2.3.1 Evaluation of Incentive Designs and Grid Services Design for Behind-theMeter Energy Storage and Front-of-the-Meter Distribution Connected Energy Storage A. Overall Objective: Work with the Commission and Contract Monitor as described throughout this Section to pursue two workstreams for behind-the-meter energy storage and front-of-the-meter distribution connected energy storage: Incentive Design and Grid Services Design. The study scope for these two workstreams does not include transmission connected energy storage devices. a. The objective of the Contractor’s scope of work is to pursue incentive design and grid services design frameworks for behind-the-meter energy storage and front-of-the-meter distribution connected energy storage: within deadlines as listed in Section 2.4.4 Task Schedule. b. To facilitate this scope of work, the Contractor shall be available by phone and email to respond to the Contract Monitor within five (5) business days of a request for information. c. The reports and other deliverables detailed in this section become the property of the Commission at the conclusion of this contract. d. The Contractor shall assist the Commission in developing incentive design and grid services design frameworks by completing the responsibilities and tasks described in Section 2.3.1B Incentive Design, Section 2.3.1C Grid Services Design, Section 2.3.1D Alignment with Benefit–Cost Analysis (BCA) Activities and Section 2.3.1E Conducting the Study. e. A Notice to Proceed (NTP) shall be issued by the Commission prior to work commencing. B. Incentive Design: Study the potential benefits and costs to Maryland from the deployment of energy storage devices and develop a calculation methodology for the potential available revenues and current deployment costs for these storage assets to guide the development of incentive levels. The base premise is that incentive levels should be set approximately at the “gap” between energy storage costs and revenues for an incentive program to succeed. Further, the design of incentive programs shall consider the value of “non-energy” benefits that energy storage deployment provides relative to state energy goals. To be clear, these benefits are not benefits from the operation of energy storage assets already captured in the Grid Services Design workstream, such as avoided wholesale, transmission, and distribution costs. Respondents will develop methodologies for determining these non-energy benefits as appropriate for each workstream and use case. How the benefits are incorporated into incentive design (e.g. incentive “adders”) is out of scope for this study. All incentive design tasks shall be completed and presented to the Contract Manager as follows: a. Use Cases: Different incentive levels methodologies should be developed for the following use cases: i. Residential Customer Class 1. Recommend an incentive level calculation methodology for a minimum of two different ranges of installed capacity levels that represent both larger and smaller system use cases. The capacity levels that represent larger and smaller residential systems shall be recommended based on the Respondent’s analysis and experience. 2. Non-energy benefits to consider: a. Deployment for businesses or other institutions benefiting lowincome and underserved communities3 b. Local workforce development c. Other non-energy benefits may be recommended based on the Respondent’s analysis and experience. ii. Commercial/ Industrial Customer Class 1. Recommend an incentive level calculation methodology for a minimum of three different ranges of installed capacity levels that represent large, medium and small system use cases. The capacity levels that represent large, medium and smaller commercial/ industrial systems shall be recommended based on the Respondent’s analysis and experience. 2. Recommend an incentive level calculation methodology for incentive adders of two different storage duration ranges, both below four hours duration and greater than or equal to four hours duration. 3. Non-energy benefits to consider: a. Deployment for businesses or other institutions benefiting lowincome and underserved communities b. Local workforce development c. Other non-energy benefits may be recommended based on the Respondent’s analysis and experience. iii. Front-of-meter distribution-connected standalone storage assets 1. Recommend an incentive level calculation methodology for a minimum of two different ranges of installed capacity levels that represent large and medium system use cases. The capacity levels shall be recommended based on the respondent’s analysis and experience. 2. Recommend an incentive level calculation methodology for incentive adders of two different storage duration ranges, both below four hours duration and greater than or equal to four hours duration. 3. Non-energy benefits to consider: a. Local workforce development b. Market establishment and acceleration4 c. Other non-energy benefits may be recommended based on the Respondent’s analysis and experience. iv. Deployment sensitivity to incentive levels 1. For each methodology developed above, conduct an analysis to estimate the reduction in deployment if the actual incentive is lower than the calculated gap (e.g. what percentage fewer MWs would be deployed if incentive offered was only 70% or 80% of the full “gap” between revenues and costs?).
