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Energy Storage: The New Efficiency

by Todd Olinsky-Paul

Apr 19, 2019

This report, which describes how states can use energy efficiency funds to provide incentives for energy storage, is a publication of Clean energy group (CEG), with appendices containing several white papers prepared by the applied economics Clinic under contract to CEG. This report explains the steps Massachusetts took to become the first state to integrate energy storage technologies into its energy efficiency plan, including actions to 1) expand the goals and definition of energy efficiency to include peak demand reduction, and 2) show that customer-sited battery storage can pass the required cost-effectiveness test. The report summarizes the economics of battery cost/benefit calculations, examines key elements of incentive design, and shows how battery storage would have been found to be even more cost-effective had the non-energy benefits of batteries been included in the calculations. The report also introduces seven non-energy benefits of batteries, and for the first time, assigns values to them. Finally, the report provides recommendations to other states for how to incentivize energy storage within their own energy efficiency plans. Four appendices provide detailed economics analysis, along with recommendations to Massachusetts on improving its demand reduction incentive program in future iterations of the energy efficiency plan.