Energy Storage Goals Can Drive Non-Wires Alternatives

In early January 2022, New York Governor Kathy Hochul announced that she was doubling the state's energy storage deployment target from 3 GW to 6 GW by 2030. The announcement furthers the state’s goal, which was already the most aggressive among the nine US states with storage-specific goals. As more jurisdictions transition their power grids from fossil fuels to variable renewable resources such as wind and solar, energy storage will likely play a critical role in maintaining grid reliability. 

Fossil fuel sources offer the advantage of running on a controllable fuel (e.g., coal or natural gas), meaning that grid operators can turn them on and off as needed to balance supply and demand. Because solar and wind generation output often peaks at times when demand is low, there will inevitably be times when supply outweighs demand and vice versa. Load flexibility, or the ability to shift demand for certain end uses (e.g., space conditioning, water heating, and EVs) to other periods throughout the day to better align with renewable energy supply, is one option to help mitigate these issues. Energy storage is another option because it allows energy generated from these variable sources to be captured and used later, effectively turning it into a dispatchable resource.

Energy Storage Can Serve Multiple Grid Needs 

In addition to smoothing out gaps in renewable energy production, the versatility of energy storage allows it to help defer or avoid the need to upgrade transmission and distribution systems, also known as non-wires alternatives (NWAs). In recent years, numerous US states have begun pursuing NWAs in place of traditional grid upgrades, often employing energy storage both in front of and behind the meter. US states such as Arizona and Massachusetts and countries such as Germany, France, and Chile have started investigating and installing utility-scale storage as transmission assets. The storage asset injects or absorbs electricity to relieve congestion and improve power flow as needed, effectively acting as another power line without the same CAPEX or physical footprint. Smaller-scale energy storage installed behind the meter at residential homes or commercial and industrial sites can be aggregated via a software control platform (otherwise known as a virtual power plant) to serve the grid in similar ways in lieu of traditional infrastructure upgrades. 

Adopting aggressive energy storage targets will encourage utilities and grid operators to incorporate more storage into their portfolios and find innovative use cases for it. As energy storage capacity increases, so does the number of resources available for NWA projects. NWAs relieve congestion on the grid, reduce a utility’s impact on the environment and the local community, and save utilities and customers money. As the electric grid continues to shift away from fossil fuels, NWAs will likely be pivotal in integrating the growing network of distributed energy resources.