Keeping the Legislative Momentum

Earlier this year we saw Maryland’s legislature stand for solar and other renewables with the override of Governor Hogan’s veto of the Clean Energy Jobs bill. This allowed for an increase in the state’s renewable portfolio standard to 25%.

Maryland has long been a national leader in renewable energy, but could the state become the next frontier in energy storage?  In the current legislation session, Maryland’s House and Senate are now looking to encourage the adoption of energy storage technologies, which will be key to the future growth of renewable resources. There are three promising bills under consideration which seek to better understand and grow the market for this emerging technology.

The Bills

Of the three bills currently on the table, two of the bills seek to incentivize storage while the third hopes to better understand the technologies implementation and the best way to facilitate its growth.

1. HB1395 – Solar Energy Grant Program

HB1395 seeks to incentivize residential owners to purchase storage technology by allowing the Solar Energy Grant Program to award grants to certain energy storage equipment, effective as of October 1, 2017. The bill does the following:

• Defines storage technologies to include electrochemical forms of storage alongside compressed air, pumped hydropower, hydrogen storage, thermal energy storage, flywheel, a super conducting magnet, capacitor, or superconducting magnet.
• Sets a capacity standard for eligible technologies at a minimum of 5 kWh, with an applicable solar photovoltaic property defined at a capacity of 20kW or less.
• Establishes that the grant amount eligible to energy storage equipment will be the lesser of $3,000 or 30% of the total installed cost of the energy storage equipment.

2. HB0490/SB0758 - Income Tax Credit - Energy Storage Systems

Joint House and Senate bills HB0490 and SB0758, if approved, would allow for a credit against the State income tax for certain costs of energy storage systems on both residential and commercial properties; commercial properties is not defined. The credit would apply to systems installed between January 1, 2017 and December 31, 2021, coinciding with the ramp down of the federal Solar investment tax credit. The credits, as proposed, are as follows:

• For commercial properties, the credit would be the lesser of $150,000 or 30% of the installed system cost for commercial properties.
• For residential properties, the credit would be the lesser of $5,000 or 30% of the total installed cost of the energy storage system for residential systems.

3. HB0773/SB0715 – Clean Energy – Energy Storage Technology Study

Unlike the previously mentioned bills, which will jumpstart the market with incentives, joint bills HB0773 and SB0715 will require the Maryland Clean Energy Center to conduct a study on energy storage. The purpose of the study would be to understand what would be the most effective regulatory reforms and market incentives to increase the use of energy storage devices in Maryland in a way that is fair to all stakeholders, including the State government, electric companies, environmental organizations, providers of energy storage devices, developers, and other interested parties. The final findings of this report would be due on December 1, 2018 with an interim report due on December 1, 2017. Some of the key components of the study include:

• How storage technologies can be integrated with other programs in the state - like demand-side management - and help to achieve the “Ten-Year Plan of Maryland Electric Utilities”
• Other states’ policies, ownership models, procurement targets, market incentives and cost recovery mechanisms (i.e. rate recovery)
• If the policies are technologically viable and cost-efficient
• How storage technologies could reduce the need for fossil-fuel powered peaking facilities and other ancillary services currently provided by fossil fuels by allowing intermittent renewable sources to operate near or at full capacity
• Necessary steps for electric companies to support storage being connected to the transmission and distribution grid

What’s the Status?

Of the joint income tax credit bills HB0490/SB0758, SB0758 passed its third reading in the Senate 46-0 on March 10^th and is now being read by the House Ways and Means committee. The energy storage study bills (HB0773 and SB0715) have each had their first hearings but have yet to progress further. HB1395, the Solar Energy Grant Program bill, had its first hearing on March 9^th. The legislative session ends on April 10^th.

Conclusion

Passage of any of these bills would allow Maryland to follow in the footsteps of other early adopters of energy storage. California, for example, has a 1.3 GW storage procurement mandate, New Mexico has a storage energy investment tax credit, and New Jersey offers a $300 per kWh incentive of up to 30% or $300,000 for energy storage projects (though the NJ program has experienced a few hiccups). Massachusetts is also beginning to lead the way with storage legislation with emerging storage capacity targets above 1000MW for electric companies alongside potential new funding sources under the SMART program when it’s rolled out.  As we have touched on before, the mass adoption of solar + storage may still be a year or more a way in most markets, with the exception of California, and is thus largely still incentive driven.

Who knows? Depending on how the remaining month shakes out in Annapolis, Maryland could become the next hottest market for energy storage.

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