Last Tuesday, U.S. Representatives Chris Collins (R-NY), and Mark Takano (D-CA) announced the launch of the Battery Energy Storage Caucus in the U.S. Congress. The mission of the caucus is to advance the understanding of how energy storage systems are enabling American businesses and homeowners to better access reliable, affordable, and sustainable electric power. Reps. Collins and Takano were joined in the announcement by representatives of the Energy Storage Association (ESA), AES Energy Storage and Johnson Controls.
NAATBatt International welcomes the launch of the new caucus and extends its thanks to all involved in the effort to form it. Getting information about battery energy storage technology and its benefits out to members of Congress and to the public generally is important. NAATBatt will support this effort in any way it can.
But while telling the story of battery energy storage in Congress is important, even more important is getting something done to support our industry and to bring the benefits of our technology to the public. Although I am sure that many in Washington are working on good ideas for possible programs and initiatives, none were discussed in the news release announcing the launch of the caucus.
At the risk being a skeptic, I would point out that over the past few years our industry has spent a lot of time and money lobbying Congress for a variety (and perhaps far too great a variety) of storage-related legislation, with little success. Our industry must decide what it wants to do. Press releases and new caucuses are great. But much more critical is getting something done. And to get something done, you must first decide what you want to do.
Where the storage industry has seen some success with traditional lobbying is at the state level. This is in part because most of the potential benefits of battery storage technology adhere to electricity distribution systems and retail customers that are subject primarily to state law and regulation, not federal. Janice Lin and her team at the California Energy Storage Alliance played a critical role in pushing for AB 2514 in California, arguably the industry’s greatest legislative success (excepting, perhaps, the battery manufacturing grants in the ARRA, for which NAATBatt can claim some credit). Likewise, Bill Acker, John Cerveny and their team at NY-BEST are playing an indispensable role in ensuring that storage remains a critical component of the New York State Energy Plan. The ESA’s efforts in Texas and other states also represent important initiatives.
The battery energy storage industry needs a coherent government relations strategy and a clear and coherent set of “asks”. I am not sure that we have those yet. But in developing our “asks”, we need to keep in mind where the opportunities in the industry really are and what we need to drive those opportunities forward. Here are some thoughts:
Rate Structure Reform. The behind-the-meter storage market is promising, but it is driven almost entirely by retail rate structures. Where rate structures encourage commercial, industrial and residential customers to levelize their use of electricity, storage will thrive. Where they don’t, it won’t. The challenge of lobbying for rate structure reform is that there are literally thousands of entities that set or approve electricity rate structures around the country. A traditional lobbying campaign for electricity rate reform would be expensive and challenging.
Utility Rate-Basing of Energy Storage Assets. In one of the more interesting conversations I had this week, a senior executive at one of the most successful ESS developers told me that he thought that the real future for storage was that batteries would eventually become a standard and somewhat unremarkable component of most utility substations. The battery will simply be there to handle any number of tasks or functions that the operating utility might need. The problem, said the executive, is that given slow utility technology adoption and purchasing cycles, both he and I are likely to be retired by the time that happens.
If that is an accurate picture of the true, primary opportunity for storage, then the appropriate focus of industry’s government relations initiatives should be to support utilities’ efforts to rate base storage assets. Today, this probably has less to do with lobbying utilities to adopt storage technology than with lobbying regulators to allow utilities to rate base it. Most regulated utilities would be happy to deploy storage in their substations, if they could rate base it. After all, that is their business model. The challenge to our industry is convincing regulators (and, again, there are more than 50+ applicable regulatory bodies) that storage assets will in the long run reduce the cost of electricity to consumers and increase its reliability. Perhaps it’s time to reconsider NAATBatt’s “Got Juice?” public relations proposal of a few years ago (which unfortunately received little industry traction at the time).
Battery Research and ESS Component Demonstration
High cost remains the principal obstacle to ESS gaining market share from competing electricity technologies. Further research into battery technology at the basic science level is one of the few areas of federal discretionary spending that has the potential to garner widespread bipartisan support. This could, and perhaps should, be the focus of an industry-wide government relations effort at the federal level. The problem, of course, is that basic research will result in little short term gain for industry or market penetration by ESS technology.
More immediate gains might come from funding demonstration projects implementing novel technologies that support the batteries themselves, such as new inverter technology and new communications software that could help bring down ESS system cost. These new technologies must be seen by utilities and their regulators to work in real world environments before anyone will rate base them and deploy them in the field. That process, left to its own natural evolution, takes a long time. Funding more projects demonstrating the efficacy of new ESS-supporting technologies could move this adoption cycle forward more rapidly.
Rationalizing Existing Credit Support Programs for Storage.
I have written in this column on many occasions about the opportunity to use existing government programs that were designed to provide credit support for large energy projects for smaller, distributed energy storage projects. Today, the Department of Energy’s Loan Program Office as much as $4 billion in loan guarantees available for innovative renewable energy and energy efficiency projects located in the U.S. that avoid, reduce, or sequester greenhouse gases. In July, President Obama announced that he wanted at least part of those funds to be made available for distributed energy projects, such as storage. But to my knowledge little has happened, largely because the programs administered by the DOE’s Loan Program Office are really structured to support larger, mega energy projects. An industry effort to reform this program and unlock some of the $4 billion that is technically available to support distributed storage technology projects might be a very good use of our industry’s limited government relations capital.
The bottom line is that the battery energy storage industry has to decide on what it wants to do and to set its own priorities. Until we set them, Congressional caucuses will serve little practical purpose, other than for politicians showing themselves to be knowledgeable and responsive to constituent concerns and for lobbyists looking for something to do.