Research and Development
Federal investment in research and development (R&D) supports economic growth, drives down costs for key technologies that can be used domestically and exported abroad, and promotes U.S. leadership on clean energy and climate. Investment in R&D for energy storage technologies is driven primarily by the U.S. Department of Energy’s (DOE’s) Offices of Electricity (OE) and Energy Efficiency and Renewable Energy (EERE). Further R&D for energy storage comes from DOE’s national labs and Advanced Research Projects Agency-Energy (ARPA-E).
Federal policymakers should increase investment and enact programmatic reforms to ensure DOE focuses on advancing R&D for:
- Chemical approaches for long duration storage such as flow batteries;
- Thermal technologies, including molten salt storage;
- Next-generation pumped-hydro storage and other kinetic approaches (e.g. flywheels, stacked concrete blocks, and compressed air energy storage); and
- Low-GHG hydrogen.
Validation and Early Deployment
Before we can deploy promising clean energy technologies at scale, we must demonstrate and validate their cost and performance in real-world conditions. Since demonstration projects reduce the economic and institutional risks of new technologies, DOE should work to develop a robust portfolio of demonstration and pilot projects, particularly for long-duration energy storage technologies.
Without targeted policies to promote early-stage deployment, producers often lack the incentive to develop new technologies at scale and consumers tend to shy away from using emerging products. Tax credits, loan guarantees, and other fiscal incentives targeted at storage technologies can reduce the green premium and drive private sector demand. Well-designed tax incentives must be technology neutral, predictable, flexible, and accessible to historically disadvantaged communities.
Market Rule Reform
Wholesale power markets in the U.S. are not yet designed to reward energy storage for returning value to the grid. The federal government and federally regulated independent system operators should modernize wholesale power-market rules to better reflect the full benefits of storage technologies.
Government procurement policy plays a critical role in accelerating the deployment of new technologies in other sectors, and it can do the same for clean electricity and energy storage. Using their procurement power, DOE, the Department of Defense (DOD), Power Market Administrations, and other government agencies can drive new power generation and storage technologies onto the market at relatively low cost to taxpayers.
Rapid, Large Scale Deployment
A carbon-pricing system that conveys the true costs of GHG emissions, such as a carbon tax or a cap-and-trade plan, would drive the rapid deployment of wind and solar power by raising the relative cost of coal, oil, and natural gas to reflect the environmental harm they cause. In fact, electric power is the economic sector in which carbon pricing can be most effective, because we already have cost-competitive alternatives to fossil fuels. Storage technologies would benefit from the increased demand for variable renewable energy sources. Carbon pricing measures should include design elements or be paired with other policies that reduce non-CO2 pollutants from fossil fuel production, particularly in historically disadvantaged communities.
Clean Electricity Standard
A power sector-specific policy option is a technology-neutral clean electricity standard (CES). A CES requires electric utilities to generate or procure some portion of their total electricity sales from qualifying clean energy sources. Under this market-based approach, the government sets a target for the share of clean electricity sold, and utilities are free to choose how they meet that target.
A CES offers an alternative or complementary approach to a carbon price for the power sector.
Technology-Neutral Deployment Tax Credit
Tax credits have already successfully enabled the deployment of clean energy technologies—especially wind and solar energy. A technology-neutral refundable tax credit for energy storage technologies can further drive the development of new technologies that will bring the power sector closer to net-zero emissions.
Technology-neutral deployment tax credits offer a less economically efficient alternative to a CES or carbon pricing.