HD13 - Virginia Energy Storage Task Force: Final Report (Chapter 863, 2020)

Executive Summary:

This report was generated based on input from Virginia’s Energy Storage Task Force, which was created at the direction of Virginia’s General Assembly with their passage of HB 1183. The formation of the Task Force reflects Virginia’s recognition of the important role energy storage will play in reaching the renewable portfolio standard targets set out in the Virginia Clean Economy Act (VCEA). Most relevant to this report, the VCEA requires investor-owned utilities to petition the Commission for necessary approvals to construct or acquire 3.1 gigawatts of energy storage by 2035, with an additional goal of 10 percent of that capacity coming from behind-the-meter (BTM) sources.

Energy storage provides a crucial benefit through its ability to smooth and offset load from intermittent wind and solar generation. These renewable technologies are necessary parts of a zero-carbon grid and therefore energy storage is also an essential part of Virginia’s future grid. Some benefits associated with energy storage are therefore the same as those from achieving a zero-carbon grid including reducing greenhouse gas emissions associated with the electric grid and improving air quality.

Energy storage systems provide numerous other benefits for the grid as bulk market devices, utility integrated systems, and BTM deployments. Many of energy storage’s benefits manifest as services they provide to the grid, which are called use cases. Use cases include, but are not limited to, voltage and capacity support, frequency response, energy shifting, non-wires alternatives, back-up generation, and demand response. Individual energy storage deployments can provide multiple use cases in an operating mode called value stacking which is one of the major benefits of energy storage systems.

Another important characteristic of energy storage systems is the numerous and diverse technologies available for deployment, allowing energy storage installations to be tailored based on geographic factors, energy demand, and other situation-specific variables. However, not all storage technologies can provide all storage use cases and certain technologies are better than others at providing certain services. Task Force members were particularly adamant about the need for “technology agnosticism" when planning for future grid needs. The evolution of the grid is uncertain, and the future mix of services required from energy storage throughout the Commonwealth will dictate which technologies are best to deploy in Virginia.

Different technologies also have different risks and barriers (e.g., land use, real or perceived safety concerns, equitable access), which must be addressed to ensure systems are safe, reliable, and available. Outside of specific technology barriers and risks, there are regulatory, market, and local barriers facing deployments of energy storage devices in the bulk market, utility system, and BTM. These barriers are presented throughout this report and are included with the associated benefits of deployment in different market segments.

These technologies also all carry both soft and hard costs to deployment which can be weighed against their benefits to determine overall effectiveness of an energy storage system. Soft costs include interconnection fees, permitting costs, overhead costs, site design, and other costs not directly tied to the construction of energy storage installations. Some of these costs can be influenced by the Virginia State Commission Corporation (SCC) and the General Assembly by changing permitting requirements for energy storage devices or altering and influencing the interconnection process. Several recommendations to this affect are made in this report. Hard costs are much more dependent on the specific technology being deployed. Virginia can also help lower these costs in a variety of ways including by making the installation process transparent and easy to follow, investing in research, development, full-scale demonstrations, and pilots for these devices, incentivizing customers directly for behind-the-meter installations, and allocating federal or regional funds to support energy storage projects. Most of these actions require future discussion on the source and amount of funds that would be required.

Discussion of these benefits, barriers, technologies, and costs is informed by Task Force discussions, and is therefore not comprehensive. The References Appendix includes material providing further information on energy storage and deployments nationally. The report focuses on the energy storage topics most relevant to Virginia and its ratepayers.

The Task Force included a group of diverse stakeholders that met for thirteen separate meetings from February 2021 to September 2021 to discuss items specified by the General Assembly and the SCC. Throughout these meetings, recommendations related to energy storage and its deployment and operation in Virginia were encouraged and discussed. These recommendations are divided into two categories in this report: consensus recommendations (i.e., those that were generally supported by Task Force members) and non-consensus items. The Task Force suggests immediate consideration of consensus recommendations by the General Assembly and SCC and believes implementation of these recommendations will help Virginia reach VCEA targets and become a national leader in energy storage. Table ES-1, on page iv of the report, presents these recommendations. The Task Force also urges further consideration of non-consensus recommendations (available in the body of report) as resolutions on many of these ideas can help set clearer guidelines for stakeholders deploying energy storage systems in the Commonwealth.

Conclusions and Next Steps

While the recommendations in this report represent necessary steps to realize the Commonwealth’s desire to address the Virginia Clean Economy Act energy storage targets, the Virginia Energy Storage Task Force does not perceive any of the identified barriers to energy storage as detrimental or insurmountable. Rather, the Task Force recommends that it continues to meet to monitor target progress and to perform dedicated discussion and analysis, resulting in informed recommendations that unpack the complexities of energy storage and provide clear paths forward for the Commonwealth’s energy storage efforts.