One of the best new markets for energy storage might not be in a state with a deregulated market and policies that favor renewable energy, but in Florida, a bastion of traditional, regulated utilities.
States like California, Texas, New York, Hawaii and Massachusetts have either competitive wholesale power markets or policies that support and encourage energy storage, or both, and are among the leaders in energy storage projects. Florida, in contrast, has virtually no energy storage projects. But that could change quickly.
Florida could see $230 million of investment in utility-owned battery systems by 2021, according to a report by researchers from the University of California San Diego (UCSD).
Projects approved or proposed for Florida Power & Light and Duke Energy Florida could make the state a prominent location for energy storage. But electricity rates that track the national average — providing less incentive for storage as a means to reduce demand charges — and a lack of regulatory mandates pose challenges for storage developers, the report said.
Dramatic market change
Florida’s market for energy storage has already changed dramatically, Rick Ferrera, one of the authors of the report, told Utility Dive. “The market is a lot different today than it was a year ago when we started the report.”
That shift is being driven by the falling costs of battery storage and a heightened awareness of the need to bolster grid resilience in the aftermath of last year’s hurricane season that brought the devastation of Irma and Maria, Ferrera said.
The report, Battery Energy Storage in Florida, was released by The School of Global Policy and Strategy at the UCSD.
It finds an existing positive investment case for behind-the-meter storage in Florida. The main driver, the authors say, is the ability of battery storage to offset demand charges for utility customers. The scenarios modeled in the report found several battery systems are already “in the money” under a variety of scenarios at the low end of current cost estimates. And, as lithium-ion battery prices fall, even more potential projects could become viable, according to the report.
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