Regulatory Implications of Embedded Grid Energy Storage
Electricity is unique among commodities in that its supply chain was developed without a storage component. Every other resource commodity has the ability to store excess quantities built into its supply chain – in the form of granaries, warehouses, reservoirs, etc. This embedded storage creates a buffer for mismatches between supply and demand, stabilizing prices and protecting customers. Recent technological advances in cost-competitive energy storage technologies that are scalable and flexible have made the concept of embedded electrical storage feasible, but several regulatory questions remain. This paper summarizes energy regulatory structures in the U.S. and the implications that they would have for embedded storage on the electric grid. Regulatory challenges for embedded storage include the lack of underlying standards, inclusion in planning processes, ownership models, compensation, and metrics. Two possible pathways forward are explored: an incremental one including regulatory guidance regarding the evaluation of embedded storage in existing planning processes, and a complex one involving the revision of existing reliability standards or the development of a new standard specific to embedded storage.