Dispatchability Adders for feed-in tariffs

If a utility or other load-serving entity (LSE), such as a Community Choice Aggregation program, wants to encourage the development of energy storage, the Clean Coalition recommends a Dispatchability Adder. A Dispatchability Adder is a fixed ¢/kilowatt-hour (kWh) bonus on top of the feed-in tariff (FIT) rate.

Pairing local renewables with local energy storage can provide many benefits to the grid and associated value to an area. These benefits and values include:

  • Making renewable energy dispatchable to match grid requirements and potentially reaping energy arbitrage and capacity value.
  • Reducing peak congestion on the transmission and distribution grids and potentially reaping associated congestion relief value.
  • Matching the energy supply and demand for a given LSE, including forecasted versus real-time experience, and potentially reaping value from avoiding scheduling penalties, etc.

When an energy storage system is deployed in conjunction with an ITC-qualifying resource, the ITC can be applied to the cost of the entire system. This means that the benefits of energy storage can be secured at a lower cost than otherwise possible.

For an energy storage project to be eligible for the Dispatchability Adder, it must meet certain operational requirements, which could include:

  • Minimum power capacity and duration ratings
  • The ability to fully cycle the battery daily
  • A requirement for the energy storage facility to follow the dispatch schedule, with as little as one hour advance scheduling — and/or configuration of the storage system to allow direct dispatch control per future specifications.

Dispatchable renewables facility owners would be compensated via a Dispatchability Adder for their full kWh deliverability rating daily — or if the total energy delivered on a given day is less than the kWh deliverability rating due to unfavorable weather or a poorly performing facility, then the Dispatchability Adder will be applied on the total energy delivered. Any shortfalls from the contracted levels under the Dispatchability Adder must be justifiable weather-driven or planned maintenance reasons. Unjustified shortfalls would be result in penalties, and three or more unjustified shortfalls within a rolling twelve-month period could result in termination of the Dispatchability Adder for the offending facility.

The Clean Coalition recently designed FIT for East Bay Community Energy, a community choice aggregator in northern California, that includes a Dispatchability Adder to incentivize energy storage.