Massachusetts’ finalized Clean Peak Standard (CPS) regulation has been lauded as a benchmark policy for addressing the duck curve, making strides in statewide emission reduction and promoting the widespread adoption of battery storage systems.
While the policy promotes large-scale battery development, it has been criticized by proponents of behind-the-meter storage like Russ Aney, CEO of Avid Solar, who asserts that the regulation does nothing to motivate investment — going so far as to refer to it as “a waste of ratepayer funds for behind-the-meter energy storage.”
Where did the value go?
“Fundamentally, I think Massachusetts Department of Energy Resources (DOER) was a bit frustrated at the time because the utilities don’t have any tariffs that provide price signals for discharging storage. We as a state are dramatically behind in terms of smart meter and grid modernization efforts: we don’t have time-of-use rates for 99% of ratepayers, we don’t have residential time-of-use rates. Clean Peak was trying to, in the absence of a market signal, attempt to convince people to discharge their batteries at a time where it’s most meaningful for the grid.”
In the finalized version of the regulation, several key factors of the policy were revised. The Alternative Compliance Payment (ACP) rate, essentially the base incentive credit, was raised to $45 from the originally proposed $30. That initial value will exist for five years, down from the ten years originally proposed. The Summer/Winter multiplier was raised to 4x from the originally proposed 3x, while the Actual Monthly Peak Hour Multiplier went to 25x from 15x.
Before the CPS was the MA-Smart program. Under this program, those who install a PV project up to 5 MW can apply to have a portion of the installation cost paid for by the state, on top of the initial investment tax credit. This provides meaningful subsidies to new PV installations, with additional subsidies for those who also choose to add an energy storage system to their array. However the storage adder was never designed to fully offset the cost of a residential storage system, since the benefit to DOER comes from the grid services provided by the system.
If the owner of that system wants to enter it into CPS, the value of the PV credits generated are discounted by 90% and the value of storage credits are discounted by 80%.
For the average residential storage system, the net benefit just isn’t there. Under the maximum scenario for each 4-hour peak discharge window in the summer, the system owner is making somewhere between 50¢ and $1.00, which translates to $50-100 a year. With the initial ACP rate lasting 5 years, this doesn’t translate into any real rebate on the cost of installing the system.
Enter Connected Solutions
While Clean Peak was being developed, Massachusetts’ utilities came up with a different design under the Mass Save program. Initially developed as a rebate system for energy efficiency upgrades, the program extended into a distributed energy resource management system (DERMS) pilot.
“They’re going to reward the average residential battery system owner anywhere from $500-1,500/year depending on the capacity of the battery for a typical residential installation. That’s a rate that’s locked in for five years and you only have to discharge your battery 50-60 times a year to claim that incentive.”
Under the pilot, batteries would be discharged remotely using the DERMS platform, via the installation’s smart inverters.
“Between the SMART energy storage adder, the Connected Solutions program and the ITC, all of a sudden we have enough incentive dollars on the table to make the investment in behind-the-meter storage economical.”
While Connected Solutions could provide better incentives to customers while also driving down the peak, it’s not a perfect pilot. The utilities have limited budgets for the program. From a market perspective, only certain battery vendors and inverter solution suppliers have been approved, a move Aney credits as being an exercising of control by the utilities rather than an issue of platform compatibility.
“The industry will have a very strong response and comment to the Massachusetts Department of Public Utilities about maintaining this as an open market.”
Certain vendors like SMA, Panasonic and Enphase have thus far been shut out of an incentive program with a greater value than Clean Peak.
A light at the end of the tunnel
If two state initiatives regarding energy storage weren’t enough, there’s Bill H.3622 “An Act relative to energy storage.” H.3622 directs DOER to establish a rebate for Massachusetts-based companies installing and manufacturing energy storage systems. A funding source considered for this program are the aforementioned ACPs, so long as the energy storage system installed provides sustainable peak load reductions on either the electric or gas distribution systems or is otherwise cost-effective.
It is a bill that Aney describes as having the potential to be a non-SMART storage incentive for all new PV. In addition, it could provide a critical incentive for the 90,000+ existing solar installations in the state to add energy storage.
The bill is currently sitting in the House Ways and Means Committee for review and approval.
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So where is FERC with all this stored electricity going into the grid? If this was a micro-hydro charging the battery, a full FERC license would be required because FERC claims that hydro “affects interstate commerce” when grid tied. FERC and the US Congress already look the other way when solar PV “affects interstate commerce”, are they going to continue to be energy bigots when it comes to solar and storage??
“While the policy promotes large-scale battery development, it has been criticized by proponents of behind-the-meter storage like Russ Aney, CEO of Avid Solar, who asserts that the regulation does nothing to motivate investment — going so far as to refer to it as “a waste of ratepayer funds for behind-the-meter energy storage.””
This guy sounds like the “flip side” of the old utility denial record. I would submit, he doesn’t know how to incentivize solar PV and energy storage to the prospective customer, much less know how to create a ‘cohesive’ solar PV with energy storage system to sell to the ratepayers. Russ if you can’t DO your job, get out of the business.
“If the owner of that system wants to enter it into CPS, the value of the PV credits generated are discounted by 90% and the value of storage credits are discounted by 80%.”
This is how you force change, do your own “self consumption” system and when your say 2,000 square foot home looks like a 500 square foot bungalow to the utility, “they” will try and find a program that allows “them” to make money off of your system. If the ‘program’ is all about the utility, then they can flounder until they fail and a new entity will buy the utility for pennies on the dollar. You on the other hand have your self consumption system in place and can ignore their drama until they work it out (effectively) with their customers. I believe this “exercise” nationwide will allow the ratepayers to actually (see) just how effective having their own “self consumption” solar PV and smart ESS system can be “applied” in the years to come and make their homes emergency, weather, power fail resilient during such incidences as ice storms, hurricanes, tornados, floods and drunks taking down a local power feeder for several hours. When people figure out, they can have some “critical circuits” online even during a extended power fail, then, they will ride it out, still have TV, a place to charge their cell phones, computer and internet access. Keeping the food refrigerated and frozen foods from defrosting, a micro-wave oven for quick meals, the rest of the stuff can wait.
Solarman, I am not sure who you are or where you are located, but the point that I was making to PV Magazine is that despite the *potential* of the Clean Peak program to (a) motivate investment in storage, and (b) encourage storage owners discharge stored energy during peak demand windows, it did not achieve its goals with the BTM market, especially for systems < 25 kW. Furthermore, because ConnectedSolutions will be more successful at achieving those goals for BTM, the CP program will end up paying out incentives (frosting on the cake) for storage owners that are not required to achieve the desired behavior during the peak demand hours that really matter–because ConnectedSolutions is already doing that.
In Massachusetts, I am considered fairly expert in both my understanding of the incentive programs and my ability to represent to customers the economics of PV + Storage. After reading several recent favorable reviews about the potential of the Clean Peak program, I simply wanted to clarify that it will not have much effect on BTM solar + storage, especially for systems under 25 kW. Some of my points were lost in translation, and I tried to clean up any misunderstandings in my prior comment…and this one. The key point, again, is that Clean Peak is not going to "incentivize" much, if any BTM storage investment in the < 25 kW market, and to the extent that those storage investors claim CP certificate revenue, it will not represent a good use of ratepayer funds.
Finally, I will add that if you ask ratepayers to fund incentive programs (like Clean Peak, SMART and ConnectedSolutions), there needs to be an accounting of the cost and benefits with a goal of achieving the best return on investment possible for ratepayers. That is hard for storage incentives in Massachusetts because of our tariff designs (lack of market signals) and metering infrastructure. MA DOER is trying to work around those challenges. ConnectedSolutions did it better for energy storage for the BTM markets. Each of the programs has its strengths and weaknesses. I think it would be best for Massachusetts to start from a clean slate, using H.3622 as the vehicle to accomplish that goal, and arrive at a unified program that supersedes the initial three attempts to encourage investments in energy storage in Massachusetts.
Anyone that wants to discuss this further is welcome to reach me directly: raney at avidsolar.com
A little more context and clarification for my comments: (1) I am not a Clean Peak “opponent” but I am disappointed that the incentive is not sufficient to motivate BTM energy storage. I was actually excited about CPS when it was launched, and very hopeful that it find a way around the lack of market pricing signals to encourage dispatching storage co-located with PV.; (2) the “ratepayer funds are likely wasted” on BTM comment is more nuanced: due to the low value of CP for BTM ESS, it will not be sufficient, even when paired with the ITC and SMART Storage Adder, for “Small” BTM (<=25 kWac) to make economic sense for most customers, but if those customers combine ConnectedSolutions along with the ITC and the SMART Storage Adder, then BTM ESS is economically viable…in which case, CP is of no value because the ConnectedSolutions program already is designed to dispatch the battery during the highest peak demand hours of the year (overlapping ~99% within the CP Windows)…so the CP program is not required to induce the behavior desired. On other days, when there is not a ConnectedSolutions events, the CP compensation is probably too low to induce discharging the battery (given the cost of battery degradation). It is important to note that the programs were developed in parallel at the same time and were not coordinated. The update to CP that makes it less valuable for BTM may actually be an intentional response by DOER in response to the MassSave ConnectedSolutions program…although DOER did not describe it that way. (3) Enphase, Panasonic and SMA (BYD) are not *currently* part of the ConnectedSolutions program, but they could be in the future. I am concerned that the decision is not just about program budget, but also subject only to the utilities' Program Administrators decision making regarding which solution vendors can participate, making their dominant energy efficiency program a true *monopsony* for the BTM energy storage market. I believe that would be a dangerous precedent for the emerging, BTM DER markets, where there is not a naturally monopoly and no need for one. By controlling the most valuable incentive (ConnectedSolutions) program dollars, however–incentives that are required to fill a market gap to make BTM ESS both economical for ES buyers and beneficial for all ratepayers–and by making Clean Peak irrelevant for BTM ESS, Massachusetts has effectively ceded control to the distribution monopolies over this valuable DER market.
@Russ Aney, I see your point and it reinforces the battle going on for large energy companies like Duke and NRG Energy. These entities are loaded with fueled generation resources in the population dense North East. If you look at what these same companies DO in the South West, they are buying out existing alternative energy generation facilities. Sooner or later the onerous “stranded assets” rate cases will be filed regularly with the North East States PUCs. Ratepayers will balk and begin to install their own solar PV and smart ESS.
In markets like California and criminal mistakes made by one utility in particular PG&E, is overextended, hasn’t bothered to keep up with O&M for decades, that created the death of 85 ratepayers due to the Camp fire last year. So, the PSPS used to “save” the public from wild fires, then shuts down commerce while the power is out. This is pushing residents to install solar PV and ESS as a system. Sooner or later, the East Coast will have to deal with “stranded assets” and the utilities will find a solution or falter and fail.
As a homeowner in Massachusetts, I have no real motivation to install battery storage.
I don’t live in a town with municipal electric, my solar is net metered, and my utility has no residential TOU rates.
My car has a 60 kWh battery and my next car probably more. Soon, bi-directional car chargers will be available, and my car will serve as storage.
So, no sense to invest in wall mounted storage.
Jerome Edgington, you described me to a T. Massachusetts, Chevy Bolt, solar PV. I was looking forward to using my car for battery storage until I thought it through. I work during the day and generally use my car for travel during my days off. Unless I don’t use my car during the daytime or the car manufacturers give us sectional, portable batteries, I can’t store my home PV electons in my car battery if my car is not at home when the sun is shining.
I guess the first question is, why would anyone want storage?
If I had municipal electric that didn’t net meter, paying wholesale for my pv production, I would definitely want it.
I’m not sold on the idea of being a peak resource for the grid. Demand is usually highest on a hot summer day and that’s when my pv is peaking also.
I only really need it during power outages.
Yes, that’s only useful if the car is home, but outages are infrequent enough that I’ll accept that downside to avoid the cost of wall storage.
I don’t need to store my pv at all, having net metering.
The car will generally have at least 30 kWh available at any one time, and that would easily cover the occasional outage for about a day, more than I need.
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