Policy Studies Clean Energy

A case study of hydropower as a wholesale storage resource

Existing regulatory regimes suppress competition from energy storage resources and undervalue grid services where these resources hold comparative advantages. This has a particularly constraining effect on hydropower, which comprises the vast majority of deployed storage resources and holds large untapped potential.  Regulatory reform is essential to allow all storage resources to compete on a level playing field and to drive voluntary innovation and deployment of cost-efficient resources.

Top points:

  1. The benefits of regulatory reform are particularly potent for hydropower as an energy storage resource, which faces unusually high regulatory barriers to entry.
  2. The most beneficial reforms include streamlining permitting processes, improving market access and ensuring market-based compensation.
  3. FERC must remain vigilant that grid operators implement the recent energy storage rule thoroughly and efficiently, which will have a large effect on the market value of storage overall and hydropower in particular.
  4. FERC should revisit how transmission policy facilitates competition from non-transmission alternatives.
  5. FERC should examine the creation of fuel- and technology-neutral markets for essential reliability services.
  6. Congress and the Trump administration should pursue reforms that reduce delays and uncertainties in hydropower licensure, especially for projects with minimal environmental impact.

Image credit: Tramp57

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