Pumped storage gets in on the act

8 November 2013

Energy storage is becoming a big topic for debate in the US and is described as being a unique and valuable resource for the electric grid. As the introduction of a bipartisan energy storage bill seeks to smooth the path ahead for storage solutions, it also seems likely to brighten future prospects for pumped storage plants.

US Senators Ron Wyden, Susan Collins, Jeff Merkley and Angus King have been applauded for their reintroduction of energy storage legislation which is hoped will spearhead a national transformation to smarter and more cleanly-powered electricity. Through the introduction of an investment tax credit for all types of energy storage technologies, the Electricity Storage Association (ESA) believes that this new act will help level the playing field for an industry that has enormous potential to increase the reliability, security and efficiency of the US electric grid.

The Storage Technology for Renewable and Green Energy Act was originally introduced with bipartisan support in the 112th Congress. The 2013 Act is substantially similar to that of 2011. It offers investment tax credits for energy storage facilities that temporarily store energy for delivery or use at a later time. The bill is technology neutral and does not pick storage technology "winners" and "losers" either in terms of the storage technology that is used, or in terms of the source of the energy that is stored. The electricity can come from wind, coal or nuclear. Pumped storage, compressed air, batteries, flywheels and thermal storage are all eligible technologies as are smart-grid enabled plug-in electric vehicles.

Linda Church Ciocci, Executive Director of the National Hydropower Association (NHA) said that the association is very pleased with the introduction of the bill. "Expanding investment tax credits and clean renewable energy bonds eligibility for pumped storage technology will help unlock the country's clean energy potential," she commented.

NHA is a strong supporter of the bill. "Further development of pumped storage is essential to the overall reliability of the nation's power grid, as well as the integration of clean and renewable energy resources at a larger scale," Church Ciocci added. "This legislation presents a tremendous opportunity to expand pumped storage, which is already the top method of storing electricity in the US. Increased investment in this proven technology will allow the hydropower industry to strengthen its partnership with other renewable energy producers to make sure that green energy does not go to waste."

Investment credits
The Storage 2013 Act provides a 20% investment tax credit of up to US$40M per project for storage systems connected to the electric grid and distribution system. A total of US$1.5B in investment credits are available for such grid connected systems. It also provides a 30% investment tax credit of up to US$1M per project to businesses that use technologies which can store energy during non-peak hours and distribute it to meet peak electricity demand.

One change from the last version of the bill is that the minimum size for eligible storage systems is now 5kWh, whereas it was previously 20kWh. It is anticipated that this change will allow small businesses to participate in pioneering storage on the grid.

“We are delighted that Senator Ron Wyden, chairman of Senate Energy and Natural Resources and a long time supporter of energy storage, and Senators Collins, Merkley and King, all staunch supporters of clean energy technologies, understand the value of energy security and have taken such a strong interest in energy storage," said Brad Roberts, Executive Director of the ESA. "Energy storage technologies help all resources - whether renewable or traditional - run more smoothly. This tax credit will help developers secure private sector equity and debt financing to truly scale this industry."

“It is to their credit that these policymakers worked together to craft a bipartisan bill that is limited in size and scope yet has the potential to open up the market for so many American innovators," adds Katherine Hamilton, Policy Director of the ESA Advocacy Council. "The ESA has received such positive feedback from both sides of the aisle for energy storage - it just makes sense - and an investment tax credit to draw increased investment in these US companies is smart public policy."

Senator Angus King said that he was proud to join with his colleagues and introduce the Storage Act. "As Americans try to regain control of their electrical costs" he said, "investing in our nation's renewable energy infrastructure will bring more affordable and sustainable power to a greater number of people."

More energy storage will increase the amount of renewable power on the grid, reduce the need for new power plants and make the US energy system more reliable, Senator Ron Wyden added. "With all of the attention given to new sources of power," he says, "it's only appropriate that energy storage gets its time in the sun."

Racoon Raccoon Mountain Pumped Storage Plant on the Tennessee River, US. Photo courtesy Voith Hydro

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