Joint SEPA, ESA report showcases value of energy storage for utilities

In the “Utility Business Models for Grid Connected Storage” report released last week, the Smart Electric Power Alliance (SEPA) and the Energy Storage Association (SEPA) highlighted what influences utility business models for energy storage and explored case studies for moving forward.

Overall, the report concludes that grid-connected storage should be valued for the help it can provide renewable integration, grid services, and customer benefits, focusing heavily on potential value streams. For example, it noted that multiple battery storage technologies could operate as grid-connected assets and that lithium-ion batteries, in particular, have already shown cost effectiveness under certain business models.

”Energy storage, more so than other asset types, requires utilities to think creatively in order to realize potential value streams,” Robert Tucker, Director of Industry Strategy at SEPA, said. “This report highlights the business models we see utilities using to extract these value streams to the benefit of the grid and customers.”

The report also showcased case studies from SMUD Energy StorageShares, Con Edison/GI Energy, Maryland IOU Energy Storage Pilots, and Oakland Clean Energy Initiative/PG&E-Vistra Energy. These studies helped the authors highlight other key findings, like that creative program designs can allow utilities to utilize grid-connected energy storage for grid value, from which customers can also benefit directly.

The authors concluded that energy storage is a preferred non-wires alternative solution for many utilities now, owing to its cost-effectiveness and flexible service offerings. Grid-connected energy storage can also allow project partners to optimize value streams through operational control agreements that layout operational parameters and prioritize dispatch rights between them. Still, regulatory challenges remain in some states and jurisdictions for utility ownership of energy storage. The report pointed to this as a fact that limits utilities’ ability to maximize the value of storage.