Maryland passes energy storage pilot program to determine future regulatory framework

Dive Brief:

Maryland lawmakers on Friday passed an energy storage pilot program that requires investor-owned electric utility companies in the state to solicit two energy storage projects. State regulators will use the pilot's data to evaluate how to best use the technology in the future.
The bill applies only to Maryland's four investor-owned utilities: Potomac Edison; Baltimore Gas and Electric; Delmarva Power and Light; and Potomac Electric Power. Utilities must apply for Public Service Commission (PSC) approval of their two projects by April 15, 2020, and Sept. 15, 2020, respectively. The projects are schedule to be operational by Feb. 28, 2022.
The pilot's launch follows a 2018 report about the future of energy storage in Maryland and is intended as the next step in the state's quest to determine what regulatory reforms and market incentives are needed to increase the use of energy storage technologies in the state.

Dive Insight:

HB 650, which passed the state Senate in a 47-0 vote on Thursday after passing the state House, requires the PSC to set up a pilot program in order for Maryland's four investor-owned utilities to start developing energy storage projects under specific commercial and regulatory models.

The pilot program is the "outgrowth of years of work by many people on energy storage in Maryland," Montgomery County Del. Marc Korman, who sponsored the measure, told Utility Dive.

"There are a lot of different things that the regulators, utilities and the other stakeholders need to figure out, and we want to make sure they're doing that and moving the ball forward," Korman said. "These pilots create a structure for them to do that."

Following the passage of the bill, the PSC has two months to establish the program's framework, which is set kick off on June 1. The utilities are then required to solicit two energy storage projects and apply for PSC approval. The approved projects are set to become operational by Feb. 28, 2022.

The utility companies must solicit offers in at least two of four utility ownership models laid out in the bill. Those ownership models include a utility-only model; utility and third-party model; a third-party ownership model; and a virtual power plant model.

Data will play an integral role in the pilot. Starting on July 1, 2023 the electric utility companies must submit the first of three annual rounds of technical and financial information to the corresponding state agencies.

On the main questions that the pilot is expected to address is whether utilities in Maryland, which has a deregulated electricity market, can own energy storage if it has any of the applications of generation, Korman said.

The pilot program, if not extended, will terminate on Dec. 31, 2026. Over the course of the program, PSC will be required to submit two reports to the state General Assembly: an interim report, due on July 1, 2024, and a full report at the end of the pilot.

While other states have a more accelerated approach to developing strategies surrounding the use energy storage, Maryland does not want to rush the incorporation of storage technologies, according to a 2018 report by Maryland Department of Natural Resources' Power Plant Research Program.

"Maryland has the advantage of not being under pressure to address certain problems that storage can help to mitigate, such as constraints on fossil fuel supplies, widespread curtailment of utility-scale wind and solar plants, or significant upward pressure on transmission and distribution costs due to load growth," the report said. "These circumstances provide Maryland with the luxury to thoughtfully increase storage's access to the grid, facilitate its participation in electric power markets, and provide compensation for a wider range of the benefits that storage can provide."

Meanwhile, state lawmakers also extended Maryland's community solar energy generating systems pilot program through Dec. 31, 2024. The program was scheduled to end in January 2020.

HB 683, which passed the state Senate in a unanimous vote on Thursday, is also lifting a cap on the number of subscribers per generating system, and modifies the pilot program in a way that a meaningful study can be conducted, according to the bill's language. The changes, including annual increases in capacity limits for each program category, will take effect on June 1.