Procurement targets differ from other energy storage policies primarily in their clear, quantifiable focus on mandating utilities to acquire a specified amount of energy storage capacity by certain deadlines. Here is how procurement targets stand out compared to other energy storage policies:
Key Differences of Procurement Targets
- Quantitative Mandate: Procurement targets require utilities to procure a specific amount of energy storage capacity, often expressed in megawatts (MW) or gigawatts (GW), by a set date. For example, California initially mandated utilities procure 1,325 MW by 2020, later increasing the target to 1,825 MW including distributed storage. Similarly, Nevada set a target of 1,000 MW by 2030 with interim milestones.
- Utility-Focused Compliance: These targets are generally set for utilities to meet, either via regulatory bodies or legislatures, unlike broader policies that might include incentives, pilots, or voluntary goals. Procurement targets compel utilities to act, reducing uncertainty for investors.
- Specificity and Flexibility in Design: While procurement targets define how much storage to acquire, they may vary in technological specificity. For instance, California limited pumped hydro storage to 50 MW of the total target, showing that targets can include technology-specific constraints.
- Contrast with Other Policy Types: Other energy storage policies may focus on financial incentives (grants, rebates, tax credits), demonstration projects, research and development support, or market rules changes rather than setting hard capacity acquisition goals. For example, New York’s approach includes procurement solicitations to acquire bulk storage via incentive mechanisms over contract terms to reduce financial risks, emphasizing development effectiveness, feasibility, and market compatibility.
- Market Incentives and Contract Structures: Some procurement programs use innovative financial mechanisms such as Index Storage Credits (ISC) that compensate storage based on operational availability and market price conditions, encouraging efficient energy injections to the grid. This contrasts with straightforward capacity mandates by procurement targets.
Summary
| Aspect | Procurement Targets | Other Energy Storage Policies |
|---|---|---|
| Main Objective | Mandate utilities to acquire specific storage capacity by a deadline | Often include incentives, pilots, R&D, or market rules |
| Regulatory Approach | Regulatory mandates via PUCs or legislatures | Incentives, voluntary goals, performance-based programs |
| Specificity | Quantified MW/GW targets, sometimes technology-specific limits | Broader goals, technology-neutral or experimental focus |
| Market Interaction | Can include contracts and performance incentives (e.g., ISC in NY) | May not directly mandate capacity acquisition |
| Impact on Investment | Provides clear signals reducing regulatory uncertainty | Provides support but less direct capacity mandates |
Procurement targets are a cornerstone of state-level energy storage policies because they set enforceable, clear goals that drive the deployment of energy storage, providing regulatory certainty and focused market signals for investors and utilities alike, distinguishing them from broader, less prescriptive energy storage policy approaches.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/how-do-procurement-targets-differ-from-other-energy-storage-policies/
