Energy Storage Association: ITC and storage support needed ‘until US market values clean energy’

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Until clean energy is properly valued in the US, legislation-based storage procurement mandates and solar incentives such as the ITC will remain necessary to support low-carbon technologies like solar and solar-plus-storage, a prominent energy storage industry figure has said.

Matt Roberts, executive director the US-based Energy Storage Association (ESA), said that he would always favour market-based solutions over incentive-based ones. However, he said, there is a total lack of a market structure that puts value on non-polluting and potentially more efficient technologies over fossil fuels.

PV Tech spoke yesterday with Roberts about a number of topics including the ESA’s annual technical conference, taking place in September in Portland, Oregon. Speakers will include one of the Public Utilities’ Commissioners for Oregon, John Savage. In June, the state implemented a mandate for its investor-owned utilities to procure energy storage, in a similar but smaller scheme to California’s AB2514. California’s three investor-owned utilities (IOUs) have been called on to deploy 1.325GW of storage by 2020, while Oregon’s three IOUs of its own must procure 5MW of storage each by that year.

PV Tech asked Roberts if the introduction of the mandate was a positive development.

“I think it’s positive that it’s moving forward. We’re not proponents of mandates, we’re proponents of market reform, but to some extent if the market’s not ready, then maybe different mechanisms need to be used,” Roberts said.

“I’ll be the first to say, if it has to be subsidised and have all these things enforced upon the industry, then it’s not correct.

“Because mandating a few systems is fine, people will start to see the value, but it’s not the long term, right? The long-term viability of storage and the marketplace is in those market reforms.”

An energy storage industry view on the ITC

Roberts said that it was a similar situation with the ITC for solar, which is planned to drop sharply at the end of 2016.

“I think that there is still a need for the ITC because once again the market hasn’t been sorted out. If we value clean energy, we have to value it appropriately. If clean energy is the goal, then how come I get paid the same kilowatt as if I made it from coal?” Roberts said.

“Whether you call it an incentive or whatever, where’s the value on clean energy? Whether it’s a tax on carbon or some other structure, it just doesn’t exist right now.”

Energy storage at present can benefit from the ITC if it is paired with solar at the time of installation and if 75% of the electricity that passes through the system is generated by renewables onsite. According to Roberts, this categorisation is flawed.

“In that scenario it’s as if it’s an inverter, it’s just a piece of the system. So storage is viable for it in that way, it’s not viable for it directly, which actually is frustrating to me because that’s a silly distinction to make.”

PV Tech asked if the drop from 30% to 10% tax relief might temporarily benefit the energy storage industry, if it means new PV system owners will self-consume their electricity. In Germany, for example, the rate of addition of new PV systems to the grid has slowed considerably as the standalone solar feed-in tariff (FiT) has fallen, but as the economic value of PV now lies in system owners using the electricity they generate themselves, many have found storage to be the most effective way to do that.

Roberts said that while there was a good chance a drop in solar incentives might mean an increased uptake of storage in the US too, he would rather see the ITC continue in the short term and then see electricity market structures reconfigured to make a level playing field between the different types of generation. He did also say, however that while he would rather see the ITC remain, or be gradually lowered rather than cut heavily in one swoop as it will be next year, solar development has gained enough traction in the US and had enough success in cost reduction that the industry would likely remain strong, although it would face challenging times.

“It still seems necessary to have the ITC until we figure out a way to create an inherent value for renewables,” Roberts said.

“It’s the same thing as the mandate question. If it’s worth more, then create a market structure that values it and stop with the incentives. Let’s take away all these energy incentives, put everything on a level playing field and say what do we want? We want cleantech that’s responsive and smart and able to do dynamic services on the grid and so on, and then create markets that value those characteristics. Right now the only thing the market values is how cheap something is.

“And if that’s the equation by which we’re going to operate then things that are cleaner, more dynamic, more robust or more reliable are devalued by the way the market is currently structured.”

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