At the Washington State Solar Summit on October 9, Washington State Academy of Sciences senior project director Donna Gerardi shared the results of their study on solar and storage, which had been released just before the event. This article provides a summary of Donna’s talk. 

The Background to the Report

Donna has been the staff lead on this project since its inception in early 2024. She started her talk by providing the background of the project, then discussed the results in the report that was delivered to the Department of Commerce and the UTC about a week before the Summit.

 As background, WSAS was established by the Washington State Legislature in 2005 as an independent resource for the state. It produces peer-reviewed research reports for policymakers and other interested parties in Washington State. 

The report is Washington State-context specific. A key issue was the net energy metering threshold of 4% of peak load set in 1996 as a threshold, after which the rate structure could be reexamined. Several utilities were racing towards that threshold. Now many other utilities, public utilities, and rural co-ops are also meeting it. The question is what next and how the state can respond. 

The mandate was to examine the values behind distributional storage to inform the design of a new policy and elements that could be factored into determining the value. 

The state strategy is for energy to be reliable, affordable, clean and equitable, and those goals are in statute. The primary driver for this project was NEM (Net Energy Metering) and the need for a robust NEM successor policy. A second driver was the arrival of battery storage maturation. Another driver was achieving the legislative objectives in the Clean Energy Transformation Act, the Climate Commitment Act, and to some extent the Heal Act. There was also consideration of the community solar expansion program.

While these issues are familiar in many states, Washington has a few differentiators that set it apart from other states, including significant hydropower resources, a relatively high reliance on electricity for residential use, and an equity-focused policy regime.

In phase one, WSAS identified factors that build into the value stack that contributes to or informs the way that rate structures are set, and the way that that utilities and others think about the way that solar and storage can be valued. These were mapped against other ways of identifying benefit and cost factors in other states and other kinds of analyses. WSAS also distinguished between benefits and costs. Benefits included health, equity and environmental issues. WSAS selected eight benefit and two cost factors for a deeper dive. 

Donna said that policymakers have to consider the policy mechanisms to select to drive activity in a certain direction. Mechanisms depend on the kind of utility, the geographic region, and the policies that are put into place to incentivize or enable promotion of certain activities. Four policy mechanisms across the country are retail rate design, grid services tariffs, utility procurements, and deployment incentives. 

Among the takeaways is that when strategically combined, policy mechanisms transition distributed solar and storage resources from customer-owned localized assets into powerful grid management tools. Value stacking around certain policies to meet strategic goals is important. And stacking policy mechanisms together can unlock synergies that result from some of the complex systemic challenges, which one policy can no longer do. 

Another throughline for the report is equity. Policy mechanisms, and the benefit and cost factors, are examined through that lens. 

The other two factors that are unique in this report are the considerations of hydropower and the impact of those decisions on tribal communities. 

Key Findings

A key finding is that battery storage is a gamechanger. It is the single most consequential variable for realizing the benefits that can accrue from solar and storage. Storage-enabled installations realize higher benefits than solar-only across every factor. The implication is that policy mechanisms could actively promote storage attachment.

Another finding is that a single mechanism could interact with other mechanisms and could be complementary. The policy implication is that a distributed DER policy framework could include a portfolio of mechanisms. It's about how the design of policy mechanisms could work as much as the mechanism type itself. 

The next step is to identify how to work with a policy mechanism to get what works best for utility rate payers. The policy implications are that the regulatory proceedings invest in detailed mechanism design and not just the mechanism type. 

Another finding is that hydropower optimization is not realized. For example, there are ecological consequences of dams, and of ramping power up and down. Washington State could develop and pilot mechanisms to target this unique resource. 

Managing cost shifts is a dominant concern, though it's currently concentrated on rate design. Its magnitude depends fundamentally on what system benefits are included in the analysis. The policy implication is that successor proceedings could use comprehensive benefit valuations and avoid narrow cost methodologies that risk over- or under-stating the cost shift. 

Then, where and when solar and storage assets are operated determines benefits and value. Distinctions between managing an appropriate mechanism, dispatch requirements and operational constraints need to be tied together. The policy implication is around storage deployment. Deployment at scale could be accompanied by mechanism designs that include operational constraints, not just deployment subsidies. 

Question & Answer

Participants asked a number of questions about the report: 

Question: In the report, did you look at different methods or mechanisms of energy storage, or was it just limited to batteries?
Answer: We didn't distinguish between batteries and other storage, recognizing that there are new technologies coming on board. 

Question: Can't we just raise from 4% to 10% and keep going like we have been?
Answer: There's so much diversity in the utility space in Washington State. There aren't that many other states in the nation, if any, that have over 60 utilities, each serving different communities in different geographic areas. WSAS doesn’t have an answer as to whether going from 4% to 10% with the same policy mechanism is the best for the state.  

Question: What do you feel are the next steps for advising utilities and regulators that are looking to address that cost step question?
Answer: Taking a deep dive into what other states did, how they did it, what their dockets looked like and what factors they considered are intended to provide examples to Washington State utilities and the larger community about how other states have grappled with similar issues. WSAS tried to present a way of organizing utilities’ thinking about how they provide that opportunity to their service areas.

Full Report on WSAS Website

*Photos by Bitter Suite Creative