Dive Brief:

• The Commonwealth of Massachusetts is likely to fall short of its greenhouse gas emission goals if it cannot implement utility-scale storage, according to a new study.

• More than 70% of the state’s two pumped-hydro storage facilities — with a collective capacity of around 1,800 MW — is currently unutilized due to the lack of market incentives, according to researchers. The lack of utility-scale storage could mean that the state’s grid remains “dirty” even with a high penetration of renewables. 

• The UMass Lowell and AIM Foundation study is currently being finalized, but the authors presented its key findings on Nov. 19. The lessons are relevant for all states deploying storage because “energy storage will be one of the key components of our future electric grid infrastructure," said Ertan Agar, one of the study’s co-authors.

Dive Insight:

Massachusetts’ energy landscape will look significantly different in two decades “and that transformation relies heavily on achieving cost-effective and resilient energy storage," Christopher Niezrecki, a professor at UMass Lowell and co-author of the study, said in a press release. 

In 2015, the state rolled out its Energy Storage Initiative, investing $20 million in 25 projects aimed at demonstrating the deployment of utility-scale storage facilities. 

“Energy storage is a cornerstone of the ongoing transition to renewable energy that will affect virtually all Massachusetts businesses. Efficient operation of the electricity grid will ensure reliability and price stability on the electric bills of both employers and homeowners,” Robert Rio, senior vice president of government affairs at AIM, said in a release. 

There are two pumped-hydro storage facilities in the state — the 600 MW Bear Swamp and 1168 MW Northfield Mountain facilities. Both have traditionally been used to store excess energy from nuclear power plants during off-peak times, according to Agar. But with nuclear power on the wane, “and also because of current market regulation, only 30% of capacity is utilized so that was pretty interesting for us,” Agar told Utility Dive in an interview.

Regulators should figure out how to utilize the pumped hydro facilities that have already been built in the most cost-effective way, he added. 

The need for additional energy storage is driven by multiple factors, including volatility in the wholesale markets as well as the need for additional renewables on the grid -- which will likely be spurred in the future by carbon tax incentives. But utility-scale storage systems are still expensive to build and operate, especially without policy incentives.

“As with other nascent technologies, the market does not yet drive the incentive. Rather, it is state and federal programs that can anticipate the largest [addition] of new storage that is cost-effective, at least, while the price of these technologies becomes more competitive,” the report said.

Regulators will have to consider how they can better utilize existing pumped-hydro storage, and analyze the financial implications of pumped-hydro versus building new battery systems, according to the report.

The authors recommend that Massachusetts consider a diverse storage portfolio, which not only includes existing facilities like pumped hydro and lithium iron, but technologies still under development, like flow batteries. In addition, the study calls on the state to outline a concrete cost-allocation methodology for the storage market, providing more certainty to investors who currently struggle with forecasting revenue from projects. And because building out the storage sector is based in part on public will, regulators can benefit from investing in awareness programs that highlight the role storage plays in reaching clean energy goals, it said.

The findings have relevance for the entire country, Agar said. Massachusetts — along with New York and California — has some of the most aggressive policies towards implementing storage in the country. 

“So all the lessons learned for one state could be definitely useful for other states,” according to Agar.

Each state will need to conduct technological, economic and scientific studies to understand how much and what kind of storage they need to meet their greenhouse gas reduction goals, as well as the timeframes for installing storage systems and the costs for ratepayers, he added.