Opinion: Storage is imperative for a reliable grid

The following commentary was written by Nik Sawe. Sawe is a policy analyst at Energy Innovation: Policy & Technology. See our commentary guidelines for more information.

Electricity is already essential for civilization, but it is only becoming more important. Over the next decade and beyond, our vehicles, home heating and cooling and many more systems currently reliant primarily on fossil fuels will increasingly be powered by electricity.

That means keeping the supply and distribution of electricity reliable, affordable and clean will be a critically important task for years to come. It is also clear that achieving that goal is going to be impossible without significant expansions of energy storage. Storage technologies including batteries, flywheels, compressed air storage, hydropower and more are used to store electricity so it can be deployed later to smooth out the flow of power on the grid, back up wind and solar energy and provide a host of other benefits.

Last year the Michigan Department of Environment, Great Lakes and Energy declared the need “to create an energy storage roadmap to determine energy storage potential in Michigan and develop recommendations to inform investment and policies regarding energy storage.” That roadmap has now been completed after a year of work by the Institute for Energy Innovation (IEI), the research arm of the Michigan Energy Innovation Business Council (EIBC), with help from partners Michigan EIBC, 5 Lakes Energy and Michigan State University Associate Professor Annick Anctil. You can find the full roadmap on IEI’s website.

One major finding of the roadmap is that Michigan will need to deploy 2,500 MW of new storage by 2030 and 4,000 MW of new storage by 2040. Those targets are the result of careful analysis of what will be needed to ensure grid reliability in light of the effects of the planned retirements of power plants and the amount of renewable energy generation coming onto the grid. Renewable generation at times needs to be curtailed if, for example, there is more wind energy available than is being demanded on the grid. Storage can soak up that excess energy so it can be used at a time when it is needed, rather than being curtailed and essentially wasted.

To be clear, reliability is a major problem in Michigan, as anyone who observed the widespread blackouts last summer knows, but the causes of those problems are often misdiagnosed. Renewable energy is not to blame for worsening grid reliability. Take last summer, for example — the blackouts were caused not by the intermittency of electricity from renewables, but instead by the distribution grid failing in the face of severe storms. Not only are those kinds of weather events becoming more common, but the grid itself is more vulnerable to weather due to years of deferred maintenance.

DTE and Consumers Energy want to spend several billion dollars apiece to improve their distribution grids over the next several years, and ratepayers may have to shoulder most of those costs on their electric bills. No doubt much of that spending will be necessary, but meeting the roadmap’s storage targets would allow Michigan to improve reliability at a lower cost and with lower emissions. Storage increases resiliency and power quality by providing instantaneously available backup power. It also decreases the need to build new expensive power plants and relieves grid congestion, working as a quicker and often less costly alternative to building new transmission and distribution power lines.

IEI’s roadmap also indicates that as the costs of solar panels and batteries decrease over the next ten years, rooftop solar coupled with batteries will be increasingly cost-effective for commercial buildings like schools, hospitals and restaurants.

For example, the modeling found that for a quick-service restaurant in 2030, a solar-plus-storage installation would save the business nearly $5,000 over 20 years on a net present value basis. These savings stem from not just lower energy bills but also the added ability to keep running even if the power goes out. The solar-plus-storage installation would also produce $2,000 more in savings compared to if the restaurant just installed solar panels by themselves.

In addition to setting a storage target, the roadmap identifies several other policies that Michigan should adopt to encourage storage at both the utility-scale and customer level, including:

Conduct an economic gap analysis to quantify appropriate grant and rebate levels for residential and commercial and industrial customers.
“Lead by example” by committing to install behind-the-meter storage at state buildings.
Amend Michigan’s Uniform Energy Code and Residential Construction Code to include storage readiness requirements for new buildings and homes.
Require utility integrated resource plans to include an accurate evaluation of opportunities for storage resources and, at a minimum, meet any established storage target.
Establish a rebate or grant program for behind-the-meter residential and commercial and industrial storage systems with a carve-out for low-income customers.
Encourage pilot electric vehicle fleet programs to allow fleets, including fleets of school buses, to provide storage benefits to the grid when not being used for transportation.

Due to its inherent benefits and declining costs, energy storage is increasing in deployment around the country. For Michigan to be ready for the advanced energy future, policymakers need to set the stage now to ensure the state has the energy storage deployed that it will need in the coming years to ensure a reliable, resilient, and cost-effective electric grid.