1. Market Participation Rules
- Fair Compensation: Ensure that energy storage systems (ESS) receive fair compensation for their services, such as energy arbitrage, capacity provision, and ancillary services. This can be achieved by modifying market structures and participation rules to recognize the unique value that ESS provide.
- Open Market Access: Implement regulations like FERC Order 841 in the U.S., which allows ESS to participate openly in electricity markets, enhancing their economic viability.
2. Financial Incentives
- Subsidies and Tax Credits: Offer subsidies, tax credits, grants, and low-interest loans to reduce the high upfront costs associated with energy storage technologies. This can accelerate deployment and economies of scale, leading to cost reductions.
- Investment Support Schemes: Implement specific support schemes like the UK’s Long Duration Electricity Storage (LDES) investment scheme, which includes a “cap and floor” regime to guarantee minimum incomes for developers while capping revenues.
3. Clear Regulatory Targets and Standards
- Grid Integration Standards: Establish clear standards for the integration of energy storage into the grid, ensuring interoperability and operational efficiency. This includes setting targets for capacity and performance.
- Regulatory Clarity: Provide clear and consistent regulatory frameworks that incentivize investment by reducing risks and uncertainties. This can include simplified permitting processes and predictable policy environments.
4. Promoting Innovation
- Innovation Routes: Create separate regulatory pathways for new and mature technologies, as seen in the UK’s LDES scheme. This allows new innovations to be tested without the constraints of existing regulations, promoting technological advancement.
5. Policy Initiatives and Government Programs
- Procurement Mandates: Establish energy storage procurement mandates, similar to those implemented by the California Public Utilities Commission, to ensure steady demand and investment in energy storage technologies.
- Research and Development Support: Offer funding and resources for research and development to enhance the efficiency and cost-effectiveness of energy storage technologies.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/how-can-regulatory-frameworks-better-incentivize-investment-in-energy-storage-technologies/
