This article comes from Canadian law firm Aird & Berlis LLP | Aird & McBurney LP and is authored by David Stevens and Jasmine Chung.
The topic of energy storage has been front and center in the energy world in the past twelve months. As discussed previously (here and here), energy storage has been referred to by many commentators as a “game changer” because it will greatly improve the efficient use of electricity resources (generation, transmission, distribution). In this article, we explore recent storage developments in Canada, the U.S. and beyond that have occurred since we introduced this topic last year.
To provide some background on where energy storage stands today, GTM Research reported that the U.S. energy storage market alone is expected to increase tenfold to $3.2 billion from 2016 to 2022, according to a recent report of the U.S. Energy Storage Monitor. One possible reason for the anticipated increase is that the cost to implement storage technologies has dropped significantly, making it more cost-effective. According to a recent McKinsey article, the average battery-pack costs are down from approximately $1,000 per kilowatt-hour (KWh) in 2010 to less than $230 per KWh in 2016.
Another possible reason is the growing understanding that storage can significantly improve the efficient use of renewable energy since it provides a mean for intermittent energy to be stored for use at another time. In this regard, the National Energy Board (NEB) of Canada has identified the pairing of grid-scale electricity storage and renewable electricity generating technologies as a strong candidate to transform the energy system. By supporting a larger share of renewables in the electricity grid, the NEB suggested that energy storage could improve grid-stabilization and buffer peak electricity demands.
A third possible reason to explain the expected increase in storage deployment is that many governmental authorities are putting in place legislation, regulations, policies, and programs to incent storage developments. Taking these factors together, it is no surprise that energy storage has generated tremendous interest from across the energy sector. We expect this interest to grow.
How Canada is advancing energy storage
As many anticipate the role that energy storage will increasingly play in the grid, we are beginning to see some legislative changes being made in Ontario and Alberta to encourage storage development. For instance, Ontario’s net metering regulation (O Reg 541/05) was amended on July 1, 2017 to allow renewable energy generation facilities of any size with an energy storage component to be eligible for net metering whereas this was previously not permitted (as discussed here). In Alberta, the provincial government announced last November the introduction of a “capacity market” for electricity which experts believe will likely spur the development of renewable projects paired with energy storage due to their potential to create capacity value. Alberta’s capacity market is expected to be in place by 2021.
The NEB’s July 2016 Market Snapshot on energy storage in Canada reported that over 50 megawatts (“MW”) of battery capacity is expected to be operational in Canada by 2018, accounting for 81% of the total electricity storage market. Flywheel accounts for another 11% of the total electricity storage market.
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Filed Under: Energy storage