In June 2021, Connecticut launched a new phase of its clean energy transition when Gov. Ned Lamont, D, signed a bill committing the state to a goal of deploying 1,000 MW of energy storage by 2030. That made Connecticut the eighth state to set a storage target, a key marker for the potential growth of energy storage to supplement wind and solar generation. 

Getting to that goal – and the interim targets of 300 MW of storage by 2024 and 650 MW by 2027 – is another story, one that states across the country are tackling in their own ways. With lingering questions about storage's unique role on the grid and how best to balance emerging technologies, experts say that states' policies will be crucial to smoothing the path to broader deployment nationwide. 

"These targets set a very clear intention from the state in terms of where it expects to go and how storage fits into other goals," said Jason Burwen, vice president of energy storage at the American Clean Power Association. "Once that target is set, it becomes the responsibility of the state to remove barriers to meeting that target. That can help show what works and where storage fits in the overall mix."

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 "We're placing an increased emphasis on the resilience that customer-sited storage could provide. In Connecticut, we saw the impact of Tropical Storm Isaias [in 2020] and we know there's going to be more and more of those storms."

Josh Ryor

Director of Utility Programs and Initiatives, Connecticut Public Utilities Regulatory Authority

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Connecticut's early focus will be on getting battery storage to homeowners and commercial customers, with an eye towards reaching historically underserved communities, said Josh Ryor, director of utility programs and initiatives for the state's Public Utilities Regulatory Authority (PURA). In a program launched in January, PURA, the Connecticut Green Bank, Eversource and United Illuminating will offer upfront incentives of up to $7,500 for residential customers to acquire energy storage, starting at $200 per kWh. Commercial and industrial customers will also be able to receive incentives of up to 50% of a project cost for storage installation. Customers who experience the longest and most frequent outages and those in low-income communities are eligible for additional benefits.

The focus on behind-the-meter deployment is in part because of PURA's directive to deploy 580 MW of storage under the Connecticut bill (the remaining storage will be obtained through state procurement), but also an attempt to spread out storage in a way that maximizes the benefits to the grid, Ryor said.

"From the regulators' perspective, we're very focused on a program that provides benefits not just to the customers who purchase storage," Ryor said. An analysis of the program found that the peak-shaving benefits of widely deployed residential storage would reduce bills across the board. However, Ryor addded, there will be additional resilience benefits for participants.

 "We're placing an increased emphasis on the resilience that customer-sited storage could provide. In Connecticut, we saw the impact of Tropical Storm Isaias [in 2020] and we know there's going to be more and more of those storms."

According to the Connecticut Green Bank, the incentives are in part modeled on the state's decade-old Residential Solar Investment Program, which led to more than 40,000 households adopting solar, with inspiration also coming from programs in New York, California and Vermont. "State incentives are vital to induce technology adoption, particularly in a nascent market," said Green Bank spokesman Rudy Sturk.

Sending a signal

Neighboring New York has set the country's most aggressive storage goal, with Gov. Kathy Hochul, D, announcing a target of 6 GW of storage by 2030. The state already has 1,200 MW under contract and has spent more than $300 million to incentivize new development. However, while utilities are working to meet state-mandated storage targets (despite many missing initial deployment targets set in 2018), the New York State Energy Research & Development Authority (NYSERDA) has acknowledged that barriers like interconnection delays, wholesale market uncertainty and a lack of monetization of some of the broader benefits of storage could impact deployment.

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"You can give an archer a target, but with no arrows they're not going to hit it."

Dan Finn-Foley

Principal Consultant, PA Consulting

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A new Energy Storage Roadmap is expected this summer, which a NYSERDA spokesman said would "ensure New York successfully hits this expanded goal by identifying research and development needed to further accelerate technology innovation, particularly for long-duration energy storage, while outlining ways to incentivize the private market to meet New York's ambitious clean energy targets." That could also include New York Independent System Operator recommendations on how to integrate storage onto the electricity grid.

Dan Finn-Foley, a principal consultant at PA Consulting focusing on energy storage, said the additional policy and study — the "logistics of bringing a new technology to market" — are what make the state-level targets so valuable.

"You can give an archer a target, but with no arrows they're not going to hit it," Finn-Foley said. "Where we've seen energy storage targets lead to a mature sort of activity are places where the mandate or target is part of a broader climate or decarbonization goal, often backed up by regulatory muscle or policy."

As of 2022, nine states have set energy storage targets, each with differing mechanisms and incentive policies. Maine, for example, seeks 400 MW of storage by the end of 2030 and has launched an investigation into how rate design could further that goal. Virginia has mandated 3,100 MW of energy storage by 2035 by requiring that its investor-owned utilities seek approval for that total, with 10% of it coming from behind-the-meter sources. Nevada's 1,000 MW goal by 2030 is being targeted largely through utility planning reforms. Massachusetts has worked towards its 1,000 MWh goal by 2025 through utility plans and a program offering incentives for customers who allow energy to be drawn from batteries during times of peak demand. 

Other targets and mandates may emerge soon. Illinois' Climate and Equitable Jobs Act requires a state commission to study storage deployment policies, including deployment targets for two large utilities to meet by the end of 2032. Vermont's Public Utility Commission has an open rulemaking on storage policies in response to a state-passed law. 

However, the programs to meet those targets are also caught up in the uncertain policy environment around storage, which plays a unique role on the grid. States and electric grid operators are still studying their tariff and interconnection rules to accommodate energy storage, which can slow developers' enthusiasm to install new storage without up-front incentives.

"On the front-of-the-meter side, what can be helpful with these incentive and target programs is it allows easier access for a large-scale battery company to get experience in the market, which then in turn allows for even more development," said Vanessa Witte, U.S. front-of-the-meter energy storage senior analyst at Wood Mackenzie. 

That's especially true with the lack of a federal tax credit for standalone storage projects. While storage projects can receive a credit when paired with solar, a standalone credit has not been approved yet in Congress. That can lead to difficulty in expanding deployment. For example, Vermont utility Green Mountain Power launched a pair of energy storage incentive programs in 2019 to allow more businesses and residences to purchase and use batteries. However, a proposed extension of one of the programs that would also require that participants allow grid charging must be refined because of how it might impact the federal tax credits available for storage linked to solar.

California paves the way

Many experts are looking to California, which implemented the first storage deployment goal in 2013 and had installed about 2,500 MW of battery storage by the end of 2021, according to the California ISO. Now the state is looking at long-duration storage that can last at least eight hours, a necessary step to weathering the day-to-day and seasonal variability of solar and wind generation. Gov. Gavin Newsom, D, proposed $380 million in the state's latest budget to support early-stage deployment of long-duration technologies, with an eye on 1,000 MW by 2030 and 4,000 MW by 2045. The state's Public Utilities Commission has directed utilities to procure a total of 11.5 GW of new electricity resources between 2023 and 2026.

In addition, CAISO is continuing to explore its own policy incentives, with a straw proposal for an energy storage enhancements initiative that would further clarify storage's role on the grid. 

California’s early target "helped accelerate the market and got California ahead of the game," said Wood Mackenzie’s Witte. More states, even those without a defined storage market, could follow suit, she said. "Storage is accelerating relatively well on its own, but there are all these markets that haven’t been tapped into. A clearly defined goal and action helps accelerate deployment even in those markets where you don’t see high levels of deployment."

Connecticut PURA's Ryor said he hopes his state's public goal has that effect – and acts as a marker of the state's interest in the burgeoning industry.

"Having that goal and this program implemented should hopefully send an attractive signal to companies to come to Connecticut and stay in Connecticut without looking across the border," Ryor said.