The energy storage industry in North America is surging ahead, driven by the record growth in the US during the past year. Notably, the COVID-19 pandemic has not stalled the momentum in growth of the sector. It is rather serving as a means to holding up the country’s economic prospects. During 2020, 1,464 MW/3,487 MWh of new storage was added in the US, which is about 180 per cent more than that added in 2019 in MW terms (at 523 MW) [as per a report by Wood Mackenzie and Energy Storage Association (ESA)]. This has been largely supported by the fall in prices as well as strong policy support both at the federal and state level. The growth has been largely driven by California’s battery energy storage system (BESS) deployment. The market is expected to continue to accelerate exponentially with a strong pipeline of large-scale, under-development projects as well as new project announcements. Market forecasts indicate that the country’s installed energy storage capacity will reach about 4 GW by end-2021 and further to 7 GW in 2025. This would thereby facilitate the ESA’s target of deploying 100 GW of new energy storage in the US by 2030.
Global Transmission Research presents the key developments in the energy storage space in the US and Canada during the past one year…
California dominated the deployments during the past year, with the operationalisation of the world’s largest BESS – the 300 MW/1,200 MWh Phase I Moss Landing Energy Storage Facility in Monterey County by Texas-based Vistra Energy – in January 2021. Construction is underway on Phase II, which will add an additional 100 MW/400 MWh by August 2021. Earlier in June 2020, LS Power energised the 250 MW Gateway Energy Storage, in San Diego County, California. Separately AES Corporation energised a 100 MW/400 MWh Alamitos battery storage facility in Long Beach, California, in January 2021. The two state utilities – Southern California Edison Company (SCE) and Pacific Gas and Electric Company (PG&E) – have contracted for the above three projects’ output, individually or together, to support grid reliability under California’s Resource Adequacy Program, which is based on ensuring reliable grid operations in real-time to the California Independent System Operator (CAISO) grid.
The federal government continues to infuse money to support research, development and demonstration (RDD), as well as build domestic manufacturing capacity for energy storage systems (ESS) in the country to meet the market demand by 2030.
In March 2021, the US Department of Energy (DoE) launched the design and construction of the USD75 million Grid Storage Launchpad (GSL), located at Pacific Northwest National Laboratory (PNNL) in Richland, Washington. The facility is expected bring together researchers and industry to boost clean energy adaptation, and accelerate the development and deployment of long-duration, low-cost grid energy storage. Construction is expected to begin later this year and complete by 2025.
In a bid to strengthen manufacturing and infrastructure for clean energy technologies such as battery energy storage, and build critical clean energy supply chains in the US, the DoE’s Advanced Research Projects Agency-Energy (ARPA-E) announced, in February 2021, that it will offer USD100 million in funding to support low-carbon energy technologies such as next-generation batteries for electric cars, and energy storage from wind and solar power.
Significantly, the Energy Act of 2020, legislated in December 2020, authorises USD1 billion over five years for federal innovation investments in energy storage technology and RDD.
Further, in December 2020, the DoE selected the Electric Power Research Institute (EPRI) and awarded USD0.6 million to lead three advanced energy storage projects to study innovative, non-battery based, bulk energy storage solutions, integrated with fossil assets.
The Federal Energy Regulatory Commission (FERC) has been proactive in promoting energy storage within its jurisdiction. Its efforts to boost energy storage received a fillip through a landmark decision by the D.C. Circuit Court of Appeals, in July 2020, upholding the Order 841 issued by FERC in 2018. Order 841 directs each regional transmission operator (RTO) and independent system operator (ISO) to create market participation rules that recognise the unique characteristics of electric storage resources (ESR). In its Order, FERC refused to include an opt-out provision for the state regulators and utility groups, which argued that FERC was impermissibly regulating distribution systems by prohibiting them from blocking storage access to wholesale markets. However, the D.C. Circuit decision rejected these claims.
In a separate development, the New York Independent System Operator (NYISO), in September 2020, became the first to comply with FERC’s Order 841. The move will facilitate the State in meeting its aggressive ESR targets in the State’s Climate Leadership and Community Protection Act (CLCPA), which requires the State to reach 100 per cent carbon-free electricity grid by 2040; along with the achievement of ESR goals —1,500 MW by 2025 and 3,000 MW by 2030.
During the year, the FERC clarified that Order 841 does not preclude ESRs from continuing to participate in demand response programmes. This was established in a September 2020 order, where the FERC sided with the North Carolina Eastern Municipal Power Agency (NCEMPA) to use energy storage as a demand response under the Full Requirements Power Purchase Agreement (FRPPA) between NCEMPA and Duke Energy Progress LLC.
In May 2021, the FERC rejected a request from the Midcontinent Independent System Operator (MISO) to extend the grid operator’s compliance deadline for Order 841 by three years, to better integrate energy storage into the electricity marketplace. FERC remarked that MISO has not demonstrated potential reliability impacts that warrant further delay. The decision thereby retains MISO’s compliance date at June 6, 2022. This was itself a deferred date, approved by FERC in November 2019 on MISO’s request, to accommodate other major market and reliability enhancements. In a separate development, in August 2020, FERC approved MISO’s proposal, which allows ESRs to be selected as ‘storage-as-transmission-only-assets’ (SATOA) as part of the grid operator’s annual grid expansion plans. Therefore, SATOAs have to clear MISO’s specific project evaluation criteria and are not subject to traditional interconnection procedures.
Meanwhile, in April 2021, FERC rejected a proposal by PJM Interconnection (PJM) to allow renewable energy and storage resources to participate more fully in its capacity market, after concluding that a key provision would benefit some existing resources over newer market participants. It found that the proposal to establish minimum floor values based on the cohort year would unjustly and unreasonably discount the capacity of effective load carrying capacity (ELCC) resources that enter the market at a later date. However, it iterated that the grid operator’s effort to assign accurate capacity values to variable energy resources by developing a broader framework appears to be a just and reasonable approach. At issue was a long-running effort by PJM to accommodate more renewable energy resources and develop rules consistent with Order 841.
In another development, in October 2020, the FERC issued the Order 2222 that paves the way for aggregated distributed energy resources (DERs), like small-scale solar arrays and battery installations, to participate in wholesale power markets. This Order requires grid operators within FERC jurisdiction to develop rules to include aggregated DERs in their market participation models by July 2021. Around 65 GW of DER capacity is expected to come up over the next four years. The Order is likely to accelerate the transformation of the US electric grid by enhancing grid flexibility and reliability.
State initiatives and developments
Several positive policy and regulatory developments took place at the state level as well.
Virginia: In December 2020, the Virginia State Corporation Commission (SCC) adopted new regulations to ensure that the state’s largest utilities meet the energy storage benchmarks outlined in the state’s clean energy legislation (that sets a goal of zero-carbon emissions by 2050 and requires state utilities to generate electricity from 100 per cent renewable energy sources by 2045). Under the regulations adopted, Appalachian Power, must build or purchase 25 MW of energy storage capacity by December 31, 2025; followed by an additional 125 MW by 2030 and another 250 MW by 2035. Meanwhile, Virginia Electric and Power Company must meet interim energy storage targets of 250 MW in 2025, 1,200 MW in 2030 and 2,700 MW in 2035. Beginning in 2021, each utility will have to sponsor at least one competitive solicitation for energy storage projects per calendar year.
New York: In December 2020, the New York Power Authority (NYPA) approved a ten-year strategic plan—VISION2030—for decarbonising New York State’s energy infrastructure. The plan commits to invest in 325 MW of distributed and customer-sited solar by 2025 and 450 MW of storage by 2030. It also calls for investing USD200-400 million annually to grow NYPA’s transmission asset base by three to five times by 2030. This is seen as critical to integrate increasing amounts of renewable energy into the grid to achieve the state’s renewable energy target of 70 per cent by 2030.
California: In order to support California’s goal of attaining 100 per cent fossil-free electricity by 2045, the California Energy Commission (CEC), in 2020, released energy storage solicitations worth US20 million to fund the innovative long-duration, non-lithium storage. As part of its solicitation for ‘Demonstrating Long-Duration and Title 24-Compatible Energy Storage Technologies’, CEC awarded USD1.2 million to Indian Energy LLC – including a grant of over USD5 million for development, integration and commissioning of hybrid modular storage systems (HMSS) and a USD6 million grant to create two living laboratories to test advanced energy storage technologies. CEC also awarded a USD1.2 million grant to a modular microgrid energy solution company, BoxPower, to further develop its software and hardware solution at 15 microgrid sites in California. Separately, the CEC selected the UK-based battery storage manufacturing company, Invinity Energy Systems (formed by the merger of flow battery providers—redT energy and Avalon Battery) for funding its vanadium flow battery (VFB) technology.
In April 2021, the California Independent System Operator (CAISO) launched an initiative to explore market reforms in anticipation of a surge of grid-scale energy storage on its system in the next few years. CAISO projected a four-fold increase in the amount of battery storage on its system from 2020 to the summer of 2021 (2 GW by August 1, 2021). Earlier in October 2020, CAISO approved three tariff revisions related to energy storage and DERs. These were an optional end-of-hour, state-of-charge biddable parameter for storage resources, establishing parameters to better reflect demand response resource operational characteristics, and streamlining market participation agreements for non-generator resource participants. The revisions would aid the operator to comply with Order 2222.
In December 2020, PG&E sought California Public Utilities Commission’s (CPUC) approval for six additional BESS projects totalling 387 MW. The six project agreements complete PG&E’s procurement requirements outlined in a November 2019 CPUC decision, which identified potential electric system reliability issues beginning in the summer of 2021, and authorised PG&E to procure at least 716.9 MW of resources to come online between August 1, 2021 and August 1, 2023. All six projects were selected through a competitive tender launched in July 2020. Earlier in May 2020, PG&E announced the results of its first procurement round—423 MW of BESS capacity, scheduled to come online by August 2021.
In May 2020, SCE signed seven 10-20 years contracts of cumulative capacity of 770 MW of BESS to help enhance the region’s electric system reliability needs. The projects, most of which are co-located with solar power plants, were bagged by NextEra Energy Resources LLC, Southern Company, TerraGen Power and LS Power. The selected contracts are part of a competitive process and are scheduled to come online in 2021.
New project announcements
Several large ESS projects are underway in the US, particularly in the states of California, Florida and Nevada. Some of the key BESS projects currently underway/announced are:
In May 2021, the US Department of the Interior approved the construction of the utility-scale Crimson Solar Project (which includes 350 MW solar PV with 350 MW/1,400 MWh ESS) on public land in California. Sonoran West Solar Holdings, a subsidiary of utility-scale developer Recurrent Energy and Canadian Solar, will develop the project at an investment of USD500 million.
In 2020, North Carolina-based Strata Solar commenced construction of its 100 MW/400 MWh Ventura storage project in Ventura County. The project was competitively selected by SCE for a 20-year contract in 2019.
In August 2020, LS Power commenced work on its 200 MW/800 MWh Diablo Energy Storage Project in Pittsburg, California.
In August 2020, Tenaska Energy Inc and financing partner Capital Dynamics Clean Energy and Infrastructure LP announced its plans to develop nine BESS projects in California, totalling about 2 GW by 2022.
NextEra Energy Resources LLC announced plans to build nearly 700 MW of energy storage at existing solar projects in California by 2022.
In February 2021, the Florida Power & Light Company (FPL)— a NextEra Energy subsidiary—began construction work on the 409 MW/900 MWh Manatee Energy Storage Centre in Florida. It is co-located with FPL’s existing Manatee Solar Energy Center’s solar PV plant and is expected to commence operations by end-2021.
In August 2020, Duke Energy Florida (DEF) announced its plans to add three new BESS facilities totalling 30 MW in the state by end-2021. These include the Lake Placid Solar Power Plant’s 18 MW lithium battery site in Highlands County; the 8.25 MW Micanopy lithium battery site in Alachua County; and a 3.5 MW solar plus storage microgrid site in Pinellas County. These projects are a part of DEF’s commitment to add 50 MW of BESS by 2022.
In July 2020, NV Energy unveiled its plans for building three solar parks with a cumulative of 338 MW of battery storage capacity in southern Nevada—Dry Lake Solar Project (100 MW), Boulder Solar III (58 MW), and Chuckwalla Solar Project (180 MW). All three storage projects are scheduled to complete by end-2023. This is part of its efforts to support Nevada’s 2050 decarbonisation goals and its target for 50 per cent of renewable electricity by 2030.
In March 2021, Able Grid Energy Solutions selected Wärtsilä to supply and maintain the Madero and Ignacio ESS with a combined capacity of 200 MW in southern Texas, US. The projects will provide grid support to Electric Reliability Council of Texas (ERCOT).
In March 2021, Gambit Energy Storage LLC—a Tesla subsidiary—announced its plans to develop a 100 MW lithium-ion BESS near a 138 kV substation in Angleton, Texas by mid-2021. The grid-connected project will include lithium iron phosphate batteries and would offer black-start capability to the ERCOT grid.
In August 2020, Key Capture Energy (KCE) selected Mitsubishi Hitachi Power Systems Americas, Inc and Powin Energy Corporation to build three utility-scale BESS projects totalling 200 MW in Texas. The three storage projects—KCE TX 11 (50 MW), KCE TX 12 (100 MW) and KCE TX 23 (50 MW)—are expected to be operationalised in 2021.
In February 2021, Milwaukee-based Wisconsin Energy Corporation (WEC) announced the construction of the 310 MW Paris Solar-Battery Park in Wisconsin, USA. Invenergy LLC will develop the facility by 2023, which will include a 200 MW solar farm and a 110 MW ESS.
- New York
In December 2020, Con Edison signed a seven-year dispatch rights agreement with California-based 174 Power Global for the development of the 100 MW East River Energy Storage System in Astoria, Queens, New York. The facility will be located on land owned by NYPA. The project, expected to be commissioned in early 2023, will balance peak electricity demands and provide grid reliability by delivering reactive power, voltage support and frequency stability to New York.
In July 2020, Arizona Public Service (APS) announced its plans to purchase large volumes of BESS—adding at least 2,500 MW of energy storage capacity in the next decade and about 10,550 MW by 2035. About 750 MW of stand-alone storage and solar-plus-storage plants are planned to be introduced by the end of 2024, followed by an additional 1,750 MW by 2030. The capacity introduced is expected to serve as a backbone for the complete replacement of 1,400 MW coal-based generation by 2031. In addition to retirement of coal-based capacity, 1,600 MW of natural gas contracts will expire over the next decade.
In September 2020, Tennessee Valley Authority (TVA) announced its plans to build its first grid-scale 40 MWh BESS near an industrial complex in Vonore, Tennessee in 2022. TVA also plans to add a 200 MWh BESS to an upcoming solar project in Lowndes County; and add up to 5 GW of energy storage capacity through 2038.
In April 2021, RWE Renewables awarded a contract to Wärtsilä to supply a 40 MW/80 MWh DC-coupled solar plus storage system to the Hickory Park Solar project in Georgia.
Collaborations and M&A activity
Several collaborations and acquisitions took place during the year.
- In March 2021, the Hunt Energy Network (HEN) announced a new energy storage venture, HEN Infrastructure LLC, in collaboration with Manulife Investment Management, to actively participate in the energy storage space within the ERCOT zone. It will develop and manage a portfolio of 500 MW of DER storage assets in ERCOT, dispatched by Hunt Energy Network’s proprietary TraDER platform.
- In February 2021, Leyline Renewable Capital announced plans to provide financial support to Ohio-based Momentum Energy Storage Partners, which would develop up to 2 GW of battery projects across the US. This include projects that are already underway within the Pennsylvania, Jersey, Maryland Power Pool, and ERCOT regions.
- In November 2020, New Jersey-based EoS Energy Storage LLC—an equipment and solution provider—signed an agreement with renewable energy developer Hecate Energy, to supply battery solutions to over 1 GWh of energy storage projects, for an estimated USD250 million. EoS’s scope of work under the agreement involves the design and delivery of its zinc-based battery solutions over the next 24 months, across Colorado, New Mexico and Texas. Earlier in September 2020, EoS Energy Storage announced that it had entered into a binding agreement to supply 1 GWh of standalone BESS to International Electric Power, LLC (IEP), an independent power producer (IPP) in Pittsburg, Pennsylvania, for grid-connected projects with the ERCOT.
- In February 2021, French-based Total SE acquired a development pipeline of 2.2 GW across four solar projects, each with co-located BESS aggregating 600 MW in Texas, from SunChase Power and private energy investment firm MAP RE/ES. All the projects will come online between 2023 and 2024.
Canada is gearing up for the development of the country’s largest storage facility – the 250 MW/1,000 MWh Oneida project. In April 2021, the Ontario government directed the Canadian grid operator Independent Electricity System Operator (IESO), to start negotiations to explore a ten-year contract with the project developers – Six Nations of the Grand River Development Corporation and NRStor Inc. The project, which is being backed by the Canada Infrastructure Bank, is expected to provide important grid-balancing services, thus creating a cost-effective electricity system for Ontario.
In another development, in April 2021, Canadian Hydro-Québec’s subsidiary—EVLO Energy Storage Inc. (launched in December 2020), announced that it will deploy a 4 MW/20 MWh BESS on the Hydro-Québec grid, based on the lithium iron phosphate battery technology. The system, which will be the first ESS on Hydro Quebec’s grid, will be deployed in the municipality of Parent by the spring of 2022.
The way forward
Contrary to expectations of a decline in energy storage deployment during 2020 due to the COVID-19 pandemic, the sector performed exceptionally well, crossing the 1 GW mark in new additions. The medium to long-term outlook for the sector remains positive. In the US, supportive federal initiatives focused on developing domestic manufacturing capacity and supply chain, as well as mandatory state procurement targets, would be the key drivers. Given the recent trend in the development of grid-connected hybrid renewable energy and storage projects, which meet the twin goals of renewable capacity addition and enhancing grid reliability, greater clarity in the grid operators’ interconnection policies would expedite their progress.
The article has been sourced from Global Transmission