by encouraging  the development of model regulatory frameworks that serve as examples  to other states. States with storage mandates and targets may also serve  as case studies to demonstrate the impact of energy storage deployment  on a large scale and provide the industry with operational experience,  examples of how to best integrate storage, and opportunities to evaluate  storage.

Changes to Interconnection Rules. Some states have changed or are  considering changes to interconnection rules to account for energy  storage. States are taking a number of approaches to revising  interconnection rules. For example:  In 2015, Hawaii’s Public Utility Commission made changes to  interconnection standards and energy policies to provide for the  interconnection of energy storage to the grid.

The Arizona Corporation Commission is developing statewide  interconnection rules for distributed generation. Draft rules include  interconnection requirements for energy storage systems and  Commission officials told us that stakeholders are debating the scope  and nature of those requirements.

Planning. Some states allow for the inclusion of energy storage in  integrated resource and transmission planning processes; grid operators  and utilities undertake these planning processes to ensure that the grid  infrastructure has sufficient capacity and grid operators are able to meet  future power demands. For example:

The New Mexico Public Utility Commission’s integrated resource  planning rules require investor-owned utilities to evaluate all feasible  energy resources as part of their resource planning process. When  the Commission’s integrated resource planning rules were originally  implemented, energy storage was not commercially feasible;  however, the state commission recently amended these rules to  include energy storage as a resource in planning.

The Oregon Public Utility Commission directed Portland General  Electric to address energy storage in its future integrated resource  plans.

Washington’s Utilities and Transportation Commission directs utilities  to demonstrate that, when considering a new resource acquisition,  their analysis should include an evaluation of the costs and benefits of  a storage alternative. The Commission also directs utilities procuring  resources to issue requests for proposals that are technology neutral,  allowing energy storage to bid.

Several states are also incorporating storage into broader energy  planning efforts, including conducting research to identify the benefits of  and opportunities for storage in the state. For example:

North Carolina passed legislation directing the North Carolina Policy  Collaboratory, at the University of North Carolina, to conduct a study  on energy storage to address how and if storage may benefit  consumers, the feasibility of storage in the state, and policy  recommendations.

Massachusetts has also undertaken a number of efforts including  launching the Energy Storage Initiative, an initiative administered by  the Massachusetts Department of Energy Resources and the  Massachusetts Clean Energy Center to facilitate the deployment of  storage and provide environmental and ratepayer benefits. As part of  this initiative the 2016 State of Charge report was released and,  among other things, identified barriers to energy storage adoption in  the state and made recommendations to increase deployment of  storage, setting a target of 600 MW of energy storage capacity by  2025.

Financial Incentives and Funding. Several states offer financial  incentives including tax credits, tax exemptions, and rebate programs that  encourage the deployment of residential, commercial and industrial  energy storage systems by offsetting costs. For example:

California’s Self Generation Incentive Program—designed to help  reduce emissions, demand, and customer electricity costs—provides  rebates to support existing, new, and emerging distributed energy  resources installed on the customer’s side of the utility meter. This  program is open to many different technologies, but according to the  California Public Utilities Commission, the largest share of funding is  allotted for energy storage projects.

In 2017, Maryland established a state tax credit for a percentage of  certain installed costs of energy storage systems on residential and  commercial property.

Legislation has also been proposed in New York that would create a  state tax credit for residential energy storage systems equal to 25  percent of costs up to $7,000.

A number of states offer funding for energy storage pilot and  demonstration projects. For example:

Massachusetts launched a $20 million grant program to pilot energy  storage use cases to increase deployment of storage.

The Washington Clean Energy Fund supports demonstration projects,  including projects at utilities working with the Pacific Northwest  National Laboratory to support understanding approaches to integrate  and optimize storage control systems and development of a  framework for evaluating the technical and financial benefits of  storage.

In addition to the efforts described above, we found that several states  have proposed or undertaken a range of other efforts that may encourage  the deployment of energy storage or address market barriers. For  example, the Arizona Corporation Commission required two electric  utilities to develop residential battery storage programs in order to lower  customers’ energy use during peak demand. In addition, Maryland’s  Public Service Commission initiated a grid modernization rulemaking that,  among other things, will define residential energy storage, determine a  classification for storage in the Commission’s rules, and create criteria to  evaluate storage investments. Similarly, state legislation directs Oregon’s  Public Utility Commission to create a framework for utilities to use when  conducting storage evaluations. Moreover, the California Public Utility  Commission has approved rules that increase the ways for energy  storage systems to obtain revenue for multiple uses, or grid services, for  example, from frequency regulation, capacity, or other services.

We provided a draft of this report to DOE, FERC, and IRS for review and  comment. In its comments, reproduced in appendix II, FERC generally  agreed with our findings. DOE and FERC provided technical comments  which we incorporated as appropriate. IRS did not provide written or  technical comments.

We are sending copies of this report to the appropriate congressional  committees, the Secretary of Energy, the Chairman of FERC, the  Commissioner of IRS, and other interested parties. In addition, the report  is available at no charge on the GAO website at http://www.gao.gov.

If you or your staff members have any questions about this report, please  contact me at (202) 512-3841 or ruscof@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. GAO staff members who made major  contributions to this report are listed in appendix III.

Appendix I: State Policies and Other Efforts Encouraging Deployment of Energy Storage

Through interviews with stakeholders and our review of documents, we  identified examples of policies and other efforts that have encouraged the  deployment of energy storage or aim to address market barriers,  including the establishment of mandates and targets for storage adoption,  the revision of interconnection rules and planning requirements, financial  incentives, and funding. Table 1 describes examples of a range of state  policies and other efforts that may encourage the deployment of energy  storage.

Appendix II: Comments from the Federal Energy Regulatory Commission

Frank Rusco, (202) 512-3841 or ruscof@gao.gov.

In addition to the contact named above, Karla Springer (Assistant  Director), Antoinette Capaccio, Janice Ceperich (Analyst-in-Charge),  Philip Farah, Kristen Farole, Paul Kazemersky, and Daniel Kojetin made  key contributions to this report. Also contributing to this report were   Tara Congdon, R. Scott Fletcher, Cindy Gilbert, and Dan C. Royer.

Supplying electricity requires power plant operators to instantaneously and precisely match output to varying demand. Technologies like batteries and flywheels can store one form of energy and then transform it to generate power as needed.

For example, interviews with government and industry officials and our review of studies indicated that energy storage can help:

Defer the need for transmission or distribution system upgrades

The federal government and states are taking steps to reduce technological and market barriers to energy storage deployment.