The US power grid is expected to double in capacity from 2022 to 2050, primarily driven by the growth of renewable capacity, which is expected to increase by 380% in that time period. By comparison, fossil fuel–generating capacity is expected to increase by only 11%.[1] This boom in renewable deployment can partly be attributed to the 2021 Infrastructure Investment and Jobs Act and the 2022 Inflation Reduction Act, which helped lower the capital costs for solar panels, wind turbines, and energy storage resources, making these resources increasingly cost effective.
Another driver in renewable growth: more and more states are setting ambitious renewable goals. Thirty states have adopted some form of renewable portfolio standard, with 13 of those committing to reaching 100% renewable energy by a certain year (New Jersey is the earliest at 2035, with most other states setting goals for 2040 to 2050).[2] Seven states have adopted some form of voluntary renewable portfolio goal,[3] six states have adopted a clean energy standard, and six states have adopted a clean energy goal.[4]
As a result, states are actively working to implement laws, policies, and regulations to promote the growth of in-state renewables while providing safe, equitable, and reliable energy to the electric grid. This has led to many more state policies, programs, and regulations to set community solar programs, energy storage goals and incentives, and utility resource planning initiatives in motion.
Community solar programs allow for diverse participation in renewables and can foster energy equity, which are key components of many state renewable energy initiatives. Under a community solar program, an energy customer (or subscriber) can enter into a contract with a remote project to receive bill credits, which are then applied to the customer’s electricity bill to lower their cost. This both enables individuals to participate in renewables projects that would otherwise be unavailable to them and allows developers to tap into a new offtaker base that is supported by incentives.
Washington initiated the first community solar program in 2006. Since then, 21 states have passed legislation allowing for community solar programs: California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Massachusetts, Maryland, Maine, Minnesota, North Carolina, New Hampshire, New Jersey, New Mexico, Nevada, New York, Oregon, Rhode Island, South Carolina, Virginia, and Vermont.[5] The most successful iterations have pared down program restrictions, increased the potential size of program projects, and expanded the number of projects that can be accepted into the community solar program.
New York, Minnesota, and Massachusetts lead the states in community solar operating capacity. As of December 2022, New York had over 1.1 GW of operating capacity, Minnesota had 875 MW, and Massachusetts had 858 MW.[6]
State actions within the last year indicate that community solar will continue to grow. In May 2023, Maryland enacted legislation transitioning its 2015 Community Solar Energy Generating Systems Pilot Program to a permanent program. The Maryland community solar program requires that each project dedicate 40% of its output to low- and moderate-income subscribers. New Mexico created its community solar program in 2021 and announced in May 2023 that it has selected a portfolio of 45 solar projects to participate. These projects have a collective capacity of 198 MW, and each project is required to reserve 30% of its output for low-income customers and low-income service organizations. Ohio is also considering community solar legislation. In June 2023, a bill was introduced that would establish a 1,500 MW community solar pilot program.
The continued growth in renewable energy and rapidly expanding electrification of buildings and transportation, compounded with the need to ensure grid reliability and stability, also require a growth in energy storage. In 2020, only 1.5 GW of utility-scale battery storage existed in the United States. That number is expected to reach 30 GW by 2025.[7]
State energy storage policies are also a driver for growth. In May 2023, Maryland became the latest (and 10th) state to enact an energy storage target, with a goal to deploy 3 GW of storage capacity by 2033. The new law requires the Maryland Public Service Commission to establish the Maryland Energy Storage Program by July 1, 2025 and provides for incentives for the development of energy storage.
New York has a goal of achieving 6 GW of storage by 2030. In support of that goal, the New York State Energy Research & Development Authority (NYSERDA) and the New York State Department of Public Service (NYPSC) filed a roadmap with the New York Public Service Commission that proposes to implement NYSERDA-led programs procuring 4.7 GW of new storage projects across the bulk (large-scale), retail (community, commercial, and industrial), and residential energy storage sectors. According to the NYPSC, the state has approximately 130 MW of operational storage with more than 1,300 MW under contract.
California continues to lead in the energy storage space with a reported capacity of 5 GW of energy storage currently operational; in May 2023, the state Public Utility Commission proposed to implement a streamlined permitting process for battery storage projects with the goal of hastening the deployment of energy storage resources.
New Jersey, which set a goal for 2 GW of installed energy storage by 2030, is also exploring ways to accelerate the deployment of energy storage resources. On August 8, 2023, the New Jersey Board of Public Utilities (NJBPU) opened a request for information seeking comments on revisions to its September 2022 energy storage incentive framework. The NJBPU is specifically seeking stakeholder opinions on the advantages or disadvantages of utility control of energy storage systems (the current program proposal does not allow for utility ownership), what current and estimated fully installed unit costs of energy storage systems are expected through 2030, and whether distributed storage resources that can provide grid services should be allowed to opt in to either front-of-the-meter or behind-the-meter programs.
Many states are implementing changes to utility resource planning processes to align with state renewable energy and energy storage goals. Certain states require utilities to produce integrated resource plans (IRPs) to demonstrate how the utility will meet long-term energy demand projections by using a combination of generation, transmission, and energy efficiency investments while minimizing costs.
Increased renewables and energy storage can create challenges to traditional resource planning as renewables and storage resources are different from conventional electricity generators and demand-side resources. Renewable energy and energy storage have unique operational constraints and energy storage can be interconnected at various points and can serve a variety of applications. In addition, policy and regulatory uncertainty may affect system profitability. These challenges are reflected in recent state actions.
For example, in June 2023, Nevada enacted legislation permitting utilities to file IRPs more often than every three years, which was the previous requirement. This legislation was driven by stakeholders who wanted increased visibility into utility resource procurement to better understand what resources will have the lowest cost and least risk in maintaining grid reliability. Prior to the enactment of this legislation, Nevada’s utility, NV Energy, was heavily reliant on contracts with independent power producers. The hope is that this new IRP process will provide the utility with more opportunities to own renewable generation and battery facilities.
Also in June, Colorado established additional legislative requirements for clean energy filings that require public utilities to meet the state’s 2030 target of achieving an 80% reduction in greenhouse gas emissions caused by the utilities’ retail electricity sales.
Despite the availability of numerous federal incentives for the development of renewable energy and energy storage resources, states are likely to continue promoting and developing programs to foster the growth of in-state community solar and energy storage resources as they work to meet ambitious clean energy goals.
State public utility commissions will also focus on utility resource planning as a way to ensure that renewable energy and energy storage resources are growing components of their in-state energy landscape. Community solar programs that are informed by utility resource planning will better meet state and community objectives by serving low-income customers or meeting distribution needs (or both) while increasing solar generation. Energy storage resources paired with community solar programs can benefit utility resource planning by supporting grid reliability.
[1] US Energy Information Administration, U.S. electric capacity mix shifts from fossil fuels to renewables in AEO2023 (Apr. 13, 2023).
[2] DSIRE, Renewable & Clean Energy Standards (Nov. 2022).
[3] Id.
[4] Id.
[5] US Environmental Protection Agency, Shared Renewables (Nov. 21, 2022).
[6] See Department of Energy, Community Solar Market Trends.
[7] US Energy Information Administration, U.S. battery storage capacity will increase significantly by 2025 (Dec. 8, 2022).