With the Right Rules, Energy Storage Can Take the Power Grid to the Next Level

Todd Hranicka, Director - Energy Services, Public Service Electric & Gas Company

The ability to store energy from renewable resources like solar and wind, and use it when it’s most needed, is considered a game changer for lowering greenhouse gas emissions, improving the reliability of the electric grid and ultimately addressing climate change.

Energy storage can help modernize the electric grid, improve reliability, and facilitate the integration of renewable energy onto the electric grid. Storage technologies provide backup power, store and dispatch energy at more favorable times, and offer other beneficial grid level energy management services. However, there remain regulatory hurdles and technical challenges before battery energy storage can become a major component of the U.S. electricity grid.

New Jersey has recognized the vital role of the emerging technology of energy storage and has set an aggressive target of 2,000 megawatts (MW)of energy storage in the state by 2030. PSE&G, New Jersey’s largest utility, has already installed 4.6 megawatt-hours of battery storage over five projects as a part of our Solar 4 All® Program over the past five years. The solar plus storage projects provide clean, renewable power directly to the grid during blue sky days, while the energy storage systems(ESS) are also used for ancillary grid management services, such as solar smoothing which stabilizes voltages and frequency on the circuit. Additionally, energy storage provides resiliency and backup power to critical facilities in the event of unplanned outages like those experienced as a result of Superstorm Sandy that devastated New Jersey in 2012.

Just as the cost of energy from solar and wind has dropped in recent years, the price of battery energy storage is declining as well. Still, before energy storage fulfills its potential, grid operators must gain confidence that storage systems will perform as intended. Energy storage investments require broad cooperation among utilities, facility owners, project developers and insurers. Meanwhile, the regulatory landscape for energy storage is evolving, and overall storage project cost competitiveness remains an issue.

While some states offer incentive programs for ESS, there is a general ``lack of state-level policy establishing clear mechanisms to identify and capture the full value of ESS, potentially inhibiting development of ESS applications at the distribution level,’’ according to a 2020 issue brief from Sandia National Laboratories.

PSE&G has plotted a course forward. As part of its Clean Energy Future program, PSE&G is seeking approval from the New Jersey Board of Public Utilities (NJBPU) to invest $109 million over six years to build and operate an additional 35 MW of energy storage capacity. In alignment with the requirements set forth in the 2018 New Jersey Clean Energy Act, the proposed energy storage program will enable PSE&G to incorporate new methods of managing the distribution system.

Cost-effective energy storage will play a key role in that transformation

Subprograms proposed in PSE&G’s energy storage filing will help ensure that when storage applications become more widely adopted and cost competitive, PSE&G and New Jersey’s energy storage industry will be well-positioned to effectively deploy ESS. The program will also allow renewables unrestricted grid access, supporting New Jersey’s Energy Master Plan solar and offshore wind goals. This will help New Jersey create an ecosystem around which a maturing energy storage market can grow. The economic development associated with this effort will yield benefits to the State that are expected to last for decades.

While there are efforts to reform ESS regulations at the federal, state, and regional transmission organization (RTO) levels in the U.S., there remain barriers to the market’s growth. Performance of battery energy storage in PSE&G’s energy storage program will help inform future federal, state and RTO policies. In this way, the program can help establish industry standards around energy storage.

The subprograms in PSE&G’s energy storage filing with NJBPU are designed to advance energy storage utilization:

• Solar Smoothing: makes the grid more reliable and mitigates voltage fluctuations produced primarily by changes in cloud cover

• Distribution Deferral: addresses overloaded circuits and defers the need for distribution system upgrades

• Mobile Storage for Outage Management: leverages storage to reduce peak demand at substations under construction, resulting in more efficient construction projects

• Microgrids for Critical Facilities: enables critical facilities to maintain a reliable supply of electricity during unplanned outages

• Peak Reduction for Municipal Facilities: locates energy storage systems at public facilities to reduce peak demand and ultimately reduce bills for public sector customers and allow PSE&G to potentially defer distribution upgrades

Over the past decade, the U.S. power sector has undergone a transformation driven primarily by changes in fuel prices, technological advancements and policies that encourage renewable energy. As profound as these changes are, they will pale in comparison to anticipated changes in how we generate electricity and manage the grid moving forward. Cost-effective energy storage will play a key role in that transformation.

The role of energy storage is expanding. Storage will help integrate renewable generation, reduce renewable generation curtailments, enhance reliability and resilience, defer transmission and distribution grid upgrades, increase customer control over energy consumption, and enable local penetration of electric vehicle charging.

Energy storage isemerging as a central element in planning and policy across the U. S., but further policy advancements and regulatory reforms are needed for storage to reach its full potential.