Originally published on the NRDC Expert Blog.
By Arjun Krishnaswami
The cost of energy storage is plummeting as performance is improving, and Congress is moving to help storage technologies continue to advance. Spurring innovation is far from all we need to do to address the climate crisis facing us, but it’s a necessary component and a start to development of comprehensive solutions.
After years in which many in Congress have done all they can to deny the science of climate change or avoid taking steps to address it, it’s reassuring to see lawmakers of both political parties acknowledging the facts and taking the first steps to grapple with it. Deploying technologies to save the surge in solar power on a sunny afternoon or wind power from a blustery night is one part of making our electric grid cleaner and greener.
Energy storage is increasingly recognized by both Republicans and Democrats as a necessary tool to unlock more clean energy like wind and solar, increase flexibility to meet changing patterns of electricity demand, provide essential grid services, and provide emergency power in times of disaster.
The Better Energy Storage Technology (BEST) Act, which was introduced by Senators Collins, Heinrich, Smith, Gardner, Coons, McSally, and King, adds to the growing set of energy storage bills introduced this Congress aimed at accelerating development and deployment of solutions to meet the emerging challenges of a cleaner electricity grid.
The BEST Act would:
- Authorize the energy storage research, development, and demonstration program within the Department of Energy’s (DOE) Office of Electricity (OE) at $60 million per year, an increase over the current funding level of $46 million (these funding levels are in addition to other parts of DOE that work on specific energy storage technologies, like the solar and vehicles technology offices);
- Direct DOE to develop a 10-year strategic plan for energy storage innovation;
- Require DOE to set cost targets for energy storage technologies suited for three timescales: 6 hours for daily needs, 10 to 100 hours for weekly fluctuations in demand, and multiple months for interseasonal balancing of supply and demand; and
- Create a program to fund demonstration projects for innovative energy storage technologies.
The proposal was released alongside the Promoting Grid Storage Act of 2019, a bicameral, bipartisan bill, led by Senator Smith and Representative Casten, that would facilitate a more coordinated energy storage innovation program at DOE and provide grants and technical assistance to expand energy storage deployment.
These proposals build upon several bipartisan bills introduced in March by Representatives Takano and Collins. The Advancing Grid Storage Act of 2019 (H.R.1743) would authorize OE’s research and development (R&D) programs at $50 million per year and authorize DOE to provide loans to fund energy storage demonstration projects and deployment programs, the Battery Storage Innovation Act (H.R.1742) would enable Title XVII loan guarantees to fund battery storage technologies for residential, industrial, and transportation applications, and the Storage Technology for Operational Readiness And Generating Energy (STORAGE) Act (H.R.1744) would encourage states to require utilities to consider energy storage in their planning processes.
Federal innovation programs are necessary to catalyze and expand storage development
The federal government has a key role to remove barriers to deployment of existing types of storage and support the development of less mature technologies to meet the emerging needs of our energy systems.
The market for new energy storage technologies is dominated by lithium-ion (Li-ion) batteries, the same type of batteries that are in our phones and electric vehicles. These batteries have rapidly declined in cost over the last several years, thanks in large part to innovation programs at DOE, increased deployment of electric cars, and heightened demand from state clean energy policies and energy storage mandates. As a result, Li-ion batteries are connecting to the grid at lower and lower cost, with several recent solar-plus-battery projects bidding in at record low prices between 3 and 4 cents/kilowatt-hour.
Despite their success thus far, challenges remain to fully realize the potential of Li-ion batteries. Existing batteries rely heavily on cobalt, more than 60 percent of which is mined in the Congo. Reliance on cobalt presents human rights concerns and may prevent battery production from expanding to meet global storage needs. Federal innovation programs are needed to develop and test cobalt-free batteries and mitigate other risks related to battery supply chains. And federal programs can ensure that we take advantage of other opportunities like improved battery manufacturing and recycling, reuse of vehicle batteries for grid-scale uses, and operation of batteries to maximize environmental benefits.
Further, Li-ion batteries only represent part of the opportunity storage technology can serve. These batteries typically can provide their maximum output for under 4 hours. This duration can work well for some major use cases, like meeting demand during peak times of the day. We also need solutions to meet longer-duration requirements, such as storing wind power at night to deliver during the day, providing electricity over a series of cloudy days when solar output declines, ensuring the lights stay on for weeks when the wind calms down, or balancing seasonal differences in supply and demand. To address these challenges, which Li-ion batteries are not well suited to meet, we will need other technologies and creative solutions, like new battery chemistries or other chemical and mechanical storage configurations. Pumped hydropower storage, which involves moving water back and forth between reservoirs of different elevations, is the largest existing source of energy storage and can meet some longer-duration needs, but development of new pumped storage resources has largely ceased in the United States. Looking to the future, new battery types, stacks of concrete blocks, innovative pumped hydropower configurations, and hydrogen produced with clean electricity are just a few examples of resources that could potentially store energy across multiple days, weeks, or months.
Many of these longer-duration technologies are in earlier stages of development than their Li-ion counterparts. Development of cost-effective longer-duration storage will require federal research to improve performance and reduce costs, demonstration funding to test and perfect the technologies, and tax credits, loan guarantees, or other financing mechanisms to bring the technologies to commercialization.
Energy storage has high potential with bipartisan, bicameral support
The bipartisan activity happening in both chambers of Congress around energy storage marks a promising step toward the large-scale deployment of energy storage technologies that are required to meet the evolving needs of a cleaner and smarter electricity grid.
These proposals advance the policy conversation around energy storage, and Congress should look to a combination of these mechanisms, including consistent R&D funding, grants for demonstration projects, technical assistance to reduce barriers to deployment, and loans and financing for technologies that are further along.
And there’s even room to raise the ambition levels within these innovation programs. For example, energy storage opportunities merit an even greater sum of money for development and demonstration projects. The Advanced Research Projects Agency – Energy (ARPA-E) spent upwards of $27 million last year on a single round of funding for long-duration storage technologies, and these technologies will require much more investment to commercialize.
Deployment incentives and properly designed electricity markets will also drive new energy storage development and bring costs down. Energy storage should be able to fully qualify for the Investment Tax Credit, as proposed by a bipartisan, bicameral bill that has already been introduced: the Energy Storage Tax Incentive and Deployment Act of 2019 (H.R.2096/S.1142). And the federal government must also make sure that operators of the electricity grid are adequately valuing the services that energy storage provides to the system.
Innovation programs are necessary but not enough to address the climate crisis alone
Innovation policies are an essential building block for a strong climate policy, but they will not fix the climate crisis by themselves. Successful innovation programs will make clean energy transition policies more effective and less costly and, if done right, will bring the benefits of an economy based on cleaner, better technology to more people. We should support these policies and ramp up investments in technology development to reap these rewards.
But the climate crisis is far too dire for us to count on technology improvements to clean our grid on their own. We know that the combination of carbon policies, clean energy technology advances, and deployment programs can drive greater emissions reductions than the sum of each approach alone. And moreover, storage is not a solution in isolation; its value is dependent on its ability to charge up with clean electricity, displace dirty generating resources, enable the deployment of additional clean energy, and increase reliability and resiliency of the grid. We must pair innovation programs with strong clean energy deployment incentives, codes and standards to make our buildings and transportation systems more efficient, limits on carbon pollution to ensure that we rapidly cut emissions, and robust investments from the federal government to make sure that the transition to clean energy is just and equitable.