Deploying Distributed Energy Storage: Near-Term Regulatory Considerations to Maximize Benefits

Since the market for distributed energy storage is still in its infancy, there is a significant need for regulatory guidance and proactive policies to ensure a smooth integration into the existing electrical system. In partnership with the Interstate Renewable Energy Council (IREC) and Keyes, Fox & Wiedman LLP, EQ Research contributed to this report, which offers independent insight on how to address challenges and opportunities related to distributed energy storage.

As the percentage of electricity generated from renewables continues to grow in the United States, particularly from solar PV systems, technologies that can facilitate increased deployment of renewables, such as distributed energy storage, are front and center in state and national discussions. Technologies such as distributed storage could lower costs and improve the quality of electric service. The electric system, however, was not originally designed with large amounts of local generation in mind, and there are important implications that must be taken into account in order to maintain power quality and reliability.

Energy storage could offer additional benefits to customers, both by helping them directly manage their energy use and offering distribution system managers new tools to help maintain and even enhance the functionality of the electricity system. Because it has the ability to address a wide range of potential issues –- including renewables integration, variability management, peak management, voltage and frequency regulation, grid resiliency, and energy management -– distributed storage is gaining attention from customers, utilities, regulators and investors.

At low penetrations, issues associated with the integration of distributed renewables can likely be managed with existing grid-management technologies and techniques, without the need for significant regulatory changes. However, as penetration levels grow, more significant regulatory changes and modifications to the grid may be necessary.

This report identifies six key near-term regulatory policy considerations to help regulators, utilities, ratepayers and states as they evaluate and seek to capture the greatest benefits of distributed energy storage.