Michigan’s newly enacted energy storage target means we now have 10 states in the club. On April 21, 2022, Governor Gretchen Witmer released the MI Healthy Climate Plan, a roadmap for Michigan to achieve economy-wide carbon neutrality by 2050 with interim 2030 goals. In addition to recommendations for renewable energy, the plan established a target of 4,000 MW of energy storage by 2040.

Fractal speculated that Michigan would be next. The state recently published a study (March 2022) that recommended energy storage targets. The report said that the state of Michigan would need to deploy 2,500 MW of energy storage by 2030 and 4,000 MW by 2040 to ensure grid reliability as fossil fuel generation retires. To facilitate that goal, the report recommended a “value of storage” study that could quantify the contributions storage makes to the grid, an economic gap analysis to set grant and rebate levels for customers and upgrades to building codes to include storage readiness requirements. The report also recommended new legislation requiring utility integrated resource plans (IRPs) to evaluate storage opportunities and to establish on-bill financing pilot programs for residential and commercial projects.

California

• Assembly Bill (A.B.) 2514 (2013) directed the state’s three investor-owned utilities (IOUs) to procure 1,325 MW of storage by 2020 with installations operational by 2024 (580 MW from SCE, 580 MW from PG&E, 165 MW from SDG&E).
• A.B. 2868 (2016) directed the same utilities to add an additional 500 MW of additional storage to be rate-based. No more than 25 percent of the capacity could be behind-the-meter (BTM).
• S.B. 801 (2018) required SCE to deploy 20 MW energy storage to meet energy reliability requirements in the greater Los Angeles area associated with the Aliso Canyon gas explosion.
• CPUC Rulemaking 20-05-003 (Feb 2022) requires utilities to add an additional 15,000 MW of energy storage, emphasis on long duration, and demand response by 2032

Let’s look at the other states with storage targets:

Connecticut

• S.B. 952 (2021) set a target of 1 GW of energy storage to be achieved by 2030. Sets interim targets of 300 MW by 2024 and 650 MW by 2027.

Maine

• LD 528 (2021) set a 400 MW energy storage target to be achieved by 2025, and 500 MW by 2030.

Massachusetts

• House Bill (H.B.) 4857 (2018) established a 1,000 MWh energy storage deployment target to be achieved by 2026.

Nevada

• S.B. 204 (2017) directed the Public Utilities Commission of Nevada to establish biennial targets for NV Energy Inc.’s procurement of energy storage systems, starting at 100 MW by the end of 2020 and increasing to 1,000 MW by the end of 2030.

New Jersey

• A.B. 3723 (2018) set targets of 600 MW of energy storage capacity within three years and 2 GW of capacity by 2030.

New York

• S.B. 5190 and A.B. 6571 directed the New York Public Service Commission (PSC) to develop an Energy Storage Deployment Program, including 3,000 MW by 2030 with an interim goal of 1,500 MW by 2025.

Oregon

• H.B. 2193 (2016) required Portland General Electric (PGE) and PacifiCorp to each have a minimum of 5 MWh of energy storage in service by January 2020.

Virginia

• H.B. 1526 and S.B. 851 (2020) and 20 VAC 5-3535, had Virginia Governor Ralph Northam signed the Virginia Clean Economy Act (VCEA) mandating a 3.1 GW energy target and a goal to achieve 100% renewable and clean energy by 2050.

Who will be next? Well, Maryland, New Hampshire, Rhode Island and Minnesota have favorable climates that include storage deployments, state policy and incentives, that could lead to storage targets.

Fractal Energy Storage Consultants provides technical design, financial analysis, procurement, buy and sell side due diligence, technoeconomic models, controls integration and OE services for energy storage and hybrid projects. Contact us today for more information https://www.energystorageconsultants.com.

On August 16, 2021, a group of US solar manufacturers, represented by D.C. law firm Wiley, filed petitions with the U.S. Department of Commerce (DOC), alleging that Chinese competitors had shifted production to Southeast Asia to circumvent import tariffs (assembling solar cells and panels at factories in Malaysia, Thailand and Vietnam).

The group, called American Solar Manufacturers Against Chinese Circumvention (A-SMACC), has chosen to remain anonymous. On August 24^th, NextEra Energy asked the DOC to force the group to identify its members or reject the request. The group has insisted on anonymity saying that “identifying its members could lead to retribution against them.”

On August 26^th, the Solar Energy Industry Associuation (SEIA) wrote a petition to the Secretary of Commerce, strongly contesting the allegations and calling A-SMACC’s efforts, “a procedural gimmick” that “circumvents and evades the channels pursuant to which the DOC normally investigates supposedly unfairly priced and unfairly subsidized imports.” SEIA also expressed disapproval in A-SMACC’s request to shield the identity of its members. SEIA urged the DOC to order the public disclosure of A-SMACC’s members, stating that they had “no legal basis to hide behind an ad hoc coalition created solely for the purpose of expanding trade restrictions on solar products.”

The DOC was expected to make a decision this week. On Wednesday, the DOC sent the group’s attorney an October 6^th deadline for A-SMACC to respond to a series of questions. The DOC said it would issue a decision within 45 days of receiving a response.

The past two months have been a roller coaster of trade-based issues. In addition to the circumvention filing by A-SMACC, the following events sent shockwaves through the solar industry:

Section 201 Tariff Extension Petitions

In early August, Suniva and Auxin Solar, filed a petition asking the International Trade Commission (ITC) to investigate extending the Section 201 tariffs for another four years. Three days later a second petition was filed by Hanwha Q Cells, LG Electronics, and Mission Solar, which also included a request that the Tariff Rate Quota (TRQ) be increased to 5 GW (from the current 2.5 GW). The current Section 201 tariff is 18% and is slated to drop to 0% in February 2022. The ITC is currently collecting data to investigate the petition, and a hearing will be held this fall with a report and recommendation delivered to the president in December 2021.

Detainment of Modules by U.S. CBP

At the end of June, the U.S. Customs and Border Protection (CBP) announced that imports containing silica from a Chinese company called Hoshine would be banned due to concerns of forced labor. In August, news spread that the CBP was detaining modules suspected of containing material from Hoshine. The news sent buyers scrambling for replacement modules.

Forced Labor Prevention Act

In July, the U.S. Senate passed legislation to ban the import of products from China’s Xinjiang region. In a separate move, the Biden administration issued an advisory warning to businesses that they could be in violation of U.S. law if their operations are linked, even indirectly, to suspected surveillance networks in Xinjiang. It is expected that the Forced Labor Prevention Act will be signed into law this fall. The bill creates a “rebuttable presumption” that assumes goods manufactured in Xinjiang are made with forced labor, meaning they could be banned under the 1930 Tariff Act, and it shifts the burden of proof to the importers.

Fractal Energy Storage Consultants provides technical design, financial analysis, procurement, due diligence and OE services for energy storage and hybrid projects. Fractal EMS provides turn-key energy storage controls and integration. Contact us today for more information https://www.energystorageconsultants.com.

On September 15, 2021, the U.S. House Ways & Means Committee finished a markup of the Build Back Better Act[1], specifically Subtitle G – Green Energy.[2] The markup for Subtitle G contains proposed amendments to the current Internal Revenue Code (IRC) Section 48[3] that would add Energy Storage Technologies (among others), as eligible energy property, and hence receive the Investment Tax Credit.

Original IRC Section 48 Language

The original Internal Revenue Code (IRC) Section 48 listed ITC eligible technologies:

• Qualified fuel cell property
• Energy property
• Qualified small wind energy property
• Waste energy recovery property

Proposed Subtitle G Language

Proposed amendments to IRC Section 48 were described in Subtitle G – Clean Energy, Part 1 – Renewable Electricity and Reducing Carbon Emissions, Section 136101, Extension and Modification of Credit for Electricity Produced from Certain Renewable Resources.

The following technologies were added as eligible energy property:

Energy Storage Technology. Energy Storage Technology means equipment (other than equipment primarily used in the transportation of goods or individuals and not for the production of electricity) which uses batteries, compressed air, pumped hydropower, hydrogen storage, thermal energy storage, regenerative fuel cells, flywheels, capacitors, superconducting magnets, or other technologies identified by the Secretary, after consultation with the Secretary of Energy, to store energy for conversion to electricity (or, in the case of hydrogen storage, to store energy), and has a capacity of not less than 5 kilowatt hours. Construction must begin by Jan 1, 2034.

Qualified Biogas Property. Qualified Biogas Property means property comprising a system which (i) converts biomass into a gas which (a) consists of not less than 52 percent methane, or (b) is concentrated by such system into a gas which consists of not less than 52 percent methane, and (ii) captures such gas for productive use. Construction must begin by Jan 1, 2034.

Microgrid Controllers. Microgrid Controller means equipment which is (i) part of a “Qualified Microgrid,” and (ii) designed and used to monitor and control the energy resources and loads on such microgrid to maintain acceptable frequency, voltage, or economic dispatch. Construction must begin by Jan 1, 2034.

Qualified Microgrid means an electrical system which (i) includes equipment which is capable of generating not less than 4 kilowatts and not greater than 20 megawatts of electricity, (ii) is capable of operating (a) in connection with the electrical grid and as a single controllable entity with respect to such grid, and ‘(b) independently (and disconnected) from such grid, and (iii) is not part of a bulk-power system.

Key Summary of Proposed Language[4]

• Energy storage technologies added as eligible property in the current ITC Section 48.
• ITC Section 48 extended for 10 years, at 30% 2022-2031 before phasing down 26% in 2032 and 22% in 2033
• Base ITC value is 6%, and rises to 30% if certain labor standards are met (with <1 MW projects exempted):
  • Prevailing wage for all workers in project construction & project alteration and repair up to 5 years after placed in service
  • Qualified apprentices required to complete a percent of all construction/alteration/repair labor hours, starting at 5% in 2022 and rising to 15% in 2024 and beyond, with 1 apprentice required for every 4 workers; exemptions allowed if labor supply is unavailable or good faith efforts can be demonstrated
• A bonus of 10% of ITC value (i.e., +3% added to 30% ITC) if certain domestic content standards are met:
  • 100% of steel & iron
  • 55% of manufactured products
  • Waivers allowed if domestic content raises project costs 25% or US production is determined to be insufficient in volume
• Direct payment election allowed for Section 48 ITCs, with a phase in of domestic content requirements:
  • Only 90% and 85% of ITC value is available for direct payment in 2024 and 2025 if domestic content standards are not met
  • Domestic content standards are required for any direct payment of ITC value starting in 2026

This legislation is expected to be included in a full budget reconciliation package for vote in the House of Representatives later this month.

[1] https://waysandmeans.house.gov/legislation/markups/markup-build-back-better-act. See bottom of webpage for all markup documents

[2]https://waysandmeans.house.gov/sites/democrats.waysandmeans.house.gov/files/documents/SUBFGHJ_xml.pdf

[3] https://irc.bloombergtax.com/public/uscode/doc/irc/section_48

[4] Summary provided by the Energy Storage Association (ESA). ESA provides vital policy and market updates to members.

Fractal Energy Storage Consultants provides technical design, financial analysis, procurement, due diligence and OE services for energy storage and hybrid projects. Fractal EMS provides turn-key energy storage controls and integration. Contact us today for more information https://www.energystorageconsultants.com.