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Energy and Natural Resources: Horizons

We are at an inflection point in the energy and natural resources industry. Across the world, we're facing change of every order; the question is - how do you deal with it?

How should energy storage be

regulated?

By Miguel Ángel Mateo Simón

With the global market for energy storage expected to surmount one billion dollars by 2025, a debate around how to regulate this resource has begun to heat up — and it could have major consequences for countries looking to keep pace with U.S. output.

Fundamentally, this debate revolves around whether to A). Regulate energy storage as a generation unit, or B). Regulate it as part of transmission/distribution networks. Mexico and some European companies, for instance, treat it as the former. The U.S, on the other hand, has begun — at least in some regions — to treat it as the latter.

While there may be no definitive answer, the two options provide different incentives to different players, which may lead, of course, to different results. Treating storage as generation can induce generation companies to build integrated storage solutions and storage at scale, to shave peak loads. Conversely, treating it as part of a transmission/distribution network gives transmission operators (TSOs), whose responsibilities are to the safety and reliability of the network, more tools at their disposal. Even policy makers have shown signals that TSO’s will need to include storage in their planning.

One answer may simply be to have specific regulations for both activities: for instance, restricting generators’ ability to build up storage capacity may impact peak-shaving alternatives. Or perhaps the ultimate solution would be to have TSO’s and generators coordinate to enhance the potential of utility scale storage.  

Amid debates like these, it’s imperative that stakeholders not lose sight of an even more fundamental issue with energy storage: the environmental costs of battery production. For while energy storage is typically thought of as an environmentally-friendly solution, the carbon footprint associated with exploiting lithium and other minerals for batteries has proved a significant counterbalance. It’ll be a long time before we have the technology necessary to reduce these costs.

As industry players evaluate the range of developing issues associated with energy storage — be they regulatory,  technological, or environmental — they’ll need to remain open-minded, adaptable, and well-prepared if they want to stay on the cutting edge.

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