- The Federal Energy Regulatory Commission (FERC) issued a proposed rulemaking in November 2016 that would significantly expand the ability of energy storage resources and distributed energy resources to participate in wholesale electricity markets. The FERC then issued a policy statement in January 2017 that specifically establishes the ability of electric storage resources to concurrently provide separate services at both cost-based and market-based rates.
- Several states have also undertaken initiatives in the form of both mandates and incentives to encourage market entry of energy storage resources. California and Oregon have imposed specific requirements on investor owned utilities to procure a certain minimum level of capacity in energy storage facilities. Massachusetts is on its way to adopting similar energy storage requirements.
- Maryland will become the first state to offer a tax credit for energy storage systems under a new law Gov. Larry Hogan, signed on May 4. Senate Bill No. 758 offers state income tax credits to tax payers for up to 30 percent of the cost of installing an energy storage system that is “used to store electrical energy, or mechanical, chemical, or thermal energy that was once electrical energy.” Gov. Hogan also signed House Bill No. 773 calling for a study by Dec. 1, 2018 of regulatory changes and market incentives to increase the use of energy storage devices in the state.
As energy grids struggle to cope with the surge in demand for electricity, more flexible systems are required to ensure grid stability. Analysts predict that technological advances, changing regulations, and new business models will dramatically change how the United States generates, transmits and consumes electricity by 2025. Energy storage growth, particularly battery storage, will serve as the cornerstone of this transformation by helping to lower grid operational costs, improve reliability and reduce emissions. It is expected that federal regulations and state policies will continue to evolve over time to encourage the greater development and integration of energy storage into the future energy system.
Baker Botts’energy, tax and environmental partners, Jay Ryan (energy partner), Mike Didriksen (energy partner), Renn Neilson (tax partner), Matt Hunsaker (tax partner) and Aileen Hooks (environmental partner), are available to comment on how these regulatory changes, mandates and incentives are creating opportunities for energy storage to compete with more traditional resources.
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