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Orlando, FL USA - November 5, 2021: The Tesla Powerwall and Sign at the entrance of the Tesla dealership in Orlando, FL.

Connecticut Aims Big Subsidies at Home and Business Energy Storage Plan

As batteries large enough to temporarily power homes and businesses have become more widespread in the United States, Connecticut is launching a program to heavily subsidize them, aiming to take a significant step toward reaching storage goals that state lawmakers set last year.

The Energy Storage Solutions program, approved by the Public Utilities Regulatory Authority in December and accepting applications this month, comes with promises to provide a reliable source of backup power to homes, and a way to curb high energy bills for industry – providing large subsidies to help cover some of the costs of installing battery storage systems designed to power homes and businesses. 

For a home storage system, the program offers an upfront incentive of around $200 per kilowatt-hour of battery capacity being installed. That means that, for a 13.5 kilowatt-hour battery like the Tesla Powerwall – the largest battery currently on the market – a residential customer would receive a $2,700 credit. 

The 13.5 kilowatt Tesla battery costs about $10,500 for one unit that could power a home for about 12 to 15 hours during a power outage if fully charged – or $17,000 for two units with a total capacity of 27 kilowatt. 

There is a $7,500 maximum incentive for each residential storage project, so the upfront credit is capped at a project capable of storing about 37.5 kilowatt of electricity. 

Green Bank also set a goal of having 10 percent of installations funded by the program be in low-income households, and another 30 percent in underserved communities – and the program offers higher incentives for both. 

Low-income households can receive an up-front incentive of $400 per kilowatt-hour of capacity being installed, double the typical residential incentive. Non-low income households in underserved communities split the difference, with an up-front incentive of $300 per kilowatt-hour.

Keying in on concerns about the reliability of the electric grid – especially during damaging storms – the program administrator Connecticut Green Bank is advertising battery storage to residential customers as an effective way to ensure a home has backup electricity to power lights, appliances and medical equipment during an outage.

For commercial and industrial businesses, Green Bank pitches storage systems as a way to lower a business’s peak energy demand, and in turn lower its electric bills. Those businesses can receive an up front credit for up to 50 percent of the cost of their storage projects, plus a according to PURA.

In addition to the up-front credit, households and businesses that use the program will also receive additional incentive payments for how much power they provide to the electric grid when it’s needed during critical periods.

Nationwide, as the costs of installing battery storage has declined in recent years, more large and small-scale battery systems have been built across the U.S., especially in California. The U.S Department of Energy expects that trend to continue, forecasting 10,000 megawatts worth of large, “utility-scale” battery storage to connect to grids in the U.S. by 2023 – 10 times the nation’s total capacity in 2019.

New England is well on its way to expanding battery storage. Last year, three storage projects with a total capacity of 600 megawatts received funding in a regional auction to secure future grid capacity – a huge increase from 17 megawatts of battery storage that cleared the auction the year before. 

More than 6,400 megawatts worth of battery storage projects are in line to connect to the New England electric grid, including nearly 5,000 megawatts worth of projects that asked to connect last year.

In Connecticut, the state legislature set a statewide goal last year of having 1,000 megawatts of energy storage installed in Connecticut by 2030. 

“[The legislature] put Connecticut on the map as a potential leader in realizing the benefits of energy storage,” said PURA Chairman Marissa Gillett, in a written statement. “[This program] builds on that vision by establishing a statewide comprehensive program that not only incorporates different applications and types of electric storage, but ensures the state is on a path to achieving 1,000 MW by 2030.”

PURA set a goal of subsidizing more than half of that through the Energy Storage Solutions Program – aiming to fund a total of 580 megawatts of smaller-scale storage projects through the program by 2030, including a target of 100 megawatts between 2022 and 2024.

Those goals include both storage for residential projects and commercial and industrial projects, with PURA targeting an even split of each. In practical terms, the target is to fund about 10,000 home battery systems by 2024, and an equivalent amount of larger, commercial and industrial projects.

Eversource and United Illuminating will pay the costs of the incentives, and of running the program, and will pass any costs approved by PURA along to their customers in their electric bills the next year, according to PURA spokesman Joe Cooper.

Green Bank’s cost-benefit analysis – based on a metric set by PURA – finds that the reliability benefits to the grid for all electric customers, including avoided generation and distribution, outweigh the additional costs that will be passed on to customers without a storage system. 

The program is designed to meet that same cost-benefit metric over the first three-year cycle of the program, Cooper said. PURA will evaluate the program every year to make sure it is still meeting that target, and the program can be revised if it is not, Cooper said.

“The launch of this program is a step forward to achieving the long-term goal of strengthening our grid reliability and greenhouse gas reduction targets,” said Energy and Technology Committee co-chair David Arconti, D-Danbury. “When there is more energy storage powered by renewables, fewer fossil fuel units will be needed for grid reliability, and that certainly is a great start.”

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