[Senate Hearing 116-325]
[From the U.S. Government Publishing Office]


                                                       S. Hrg. 116-325

                     OPPORTUNITIES FOR THE EXPANDED
                    DEPLOYMENT OF GRID-SCALE STORAGE
                          IN THE UNITED STATES

=======================================================================

                                HEARING

                               BEFORE THE

                              COMMITTEE ON
                      ENERGY AND NATURAL RESOURCES
                          UNITED STATES SENATE

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              JUNE 4, 2019

                               __________
                               
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                               __________

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               COMMITTEE ON ENERGY AND NATURAL RESOURCES

                    LISA MURKOWSKI, Alaska, Chairman
JOHN BARRASSO, Wyoming               JOE MANCHIN III, West Virginia
JAMES E. RISCH, Idaho                RON WYDEN, Oregon
MIKE LEE, Utah                       MARIA CANTWELL, Washington
STEVE DAINES, Montana                BERNARD SANDERS, Vermont
BILL CASSIDY, Louisiana              DEBBIE STABENOW, Michigan
CORY GARDNER, Colorado               MARTIN HEINRICH, New Mexico
CINDY HYDE-SMITH, Mississippi        MAZIE K. HIRONO, Hawaii
MARTHA McSALLY, Arizona              ANGUS S. KING, JR., Maine
LAMAR ALEXANDER, Tennessee           CATHERINE CORTEZ MASTO, Nevada
JOHN HOEVEN, North Dakota

                      Brian Hughes, Staff Director
                     Kellie Donnelly, Chief Counsel
                      Jed Dearborn, Senior Counsel
                Sarah Venuto, Democratic Staff Director
                Sam E. Fowler, Democratic Chief Counsel
          Brie Van Cleve, Democratic Professional Staff Member
                            
                            
                            C O N T E N T S

                              ----------                              

                           OPENING STATEMENTS

                                                                   Page
Murkowski, Hon. Lisa, Chairman and a U.S. Senator from Alaska....     1
Manchin III, Hon. Joe, Ranking Member and a U.S. Senator from 
  West Virginia..................................................     2

                               WITNESSES

Crabtree, Dr. George, Argonne National Laboratory and University 
  of Illinois at Chicago, Director, Joint Center for Energy 
  Storage Research...............................................     5
Davidson, F. Mitchell, Chief Executive Officer, U.S., Brookfield 
  Renewable......................................................    15
Fowke, Ben, Chairman, President, and Chief Executive Officer, 
  Xcel Energy Inc................................................    59
Kumaraswamy, Kiran, Vice President, Market Applications, Fluence.    81
Ott, Andrew L., President and CEO, PJM Interconnection...........    94

          ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED

American Council on Renewable Energy, et al.:
    Letter for the Record........................................   155
Crabtree, Dr. George:
    Opening Statement............................................     5
    Written Testimony............................................     8
    Responses to Questions for the Record........................   129
Davidson, F. Mitchell:
    Opening Statement............................................    15
    Written Testimony............................................    17
    Responses to Questions for the Record........................   143
Fowke, Ben:
    Opening Statement............................................    59
    Written Testimony............................................    61
    Responses to Questions for the Record........................   146
Kumaraswamy, Kiran:
    Opening Statement............................................    81
    Written Testimony............................................    83
    Responses to Questions for the Record........................   148
Manchin III, Hon. Joe:
    Opening Statement............................................     2
Murkowski, Hon. Lisa:
    Opening Statement............................................     1
National Hydropower Association:
    Letter for the Record........................................   156
Ott, Andrew L.:
    Opening Statement............................................    94
    Written Testimony............................................    96
    Responses to Questions for the Record........................   151

 
                     OPPORTUNITIES FOR THE EXPANDED
                    DEPLOYMENT OF GRID-SCALE STORAGE
                          IN THE UNITED STATES

                              ----------                              


                         TUESDAY, JUNE 4, 2019


                                       U.S. Senate,
                 Committee on Energy and Natural Resources,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:16 a.m. in 
Room SD-366, Dirksen Senate Office Building, Hon. Lisa 
Murkowski, Chairman of the Committee, presiding.

           OPENING STATEMENT OF HON. LISA MURKOWSKI, 
                    U.S. SENATOR FROM ALASKA

    The Chairman. Thank you for covering, Senator Manchin, I 
appreciate it.
    I apologize to members of the Committee and to our honored 
guests. Thank you for being here this morning. I am going to 
apologize for my voice. I have kennel cough or something, I 
don't know. Awful.
    [Laughter.]
    We are here this morning to examine the expanded deployment 
of grid-scale energy storage. As with many of our hearings in 
this Congress, this is part of our Committee's ongoing efforts 
to address climate change by promoting the development of 
innovative and clean energy technologies.
    Earlier in the year we held scene-setting hearings on 
opportunities for energy innovation and climate change in the 
electricity sector. We have discussed the prospects for 
advanced nuclear, renewables, energy efficiency, and carbon 
capture, utilization and sequestration, CCUS. We have just done 
some really supercool things in this Committee, just saying.
    In those hearings, our witnesses emphasized that innovative 
technologies present a tremendous opportunity to reduce 
greenhouse gas emissions on a large scale, and that we can 
seize the opportunity by focusing on policies that will lower 
the cost and increase the deployment of these technologies.
    So we are working hard in the Committee to do just that. We 
are taking this challenge seriously. We understand that if we 
are going to be serious about addressing climate change, we 
need to come together----
    Senator Manchin. Hold on, here we go.
    The Chairman. Thank you. This is teamwork, yes. Sorry, 
folks. There, look at how miraculous.
    We are taking this challenge seriously. We understand if we 
are going to be serious about addressing climate change, we 
need to come together on practical and effective solutions that 
will reduce our greenhouse gas emissions. CCUS and nuclear 
energy will play a major role in these efforts and so will the 
topic of today's hearing, which is energy storage.
    Put simply, energy storage is the process of capturing 
electricity from the grid and storing it for future on-demand 
use. This technology can take many forms, including pumped 
hydropower, grid-scale batteries, and flywheels.
    Energy storage resources present a win-win opportunity to 
make the grid cleaner, more resilient, and more affordable. By 
storing power when it is cheapest and dispatching it during 
peak demand periods when power is most expensive, energy 
storage can significantly lower consumers' power bills. It can 
also help avoid or defer the need to build out additional 
electric generation, transmission, and distribution 
infrastructure.
    Energy storage can play a key role in our nation's ongoing 
transition from large and predictable generation resources to a 
decentralized and more intermittent supply. Specifically, 
energy storage can pair with variable resources like wind and 
solar to make their output more consistent and avoid the wear 
and tear and uncertainty caused by irregular power flows.
    We have certainly seen how this works back in my State of 
Alaska. Chugach Electric Association in Anchorage--they have 
deployed a flywheel and battery system to integrate fluctuating 
wind power and improve the energy stability. Kodiak also uses 
batteries and flywheels to help smooth out the wind energy 
there. We took Secretary Perry out last year. He was quite 
impressed by what he saw and how they had used the batteries 
to, again, smooth the whole system. Later this week, I am going 
to be going out to a fabulous little community of Cordova. They 
are going to have a ribbon-cutting there for a new energy 
storage system. They are going to pair a battery with 
hydropower to lower their energy costs in that little fishing 
village and reduce their reliance on diesel fuel. So as usual, 
Alaskans are innovating in some pretty exciting technologies.
    Today we will examine the state of energy storage 
technologies, the regulatory and economic challenges of 
deploying more of these technologies, and how the Federal 
Government can partner with industry to get more of these 
technologies on the grid.
    We have a great panel here with us this morning. Before I 
introduce them, I will turn to Senator Manchin for his opening 
statement.
    Again, thank you, Senator Manchin and to my colleagues.

              STATEMENT OF HON. JOE MANCHIN III, 
                U.S. SENATOR FROM WEST VIRGINIA

    Senator Manchin. Chair Murkowski, thank you for holding a 
hearing today on grid-scale energy storage. I would like to 
welcome our witnesses and thank you all for joining us to talk 
about how storage technologies can help us address some of our 
greatest challenges like climate change and energy cost.
    But before we jump in, I would like to acknowledge one of 
our witnesses, Andy Ott. Andy has recently announced that he 
will be retiring at the end of the month after a successful 
22--is that correct, Andy?--22-year tenure running the largest 
grid in North America, which is PJM. Andy, I want to thank you 
again for being here today, and thank you for your service all 
these years. We wish you nothing but the best in the future.
    Grid-scale energy storage is a hot topic these days, and 
for good reason. Energy storage is needed to achieve the full 
potential of renewable energy. It is really a key enabling 
technology to a low carbon, modern grid that will help us 
achieve our carbon emissions reductions and address climate 
change.
    Storage allows us to dispatch energy during times of peak 
demand, enhance the reliability of our grid, provide energy 
security and backup power for customers, and enable increased 
flexibility for helping to manage the continued growth of 
renewable generation on our system. Storage can also help defer 
distribution system upgrades and it can be installed quickly 
compared to traditional generation, bringing better value to 
customers while maintaining reliability.
    Several members of this Committee have introduced bills to 
advance storage this Congress. The Administration proposed an 
increase in energy storage R&D and a new cross-cutting 
initiative to address the remaining barriers.
    Furthermore, FERC has been working to make sure owners and 
operators of storage resources have fair and equal access to 
competitive wholesale energy markets. Meanwhile, system 
operators, utilities, and generators are working out the 
details in the energy markets.
    With all this activity, I would say this hearing is going 
to be very timely.
    I look forward to hearing from the panel about how to 
prioritize taxpayer dollars to create the most value for energy 
storage, both now and in the future.
    I don't think anyone here will disagree that more work 
needs to be done to advance storage technology or bolster 
existing technologies like lithium-ion batteries, which is 
currently our best bet for chemical batteries.
    In an editorial published on May 14th, Bill Gates stressed 
the importance of energy storage as one of the three key 
technology suites we should be pursuing in addition to advanced 
nuclear, carbon capture, and better transmission lines.
    While battery technology has a long way to go, costs are 
coming down. In 2010 the cost of lithium-ion batteries was 
about $1,000 per kilowatt-hour. Now we are down to about $200 
per kilowatt-hour which is great progress, but it is not 
enough.
    There are problems with lithium-ion. I understand that we 
may not be able to get the cost down to much below $100 per 
kilowatt-hour. Also, we have only one active lithium operation 
in the U.S. and are otherwise dependent on foreign countries to 
supply this critical material, which is why I am the lead 
Democrat on Senator Murkowski's American Mineral Security Act, 
as well as the sponsor of the Rare Earth Elements Advanced Coal 
Technology Act, which highlights the work that WVU and NETL are 
doing to extract these materials from coal by-products.
    So while we discuss the advancement of storage technologies 
here today, I want to remind my colleagues of the importance of 
the supply chain of materials needed to actually manufacture 
energy storage resources.
    Furthermore, energy storage won't be one-size-fits-all. We 
need several different types of storage technologies available 
to us so we can find the right tool for the job to store energy 
for later use.
    I look forward to a robust discussion on what policies we 
need to get a suite of storage technologies ready to go and to 
the point of being cost-effective. We also need your help to 
see around the next corner to make sure we are preparing our 
energy grid to handle the energy demands of the future while 
also preparing our economy and our workforce to be competitive 
and robust in a global market.
    I don't think anyone here will disagree that more work 
needs to be done to advance storage technology to bolster 
existing technologies like lithium-ion batteries. We have only 
one in the U.S.
    I also briefly mentioned one type of storage that might not 
be as flashy and new as some of the other emerging 
technologies, but it is critical nonetheless. Pumped-storage 
hydropower represents 95 percent, and I repeat, 95 percent, of 
installed storage capacity in the U.S. today. It is renewable, 
zero carbon and tried and true.
    I would like to see more pumped-storage deployment in 
states like West Virginia where we have the needed topography 
and water. I know that Brookfield already operates the Hawks 
Nest hydro facility in West Virginia and one of the largest 
pumped-storage hydro facilities in Massachusetts. I hope to 
hear about any pumped-storage development the panelists may 
have in the works and how we, in Congress, can help advance 
those efforts.
    As I have said before, we need to be nurturing and 
advancing all technologies that can help us combat climate 
change.
    I want to say one thing off script. The Chairman and I just 
came back from a trip to the Arctic, and we met with all the 
Arctic nations. What I took away from that trip was this: not 
one, including Russia, has used climate change as a political 
divider. They all know it is life or death up there for them to 
survive in that fragile ecosystem. It was unbelievable to walk 
away seeing everybody from the far right to the far left and 
anywhere in between trying to find an answer on how to subvert 
this, because it is real and it is damaging. It is going to 
affect all of our lives, and we have that responsibility. It 
was an unbelievable trip that was most educational and 
enlightening for me.
    I look forward to working with my colleagues on the Energy 
Committee to explore how energy storage can be leveraged in 
conjunction with other grid assets to bring to bear the 
greatest benefits for the grid, its customers and its 
environments.
    We have a lot to cover today, and I look forward to hearing 
from our panelists. I want to thank you, Madam Chairman, for 
this hearing.
    The Chairman. Thank you, Senator.
    You remind us all that we have a lot of good work to do in 
this Committee and I think that we are really helping to lead 
good, constructive discussions about what is out there, how we 
are working to make a difference when it comes to these 
technologies that will help deliver clean, efficient energy 
sources that reduce our emissions.
    Let's begin with our distinguished panel this morning. Dr. 
George Crabtree is the Director of the Joint Center for Energy 
Storage Research (JCESR) at Argonne National Laboratory. We 
welcome you. Mr. Mitch Davidson is the CEO of Brookfield 
Renewable, welcome. Mr. Ben Fowke is the CEO of Xcel Energy. We 
have Mr. Kiran Kumaraswamy, who is the Vice President for 
Market Applications at Fluence, and Mr. Andrew Ott, who is the 
President and CEO of PJM Interconnection.
    Dr. Crabtree, if you would like to begin. We would ask you 
to all try to keep your comments to about five minutes. Your 
full statements will be included as part of the record, then we 
will have an opportunity for questions.
    Please proceed.

 STATEMENT OF DR. GEORGE CRABTREE, ARGONNE NATIONAL LABORATORY 
 AND UNIVERSITY OF ILLINOIS AT CHICAGO, DIRECTOR, JOINT CENTER 
                  FOR ENERGY STORAGE RESEARCH

    Dr. Crabtree. Thank you.
    Chairman Murkowski, Ranking Member Manchin and 
distinguished members of the Committee, I'm honored to testify 
before you at this hearing.
    This is a time of great transition in the electric grid. 
Efforts are underway to strengthen its resilience and 
reliability against extreme weather and against possible 
cyberattacks to decarbonize it and to incorporate renewable 
energy into it.
    Ever since the grid was born in the 19th century, it has 
operated under a highly constraining principle and that is, we 
must generate electricity at the same rate that we use it. This 
requires minute-by-minute matching of generation to demand and 
this elaborate balancing act has serious downsides. One is that 
we must build the grid to meet the peak demand and the peak 
demand is about 40 percent higher than the average demand. That 
means that we're building 40 percent more infrastructure than 
we need. If energy storage were cheap enough, we could imagine 
a fully modern grid, running continuously at its most efficient 
level to meet the average demand. The modern grid would store 
excess generated electricity when demand is low and release it 
when demand is high.
    With regard to expediting the grid transition, I would like 
to share a few fundamental messages with the Committee. First, 
energy storage plays many pivotal roles in all sectors of the 
grid, that includes electricity generation, transmission and 
distribution. There are probably more than 20 pivotal roles 
that must be addressed. Second, energy storage technology is 
advancing rapidly but we urgently need significant research 
advances to develop the storage technologies that will enable 
the full transition to a modern grid. Third, we are just now 
discovering through early stage deployments the best practices 
for deploying energy storage in the highest impact and most 
cost-effective manner. We need to encourage many more early 
stage deployments to learn what works and what does not work. 
Lastly, storage plays a central role, not only in transforming 
the electric grid, but also in transforming other critical 
areas of the economy, that includes ground-based transportation 
through electric cars and trucks and aviation through air 
taxis, package delivery, and regional passenger flight. What's 
more, the military has all of the storage needs of the civilian 
economy as well as special storage needs for surveillance, 
weaponry and resilient worldwide bases that operate 
independently of the local grid for up to several months. 
Advances in storage for the grid will spill over to advance the 
frontiers of these other critical areas of the economy.
    What unites all of these messages is the single key 
message, the urgent need to advance the state-of-the-art of 
battery R&D.
    Congress and the Federal Government have taken the 
challenge seriously with the creation in 2012 of the Joint 
Center for Energy Storage Research, or JCESR for short. JCESR 
is led by Argonne National Laboratory. At its foundation, JCESR 
comprised 20 leading R&D institutions, including national labs, 
universities, and industry. These institutions have been 
working collaboratively to create the battery science and 
technology needed to support the emerging transformations of 
the electric grid, as well as ground transportation and flight.
    JCESR has drawn its talent from across the United States, 
including MIT in the East, Lawrence Berkeley National Lab in 
the West, and everything in between. Such a collection of 
energy storage talent, it's a real dream team, cannot be found 
in any single institution.
    As the saying goes, ``The proof is in the pudding.'' In its 
first 5 years JCESR has many accomplishments to its credit and 
you can read what those are in my written testimony, but most 
important, JCESR promised to deliver two prototype batteries, 
one for the grid and one for transportation. In fact, JCESR 
actually delivered four prototypes, two for the grid and two 
for transportation. This effort led to important breakthroughs 
in advancing the state-of-the-art of four types of advanced 
batteries beyond the conventional lithium-ion.
    Three numbers give you a quick sense of JCESR's impact: 450 
scientific journal publications to date; 95 graduate student 
and post-doctoral alumni now working in academia, national labs 
and industry to advance U.S. battery research and development; 
and the formation of three startups. One of those startups, 
Form Energy, is pursuing commercialization of one of JCESR's 
prototypes--a water-based, air breathing sulfur battery.
    In September 2018, the Department of Energy renewed JCESR 
for a second 5-year period. In the renewal, JCESR is shifting 
its focus from particular battery systems to transformational 
battery materials. We realized toward the end of our first term 
that even if all four of our prototypes went to 
commercialization, this would not come close to satisfying the 
urgent need for a diversity of new battery materials for a 
diversity of emerging applications.
    In closing, I'd like to reiterate that energy storage will 
play a vital role in the transformation of the electric grid 
spanning generation, transmission, and distribution. We're 
still in the initial steps of that transformation, but we have 
not yet walked through the door. Achieving this transformation 
requires developing an energy storage ecosystem that spans 
research development and deployment.
    Thank you.
    [The prepared statement of Dr. Crabtree follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    The Chairman. Thank you, Dr. Crabtree.
    Mr. Davidson, welcome.

  STATEMENT OF F. MITCHELL DAVIDSON, CHIEF EXECUTIVE OFFICER, 
                   U.S., BROOKFIELD RENEWABLE

    Mr. Davidson. Chairman Murkowski, Ranking Member Manchin 
and members of the Committee, my name is Mitch Davidson. I am 
the CEO of Brookfield Renewable's U.S. business, and I 
appreciate the opportunity to be here today.
    Brookfield Renewable owns and operates one of the world's 
largest renewable energy portfolios which includes 900 
renewable power facilities with a total install capacity of 
17,500 megawatts. Included in our U.S. portfolio are 137 hydro 
facilities--many of which are frequently the largest taxpayers 
in the rural communities in which they reside, 26 wind farms, 
and 490 solar installations, totaling 6,500 megawatts of 
capacity. We operate these resources within a binding global 
commitment to safety, environmental responsibility and 
community engagement.
    Hydropower is a proven long-life resource providing 
critical, baseload and peaking power and delivering a variety 
of important reliability benefits, all with zero emissions. 
Hydropower is a most efficient technology for storing energy 
and is capable of providing a firm capacity with the ability to 
follow dispatch orders without the loss of its renewable 
resource.
    These assets also provide valuable ancillary services such 
as operating reserves, frequency regulation, power support and 
black start capabilities.
    Reservoir hydroelectric resources store water during the 
spring snow melt or rainy season. We think of this as stored 
fuel and turn that stored fuel into energy during the peak 
periods of summer and winter months. For example, on a single 
river in Maine, we control three large reservoirs and seven 
generation stations which provide the fuel security equivalent 
of 30 days of stored energy.
    Pumped hydro has the ability to become a significant load 
during periods of low demand. This excess load can minimize 
production changes for large baseload units, thereby enhancing 
their efficiencies and minimizing the risk associated with 
operational changes or capture energy from intermittent 
resources which on many occasions would have otherwise been 
curtailed during those periods.
    The 600-megawatt Bear Swamp pump hydro facility, which is 
jointly owned by ourselves and Emera Energy, began generating 
electricity in 1974. During the charging cycle the facility 
pumps approximately 4,600-acre feet of water uphill into a 
reservoir. The facility can reach maximum output from a 
standstill in three minutes and is capable of taking 600 
megawatts of excess generation off the grid to generating 600 
megawatts for the grid in under 30 minutes. This 12,000-
megawatt swing with the ability to maintain output for up to 
six hours are reasons why the ISO New England operation staff 
believe the facility is critical to the reliability of the 
electric system.
    Bear Swamp is currently undergoing an upgrade and a 
relicensing. Once completed, it will be capable of producing 
660 megawatts at six percent greater efficiency with a reduced 
time of pumping to full capacity by an entire hour. Following 
these upgrades, Bear Swamp will have essentially two new 
generation units thereby prolonging the useful life of the 
asset up to 50 years.
    Hydropower is the largest generator of renewable energy in 
the country providing grid resiliency, fuel security and 
ability to balance valuable resources. These assets should be 
considered energy infrastructure, critical energy 
infrastructure. Hydropower has consistently delivered these 
attributes during severe weather conditions, weather conditions 
which have posed challenges for many other generation 
resources. For example, during the Northeast severe cold 
weather event that occurred December 2017 through January 2018, 
our hydroelectric generation resources continued to operate at 
their planned levels of production with many of our assets 
operating at levels of 50 percent above expectations.
    Hydropower facilities are capital intensive assets. 
Unfortunately, many renewable portfolio standards favor new 
renewable generation to existing hydro, putting hydro assets 
which have superior dispatch capabilities at an economic 
disadvantage. As policymakers consider ways to further reduce 
emissions, it is critical that existing hydropower be treated 
on par with other renewable resources.
    In closing, I would like to reiterate that hydropower is a 
critical component of this country's energy infrastructure and 
a resilient electric grid. With the right regulatory policies 
and economic signals, hydropower will continue to enable the 
large-scale development of valuable renewable energy resources.
    I appreciate your time, and I look forward to your 
questions.
    [The prepared statement of Mr. Davidson follows:]
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    The Chairman. Thank you, Mr. Davidson.
    Mr. Fowke.

    STATEMENT OF BEN FOWKE, CHAIRMAN, PRESIDENT, AND CHIEF 
              EXECUTIVE OFFICER, XCEL ENERGY INC.

    Mr. Fowke. Chairman Murkowski, Ranking Member Manchin and 
distinguished members of the Committee, my name is Ben Fowke 
and I'm Chairman, President and CEO of Xcel Energy. I really 
appreciate the opportunity to provide Xcel Energy's perspective 
on grid-scale storage and its great potential for the utility 
industry.
    Xcel Energy is a public utility holding company serving 3.6 
million electric customers and 2 million natural gas customers. 
Headquartered in Minneapolis, we serve parts of eight Western 
and Midwestern states including Minnesota, Colorado, North and 
South Dakota, Wisconsin, Michigan, Texas and New Mexico.
    Xcel Energy is leading the way to a clean energy future by 
transitioning away from coal to renewables and other cleaner 
technologies, all while keeping electricity rates affordable 
and our system reliable. We already have achieved a 38 percent 
system-wide reduction in carbon dioxide emissions from 2005 
levels and we're aiming to go much higher.
    Xcel Energy is the first utility in the country to announce 
the goal of providing carbon-free electricity by 2050 with a 
near-term target of reducing carbon emissions by 80 percent by 
2030. This vision is ambitious and its success depends of the 
development of new technologies that will continue to ensure a 
reliable, affordable grid.
    Those new technologies will undoubtedly include energy 
storage. We have been increasing our understanding of storage 
and how it works on our system, particularly pumped hydro and 
batteries. For 50 years we've operated a 324-megawatt pumped-
storage facility in Colorado. We have also learned more about 
the value of battery storage through innovative pilot projects 
in Minnesota and Colorado. I'm excited about the possibilities 
of grid-scale storage technologies and the potential services 
and value they can offer our customers. While we're in the 
early days of energy storage and many challenges remain, I 
believe storage has the potential to play an important role in 
the electric grid of the future.
    Wind and solar provide low-priced, clean energy to our 
customers but they are intermittent and seasonal. Grid-scale 
storage can help with renewable integration allowing higher 
renewable energy penetration levels than would otherwise be 
possible.
    Storage can also provide other importance to the grid and 
customers, including more reliable grid operations, voltage 
support, frequency control. Already batteries are being used to 
provide backup power to customers with specific power quality 
needs. Electric utilities are currently taking advantage of 
many different values of grid-scale storage. In fact, utilities 
are the leading developers of storage technologies in the 
nation.
    In Colorado, for example, we're calling for up to 275 
megawatts of storage capacity in our Colorado energy plant. The 
storage capacity proposal is one of the largest of its kind in 
the country. I'm excited by the potential value of storage, 
especially as the technology advances and the prices decline.
    While the possibilities of storage technology are certainly 
promising, many people have misconceptions that batteries can 
address all future challenges of a clean energy grid. In fact, 
batteries and other storage technologies still have limitations 
and like all things in energy, there is no silver bullet.
    First, storage today cannot solve the problem of wide 
seasonal variation in renewable energy generation which is the 
chief factor preventing the creation of a fully renewable 
electricity system. Today's best battery storage systems 
provide a few hours of storage for a few megawatt-hours of 
energy. However, for a fully renewable grid, we would need to 
store huge amounts of energy for months at a time. The cost of 
seasonal storage today is prohibitive.
    Second, while storage can initially help integrate 
renewables by moving energy from the time it is produced to the 
time it is needed, the value of each increment of storage 
capacity declines as more storage is added to the system. 
Eventually new storage has little additional value in helping 
integrate renewables.
    And finally, although storage can bring multiple services 
to the grid--power quality and grid support, for example--we 
usually cannot add the value of all of these services together. 
As a general rule, they're not all available at the same time.
    The right public policies can help address these 
challenges. The Federal Government is uniquely positioned to 
promote further energy storage research, development and 
deployment as part of a larger clean technology program. 
Incentives are also important, but they need to be the right 
design to be effective. My written testimony sets forth these 
and other policies we think would support the bright future we 
see in grid-scale storage.
    In closing, I'm optimistic about the future for storage 
technology and believe it will be an important part of the mix 
as we work toward our vision of a clean energy future that is 
both reliable and affordable.
    Thank you for the opportunity to testify today. I look 
forward to your questions.
    [The prepared statement of Mr. Fowke follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    The Chairman. Thank you, Mr. Fowke.
    Mr. Kumaraswamy.

    STATEMENT OF KIRAN KUMARASWAMY, VICE PRESIDENT, MARKET 
                     APPLICATIONS, FLUENCE

    Mr. Kumaraswamy. Good morning, Chairman Murkowski, Ranking 
Member Manchin and distinguished members of the Committee. My 
name is Kiran Kumaraswamy, and I am the Vice President of 
Market Applications at Fluence. I also serve as a Member of the 
Board of Directors for the Energy Storage Association, the 
leading national voice of the United States energy storage 
industry. I am honored to testify in front of you today.
    Fluence is an energy storage technology and services 
company jointly owned by Siemens and AES Corporation. Fluence 
combines the engineering and service capabilities of AES and 
Siemens energy storage teams.
    Energy storage is on the cutting edge of the global energy 
transition. Bringing increasing amounts of solar and wind power 
onto the grid means planning for a system in which high levels 
of power quality are still essential but variability of 
generation is the norm. Energy storage helps us to meet such 
challenges.
    With the introduction of energy storage, we can, for the 
first time, shift and control with pinpoint accuracy the time 
and location of power delivery. A few key points to note here.
    First, energy storage unlocks value in all grid assets by 
improving their utilization--be it traditional thermal plants 
such as gas or nuclear, renewable resources such as wind and 
solar or the transmission and distribution infrastructure that 
delivers energy to factories, homes and offices.
    Second and of equal importance for the U.S. economy, energy 
storage gives large energy users control over their energy 
costs by allowing them to decide when to use grid power or 
their own reserves.
    Third, the addition of battery storage to gas turbines 
helps such traditional generators of electricity become more 
flexible and helps manage the gaps between power demand and 
supply reliably.
    Storage providing peaking capacity is gaining traction 
broadly across the U.S. Increasingly, utilities are examining 
and selecting large-scale energy storage in lieu of new natural 
gas plants to provide for periods of peak demand. We believe 
one of the most transformative uses for energy storage will be 
in the transmission and distribution sector allowing utilities 
to defer or avoid entirely investments in traditional wires 
solutions.
    As the economic, environmental and resilience benefits of 
energy storage are becoming widely accepted, policy must 
continue to evolve to ensure storage can compete on a level 
playing field.
    The first area of focus is to accurately measure the 
capacity value of different durations of energy storage in 
regional power markets. Many of the underlying modeling 
techniques for assessing the capacity value of energy storage 
were developed within the U.S. Department of Energy's National 
Renewable Energy Laboratory, or NREL. This work is a prime 
example of how DOE's national labs and other research 
initiatives have provided expertise and support that have been 
essential to and are still vitally needed for the growth of our 
industry.
    A second critical need is to remove barriers to energy 
storage being deployed as a transmission asset. A regulatory 
construct for storage-as-transmission is largely undeveloped 
which is having a direct impact on the ability to install 
storage for transmission reliability purposes. Our request is 
for Congress to direct FERC to open dockets on storage-as-
transmission started with either technical conferences or 
notices of inquiry to inform any potential rulemakings FERC may 
determine are merited.
    A third critical need is to take advantage of the unique 
resiliency benefits that energy storage provides in disaster 
response and infrastructure planning. To this end, the 
Department of Energy could provide significant support in 
studying and quantifying the value of resilience that energy 
storage provides to the entire electric network.
    While we push hard for progress in each of these critical 
needs, we also want to recognize the accelerating progress that 
we have made at the federal and state levels. At the federal 
level, FERC Order 841 has injected much needed guidance for 
wholesale power markets to adapt to allow energy storage to 
compete with other traditional resources. We applaud FERC for 
reaffirming Order 841. At the regional level, we are very 
encouraged by the progress made in various states like New 
York, Nevada, New Jersey, Oregon, Maryland, California, 
Massachusetts and Colorado.
    The U.S. currently is the leader in battery storage 
deployments globally with several countries closely following 
behind. Removing structural barriers in wholesale power 
markets, improving regional planning processes and providing 
certainty for this industry will continue to help us retain 
that leadership position.
    Chairman Murkowski, thank you for the opportunity to be 
here today. I am happy to take any questions.
    [The prepared statement of Mr. Kumaraswamy follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    The Chairman. Thank you.
    Mr. Ott, welcome.

        STATEMENT OF ANDREW L. OTT, PRESIDENT AND CEO, 
                      PJM INTERCONNECTION

    Mr. Ott. Thank you, Chairman Murkowski, Ranking Member 
Manchin and members of the Committee.
    I am Andrew Ott. I am the President and CEO of PJM 
Interconnection. I was before you last October to talk about 
system restoration and Blackstart, and I am honored to be 
invited back to talk about the important issue of energy 
storage.
    PJM operates the largest bulk power grid in the nation, the 
largest electricity market in the world, population of 65 
million people. Our role is three-fold: essentially to ensure 
reliable grid operation, to operate competitive markets that 
essentially yield benefits for competitive investment to 
consumers and to the economy, and also, of course, 
infrastructure planning to ensure the grid remains robust and 
reliable into the future.
    Today, I want to underscore a few points on energy storage 
that are key, I believe. The first is, again, storage is a 
flexible, very valuable resource to the grid. We've seen that 
in PJM. The second point, our markets have worked well to 
incentivize and incorporate storage. And in fact, we are 
compliant with the FERC Order 841. It was certainly--our 
competitive markets have already yielded benefits to incent 
investment in battery storage to provide certain grid services.
    Again, because of our early leadership in this area, we 
have become the largest market for battery technology that 
currently exists. We have 300 megawatts of batteries today that 
participate in our market and provide, primarily, frequency 
regulation. We also have 5,000 megawatts of pumped hydro 
storage and one, of course, 20-megawatt flywheel that's still 
operating in the market.
    In 2018, 27 percent of the frequency regulation, on 
average, every hour in our market is provided by battery 
storage, by storage devices. Effectively, five years ago it was 
100 percent, you know, regular generation. Today, over a 
quarter is provided by these alternative technologies. Very big 
success story. At some times, over 49 percent of the total in 
peak times of the total frequency regulation is provided by 
battery storage.
    One of the largest battery deployments in the nation is in 
West Virginia at Mount Laurel, West Virginia, 32 megawatt 
batteries co-located with a wind farm. We have about 1,000 
megawatts of new storage in the transmission interconnection 
queue. We also have about 2,000 megawatts of combined energy 
storage in renewables.
    A third point I would make though, is energy storage, at 
this point, cannot replace traditional generation like nuclear 
or coal-fired, gas-fired power plants, but it can, in fact, and 
has, competed successfully to provide grid flexibility services 
and very high quality value-added services on the grid.
    Obviously, PJM is an independent and fuel neutral 
organization. Our markets have already been adapted. We allow 
participation at 100 kilowatts. So we have a tremendous number 
of distributed resources in our system, in fact, 205,000 
distributed generators already operating in PJM's grid today.
    Generally, battery storage has limited duration. We have 
seen about 15 minutes, some up to four hours. The technology is 
always improving. We have already seen, through our markets, 
demand response has already significantly flattened the peak of 
the demand on a day-to-day basis. We don't really have those 
sharp peaks anymore because of the advent of these technologies 
coming in. So we need more and more of these types of 
resources. Aggregation, we believe, is the key to having these 
types of resources continue to provide competition in this 
area.
    There are a variety of policy issues that impact further 
incorporation of energy storage. I'd like to point a few of 
those out. We certainly need some help from FERC. As usual, I 
am here asking you to help us get some answers out of FERC.
    Certainly, reserve pricing. We put a comprehensive proposal 
in front of FERC to actually price reserves throughout the 
market. So this is like a 10-minute reserve, 30-minute reserve, 
tremendous revenue stream potential for battery storage, for 
other types of storage technologies to give a revenue stream. 
But we really need those rules to be in place and operational. 
We will have the same kind of success we have seen with 
frequency regulation.
    Subsidies, again, we will respect the right of Congress and 
the states to subsidize resource--we need some guidance though 
from FERC on how that interplays with competitive investment.
    Federal/state coordination is also something key. We have 
already seen 2,000 megawatts of distributed resources in our 
system, but some help on this notion of how the retail and the 
wholesale interface.
    Energy storage, again, is a transmission asset, some 
guidance there, as my colleagues on the panel had said.
    And finally, again, I think storage does create a 
tremendous opportunity to use alternative technologies to 
displace traditional types of resources and clean up, if you 
will, the grid.
    I look forward to your questions. Thank you very much.
    [The prepared statement of Mr. Ott follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    The Chairman. Thank you, Mr. Ott.
    Thank you, each of you, this morning for your 
contributions. I think it is clear we recognize the benefits 
that energy storage can bring. I think Mr. Fowke, you said, 
there is no silver bullet out here, but this is clearly a 
component piece, one that adds flexibility, one that gives us 
some room to run here. And understanding how we have really 
seen a significant increase in energy storage deployment over 
this past decade here is impressive.
    Several of you have mentioned the FERC Order 841. There is 
also Order 845, designed to improve the interconnection process 
for energy storage resources.
    Mr. Ott, you have outlined some other areas where it would 
be important to get some guidance or indicators from FERC that 
would help to clear the regulatory path for energy storage.
    In addition to what Mr. Ott has outlined, is there anything 
else that any of you would suggest that FERC needs to look to 
with regards to regulatory obstacles that are in the path of 
further deployment of energy storage?
    I will throw that out to any one of you.
    Mr. Kumaraswamy and then Mr. Davidson.
    Mr. Kumaraswamy. Sure, I think as I mentioned in my written 
and the oral testimony, the subject of storage as transmission 
needs to be studied further, I think that maybe structural 
deficiencies in the way we actually look at that subject.
    It's an area that we haven't seen much traction overall in 
the market even though we have had the broader construct of 
Order 1000 that created the pathway for potentially non-wires 
alternatives to be considered in regional transmission planning 
processes.
    We still haven't seen a lot of success come through from 
the FERC. And so, I think that may be an area that is 
worthwhile to do a little more exploration. It could be 
furnishing notice of inquiries or technical conferences with 
the right subject matter experts to figure out what issues are 
being impediments toward deploying storage for transmission and 
distribution needs.
    The Chairman. Very good.
    Mr. Davidson, did you have anything that you wanted to add 
there?
    Mr. Davidson. Yes, ma'am.
    Senator, I would like to add Brookfield is the single 
largest private owner of a FERC hydro license. We deal with 
FERC and stakeholders around relicensing our facilities on a 
continuous basis. It's arduous.
    However, it is well known, it can take upwards of five 
years to relicense a single facility, but we know how to do it. 
We do it well and FERC, in the processes now I'd say that it's 
like any other process, there's always ways to improve. But I'd 
say that because we know how to do it and we know the way to go 
through the process, it works well.
    The Chairman. Let me keep on with you, Mr. Davidson, 
because you mentioned the length of time for the permitting 
process, but we also recognize that while pumped hydro storage 
is the most commonly used form of storage, 95 percent, it is 
also my understanding that these, any new projects, are almost 
cost prohibitive. I am told that on average any new project is 
$1 billion, averages $1 billion, limited to certain geographic 
locations and certainly take a longer time.
    How do we get around this hurdle because you have 
regulatory hurdles but you also have economic hurdles?
    Mr. Davidson. I think it's more of an economic hurdle right 
now. I think where the market is today, we don't see the price 
signals that justify the investment in new pumped storage. So 
there will have to be some sort of incentives or other ways to 
encourage that type of investment.
    The Chairman. Well, around this Committee we have been 
talking a lot about resilience. Mr. Kumaraswamy, you mentioned 
the importance of storage when it comes to maintaining grid 
operations during natural disasters. Do you think that storage 
takes on a, perhaps, a more heightened role in these areas, 
these parts of the country where they are seeing, perhaps, more 
disaster prone situations where the economic challenges that 
you speak of, that we have been having a problem with, can get 
that more clear market signal because we have to have something 
that stands as that tempering agent, if nothing else?
    Mr. Kumaraswamy. Absolutely. No, I think that's a great 
question and I want to give you one example that I've 
highlighted in the written testimony.
    One of our parent companies, the AES Corporation, actually 
has two, 10-megawatt energy storage areas that they've deployed 
in the Dominican Republic. If you go back to September 2017 
during Hurricanes Irma and Maria, you know, Dominican actually 
had a significant impact from the hurricanes. And we have 
actually seen that the storage arrays provide a significant 
amount of frequency control for the island grid, even though 
about 40 to 50 percent of the traditional generation has been 
offline in the Dominican Republic in the same timeframe.
    So storage can do that because it is simply the best tool 
that you have to manage the variations in frequency and it 
takes a much more important turn when you go into island 
accounts that have limited resources to actually balance the 
grid and more so during disaster conditions when one or two of 
your significant generation sources may be offline for a fuel 
reason or for different reasons. And so, that is a great point 
in the sense that the value that storage provides in adding to 
system resilience is significant.
    Again, AES and Siemens have actually provided for a similar 
plan in Puerto Rico where it's a concept of creating mini-grids 
in Puerto Rico where you can have solar and storage co-located 
in a manner that adds significant resilience to Puerto Rico and 
redesigning and reshaping the overall electric grid in a manner 
that is much, much more resilient than the current 
infrastructure.
    The Chairman. Thank you. Thank you, all.
    Senator Manchin.
    Senator Manchin. Thank you, Madam Chairman.
    Dr. Crabtree, this might be for you and then anybody else 
can chime in if they want.
    I understand that a potentially serious obstruction of 
greater adoption of manufacturing for low carbon-free 
technology is going to be reliable access to critical minerals. 
And right now, we depend mostly on China for those minerals.
    With the trade war and the instability that we have, how 
could this thing escalate? How long it could go on? What type 
of a vulnerable situation are we in in order to proceed further 
in light of a stable domestic supply? We know we have those 
minerals here in America. We just don't do the refining or do 
any of the processing. Do you believe it is of a critical 
nature that we should be moving and acting quickly?
    Dr. Crabtree. I think that's an excellent question, Senator 
Manchin, and indeed I do believe that it is critical.
    If you look at what other countries have done, primarily 
China, they have taken a very strategic and deliberate action 
to line up their supply chains. So they've gone to other 
countries and written long-term contracts to get lithium, for 
example, or cobalt.
    They bring those minerals to China where they're refined 
and then sell them to battery manufacturers, some of which are 
in China, but elsewhere as well.
    The United States hasn't taken a strategic and deliberate 
point of view to that challenge. And I think you mentioned that 
there are minerals in this country that we can certainly 
exploit. We should certainly do that. But we'll need many more 
sources, other than those that are here, and I think we should 
look at that.
    Senator Manchin. What happens to be some of our 
impediments? That basically, is cost, you know, us being in a 
capitalist market and society that when we start down that path 
our costs might be a little bit higher, they will undercut us. 
And it pulls the rug out, unless strategically for our country, 
we strategically have a supply because of the need that we have 
and the security of our nation. And I think, I mean, everything 
that we do, if you are talking about energy--we have what, 
turbines, lithium batteries, solar cells? Everything depends on 
it. And we do not produce one ounce.
    Dr. Crabtree. So the point you raise is extremely valid. It 
will take some time to remedy.
    I think your point about being in a capitalist society and 
the cost being higher is a correct one, and we have to find 
creative and innovative ways to really bring the cost down.
    Senator Manchin. Well, our government, DoD, is part of 
where it has to go in order for us to have a strategic supply.
    Dr. Crabtree. That's an excellent point. There's a lot of 
things that can happen in the military that then spill over 
into the civilian area, for sure.
    And may I bring up one more point? And that is that 
recycling can play a role here. We don't recycle our lithium-
ion batteries at the moment. Less than five percent are 
recycled. In fact, DOE just started a new program at Argonne 
starting in February of this year to look at ways to recycle 
lithium-ion. And if we can do that----
    Senator Manchin. Are other countries recycling?
    Dr. Crabtree. I'm sorry?
    Senator Manchin. Are other countries recycling? Do you 
know?
    Dr. Crabtree. So far no one in the world has the advantage. 
It's a level playing field.
    Senator Manchin. No technology for that yet.
    Dr. Crabtree. There is no technology for it. So, you can 
smelt and take the elements off. At Argonne and elsewhere 
people are looking at what's called direct recycling. That 
means taking the cathode out of the used battery as a unit, 
refurbishing it and putting it back in.
    Senator Manchin. Gotcha.
    Dr. Crabtree. This is a way to get the cost down 
considerably.
    Senator Manchin. Mr. Ott, if I could, PJM has the largest 
amount of demand response in the world, currently making up six 
percent of PJM's total supply. And you have expressed concern 
that without limits on discharge duration, storage resources 
may displace these important demand response resources in the 
capacity market. However, hard critics argue that your proposal 
prevents storage from fully participating in the marketplace.
    What are some of the opportunities for storage 
participation in PJM beyond the capacity market?
    Mr. Ott. Yeah, thank you, Senator.
    It is key that, certainly, the revenue streams that have 
created the significant benefit of, you know, six percent of 
our resources being demand response is displaced probably the 
equivalent of like nine nuclear power plants. I mean, it's a 
significant stock.
    The point though is that at some point the peaks become 
flat and we need to look for alternative ways to use these 
kinds of technologies. Hence, we've put forth a proposal to 
say, look, there's tremendous opportunity for a 30-minute 
reserve, 10-minute reserve, these other types of very valuable 
grid resources, backup power as you indicate. If we can pay for 
them and develop revenue streams for those----
    Senator Manchin. Basically, you want to put those in the 
recharges.
    Mr. Ott. Correct. I want to put those in the market.
    Senator Manchin. We don't want to camouflage it. We want 
the consumers to pay for that capacity, but you say it will 
save them in the long run?
    Mr. Ott. Essentially what it would do is create a forward 
market for these types of valuable reserves and that would 
create the revenue stream that's needed for further 
development. And that's really where we need to be.
    Senator Manchin. What type of a cost increase is that going 
to be to the average retailer?
    Mr. Ott. In fact, what we saw with frequency regulation, it 
was actually a cost decrease because the competition from the 
new entry was so great that it actually lowered the total price 
over time. So, my opinion is it would be, it would actually be 
a savings over time.
    Senator Manchin. Okay, thank you.
    Thank you, Madam Chair.
    The Chairman. Senator Gardner.
    Senator Gardner. Thank you, Madam Chair and thank you to 
the witnesses for your time and testimony today. Welcome to the 
Committee.
    I want to compliment Xcel Energy for the work they have 
been doing on their 2030 plan, their 2050 plan. Your testimony, 
Mr. Fowke, talked a lot about the work that you have been able 
to do to deliver, already, on that vision of both the 2030 as 
you work toward 2050.
    I agree that storage and a number of other energy 
technologies can be developed collaboratively through public 
and private partnerships, investments. And so, I will focus my 
questions on the federal role in that partnership.
    You talked about and you called for research and 
development investments for development of hydrogen and other 
power to gas technologies. Could you talk a little bit more 
about how hydrogen can play an important role in achieving 
these, the goals of the Xcel Energy plan, the clean energy 
plan?
    Mr. Fowke. Well, thank you, Senator, and thanks for your 
support in so many things you do.
    You know, I know that with today's technologies we can get 
to that interim goal of an 80 percent reduction. It takes the 
right public policy, but we can do it.
    To get that last 20 percent of carbon out of the big grid, 
and that's what I'm talking about here is the big grid, it's 
going to take new technologies. We've talked a lot about the 
development of storage, but it's going to take, I think also, 
dispatchable resources and it could be in the form of the next 
generation of nuclear technology, the next generation of carbon 
capture or something I probably would have laughed at ten years 
ago, the development of the hydrogen economy.
    And the opportunity to use electrolysis and renewable 
energy to fund or to power that electrolysis and produce 
renewable hydrogen or the opportunity to use high temperature 
steam and nuclear plants to produce hydrogen, again, carbon-
free. I think it's a tremendous opportunity. And then that 
hydrogen could be used in fuel cells or potentially remodified 
gas plants and then you have your dispatchable resource.
    Our approach at Xcel Energy is to be technology agnostic. 
Utilities aren't really designed to do a lot of R&D. And so, 
here's where the role of the Government, working with industry, 
really comes into play. And again, thank you for your support.
    Senator Gardner. Thank you very much.
    As one of the sponsors of the Storage Investment Tax Credit 
bill, along with Senator Heinrich and many other of our 
colleagues, I am interested in seeing this tax credit spur the 
adoption of additional energy storage and opportunities.
    How can we ensure that the new tax incentives are 
efficiently used by utility companies and other potential 
investors?
    Mr. Fowke. Well, that's a really good question. I mean, 
obviously, the incentives have come a long way into getting us 
to where renewables will be our biggest source of energy on our 
system by next year. And I think incentives get a lot of credit 
for that. But, along the way a lot of participants in the 
market, including many utilities, don't have the tax appetite 
to efficiently use those tax credits. So, as you know, Senator, 
complicated equity partnerships are developed where you 
basically monetize that through partnership structures. They're 
complicated and the participants are fairly limited.
    So, what does that mean? It means the cost of capital 
raises. And when the cost of capital raises, the renewable 
project becomes more expensive and ultimately becomes more 
expensive for the consumer.
    So, if we can make the utilization of those tax incentives 
more efficient and have more broader participation, you'd lower 
that cost of capital. And that's something that we've got some 
ideas about and we're working with many of you on the 
Committee.
    Senator Gardner. Thank you. I look forward to continuing 
our work together on that so we can actually utilize the tools 
that we have. It is pretty exciting.
    Mr. Kumaraswamy, a question for you regarding some of the 
energy storage work you talked about. I was impressed with the 
numbers that you testified in your opening statement about 
estimates for market growth that your company and others in the 
storage industry will need to grow to meet that demand. Pretty 
impressive.
    I am hearing that there are supply chain issues though and 
some concerns about those challenges, particularly related to 
some of the news that have been recently highlighted by the 
People's Daily, the ruling Communist Party newspaper in China. 
They ran a commentary last week headlined, ``United States 
don't underestimate China's ability to strike back.'' It noted 
that the United States is uncomfortably dependent on rare 
earths from China. The editorial included this line, ``Will 
rare earths become a counter weapon for China to hit back 
against the pressure of the United States has put on for no 
reason at all? The answer is no mystery.''
    How do companies like yours and others deal with the 
critical mineral supply chain challenges such as rare earths, 
graphite, cobalt, nickel and others?
    Mr. Kumaraswamy. That's a great question, Senator.
    Fluence is a technology agnostic company, so we actually 
don't manufacture batteries, we don't manufacture rotors. We 
have the technology platform that we offer for the customers 
and we design these solutions in a manner where they can 
benefit in terms of the performance from those systems and 
minimizing the total lifetime cost of all of those solutions. 
And so, what we end up doing is actually working with a broad 
array of suppliers globally to source many of these components. 
And so, I think it protects us and shields us from particular 
exposure in a particular area or a particular region of 
geography and that gives us the capability to continue to serve 
our customers globally with the supply chain that we have. So--
--
    Senator Gardner. Just quickly.
    Do companies, storage companies, generally manufacture 
their own cells, modules, battery packs that integrate the 
system or do they source most of these from Chinese battery 
cells and modules?
    Mr. Kumaraswamy. There are companies that actually do that, 
but there's also a robust supply chain that is non-China based 
that's actually available in the marketplace as well.
    Senator Gardner. Very good, thank you.
    Thank you, Madam Chair.
    The Chairman. Senator Heinrich.
    Senator Heinrich. Dr. Crabtree, I want to ask you a little 
bit about the nexus between storage and carbon pollution, 
because one of the things we are trying to get at here, 
obviously, is to address our climate challenges, and storage 
can obviously play a role in reducing those emissions, but used 
in certain ways it can also increase those emissions.
    Has JCESR or have you given thought to what policies or 
market structures might be needed to ensure that as we bring 
storage on to the grid we are actually having the impact of 
cleaning the grid up?
    Dr. Crabtree. That is a great question, Senator Heinrich.
    I think one of the most important things is that we charge 
the storage that we put on the grid with clean electricity. So 
if we're charging with fossil electricity, we're basically 
encouraging the greater use of fossil electricity.
    And I think the ways that we can find, either through 
policy or incentives at the state level and at the federal 
level, to encourage that simple activity is the most important 
thing that we can do.
    Senator Heinrich. Great. I appreciate that.
    Mr. Ott, as you are aware, Section 204 of the Federal Power 
Act bars any utility practice that is unjust, unreasonable, 
unduly discriminatory or preferential. And as you know, I have 
been closely following FERC's implementation of Order 841. You 
said you were compliant with Order 841.
    But let me ask, in PJM's filings, can you, I guess, explain 
to us how putting in place a 10-hour minimum capacity 
requirement for storage is not on its face unduly discretionary 
or preferential, and could that potentially actually make PJM 
non-compliant with FERC's Order 841?
    Mr. Ott. Thank you, Senator.
    I believe the key here is that we're treating all resources 
the same for providing the same service. And again, I believe 
from a capacity perspective, allowing aggregation, allowing 
resources to come together to meet the requirement is a way 
that will create a platform, if you will, for resources that 
currently can't meet duration requirements to actually, I'll 
say, participate with others. So, there are ways to get there. 
It's not a barring.
    Senator Heinrich. How did you arrive at that figure, 10-
hours?
    Mr. Ott. It's based on the duration of our peaks given the 
tremendous amount of demand response we have in our system.
    Senator Heinrich. Mr. Davidson, I want to ask you a little 
bit about the historical role of hydropower versus what we may 
need today and whether or not the structures are there to 
incentivize the role of hydropower in the future as a grid 
balancer.
    Historically most hydropower has been used for firm 
capacity. Obviously, we see an enormous role going into the 
future of what you discussed in your testimony of using 
hydropower as a grid balancer.
    But are there changes that need to be made at the state and 
federal levels in policy or in market structures to encourage 
its use in that role?
    Mr. Davidson. Yes, Senator, thank you for the question.
    The simple answer is yes. Today, hydropower and pumped 
hydro, in particular, is taking on the job of trying to help 
mitigate intermittent resources as it comes on during different 
periods of the day and move that energy during periods when it 
is most needed. As we continue to integrate even more of these 
intermittent resources into the system, this need will become 
even greater.
    The economic signals that are out in the market today do 
not justify the extensive----
    Senator Heinrich. They are not adequate to----
    Mr. Davidson. No, sir. They're not adequate for the amount 
of investment you have to make in pumped-storage.
    The one thing you do have to remember though, is when you 
build a pumped-storage facility, this is a 100-year life asset.
    Senator Heinrich. Sure.
    Mr. Davidson. Many parts of it, the mechanical parts of it, 
are 30 to 50 years, but the actual infrastructure, the pieces, 
the parts of it we build inside of mountains, they're there, 
basically forever. So we have to think of these assets are 
forever assets.
    Senator Heinrich. Mr. Kumaraswamy, I want to get your 
thoughts on how important--well, a couple of years ago we heard 
a lot about value stacking. How important is that today and how 
should state and federal market rules be crafted to reflect the 
incremental value and the revenue streams from different types 
of services that storage can provide and potentially provide 
concurrently?
    Mr. Kumaraswamy. That's a great question, Senator Heinrich, 
and thank you so much for your leadership on many of the 
storage-related bills that you've sponsored or you've supported 
over the years and currently.
    On the value stacking we always say that you can make the 
business case work with two or three different services that 
are provided in the marketplace. So, in many, many markets 
across the U.S. what we are finding is that four hours of 
energy storage is enough to get even 90 percent or 100 percent 
of capacity current. And so, having the capacity value come 
through from the regional markets is a significant plus. And 
then you add the capability for energy storage to provide that 
peaking capacity and frequency relations simultaneously and 
that lets you do two of those services at once. And many 
markets, again, just doing those two things alone will get you 
over the finish line and that's partly enabled because of the 
falling cost of energy storage over time also, right?
    So I think we have noted that previously in the opening 
remarks here in this hearing. Energy storage costs have fallen 
significantly in the last several years. And as far as we can 
see, that trend is going to continue, not because of anything 
that we do in the energy sector, but everything that happens in 
the transportation sector.
    And so, whatever is happening on the EV side of the house 
is really creating that synergy right now that the stationary 
energy storage market can take advantage of and right on top of 
that and take advantage of this amazing technology that we 
have.
    So I think in answer to your question, I would say doing 
capacity and some of the ancillary services really is essential 
to crossing the line in many of the markets.
    The Chairman. Senator Stabenow.
    Senator Stabenow. Thank you, Madam Chair, for another 
excellent hearing on such a critical topic for all of us. When 
I hear about the things happening in American innovation, 
thanks to all of you, it just reminds me over and over again if 
we could just really focus and get past debating whether or not 
climate change is real and focus on what we can do about it, 
there is a lot that we can and have to do about it. I 
appreciate the Committee's thoughtfulness in lifting these 
things up because there is an incredible sense of urgency as we 
watch the severe weather and past disaster assistance bills 
over and over again. Thank you for all that you are doing.
    Particularly, Dr. Crabtree, I want to ask you a couple 
questions as Director of the Joint Center for Energy Storage 
Research. I am very pleased the University of Michigan is a key 
partner in that. I hear a lot about what you are doing from 
them, and I know that they play an integral role in research to 
advance solid-state batteries.
    As a state focused on transportation, this is obviously of 
great interest to me. I understand this technology can 
significantly reduce EV charging times which is going to be 
essential as we deploy more and more electric vehicles, and 
some are saying to as little as 10 minutes which would be 
fantastic and increase the storage capacity in smaller, simpler 
battery packs which is also very important. I am wondering how 
close are we to widespread commercial deployment of this kind 
of battery technology and what are the challenges to not only 
getting to commercialization but also production of solid-state 
batteries in the United States?
    Dr. Crabtree. That's a wonderful question and thank you, 
Senator Stabenow, for your support. We very much appreciate the 
University of Michigan who does play a big role both on the 
transportation side and for the solid-state electrolytes that 
you mentioned.
    Senator Stabenow. Yes.
    Dr. Crabtree. I was at a conference last year of early 
career battery researchers. There were about 60 of them. And 
they took a survey and said what do you think is the most 
important or impactful development that is on the horizon and 
the number one answer was solid-state electrolytes.
    So I feel, personally, that this is something that will 
happen. We've used liquid organic electrolytes for lithium-ion 
batteries since their inception in 1991, but so far have not 
been able to improve on that.
    One of the things that solid-state electrolytes would do is 
dramatically improve the safety of batteries. There's the 
thermal runaway reaction, which is the problem that Boeing ran 
into a few years ago and we all know about, occurs. It's a 
reaction between the liquid organic electrolyte and the 
cathode. So with the solid-state electrolyte, that side 
reaction is gone and suddenly the safety is much greater.
    You asked to how close are we to that? So the problem, the 
big technical challenge, is how fast lithium-ions move in the 
solid-state electrolyte. And most solid-state electrolytes, 
they move quite slowly which means the charging time would be 
slow.
    There are two classes of materials where they move actually 
faster than in liquid organic electrolytes and those two 
classes of materials are getting enormous attention right now. 
So I would say that it's quite promising that this will happen. 
Many others as well as myself, feel that it's very likely to 
happen in the laboratory probably within the next five years 
and then you face probably another five years of scaling it up 
and bringing it to production. So my guess, and I may be 
conservative in this, is that it's probably about ten years 
away.
    Senator Stabenow. Well, we need to figure something out 
because we need to be moving. I appreciate all your work. We 
need to be moving as quickly as possible on this.
    I also appreciate your testimony on the benefits of 
electric vehicles and in your written testimony you said, ``EVs 
unite the two largest energy users in the economy, the electric 
grid and transportation and create a new horizon on the 
electric grid.''
    Both Senator Alexander and I have introduced a bill to 
extend the federal tax credits we need to be able to do that to 
be able to get more vehicles in the marketplace to be able to 
bring, sufficiently bring, the price down because of volume, 
but we also need the charging stations. This is a catch-22 in 
terms of being able to quickly move forward on that.
    I wonder if you could speak just a little bit more about 
harnessing the energy potential of vehicle batteries for grid 
services during and after the life of the vehicle. I think the 
afterlife, the recycling piece is very, very important. 
Research suggests, as you know, that retired lithium-ion 
vehicle batteries have as much as 70 percent of their initial 
storage capacity and potential for discharge of electricity for 
another seven to ten years in less demanding uses.
    You briefly mentioned it. You mentioned the Department of 
Defense. But I am wondering what your feeling is in terms of 
being able to move more quickly on recycling of those 
batteries?
    Dr. Crabtree. So I think this is universally recognized, 
that recycling is universally recognized as something that's 
timely and needs to happen badly, partly because EVs will drive 
the demand for lithium-ion batteries enormously up and we need 
to look for our supply chain, as Senator Manchin was mentioning 
earlier, and also the cost.
    So, for example, if you take a lithium-ion battery out of a 
car when it still has 70 percent of its capacity left and put 
it into the grid, basically cutting the cost by a factor of two 
for each of those applications because the battery is now being 
used twice.
    At the end of its usefulness for the grid, of course, we 
have to recycle. And my feeling is that within the next five 
years with the new emphasis on recycling, that we will find 
ways to recycle at lower cost and make use of all of the 
elements, particularly lithium, nickel and cobalt that are in 
used batteries.
    You may know that lead acid batteries are 99 percent 
recycled. It's actually cheaper to get lead from an old lead 
acid battery than it is to mine it out of the ground, and we'd 
like to reach that state for lithium-ion as well.
    Senator Stabenow. Thank you.
    I have other questions that I will submit for the record, 
Madam Chair.
    Thank you to each of you.
    The Chairman. Thank you.
    Senator Hirono.
    Senator Hirono. Thank you, Madam Chair, for continuing to 
focus on the need to reduce emissions from the use of fossil 
fuels.
    I have a lead up to a question for you, Mr. Fowke. Hawaii 
is on the leading edge of incorporating renewable power and 
energy storage. And of course, Hawaii is not connected to any 
other states' grids, so we are kind of on our own.
    I visited the Hawaii solar and storage facility on Kauai 
island in Hawaii in April. It is the largest combined solar and 
battery storage facility in the world. It generates 11 percent 
of Kauai's power and can serve as much as 40 percent of Kauai's 
evening peak power demand. All together Kauai Island Utility 
Cooperative gets 50 percent of its power from renewable sources 
and it expects to reach 60 percent renewable power by the end 
of this year with another combined solar and battery storage 
system at Pacific missile range facility, Barking Sands Naval 
Base.
    Hawaiian Electric--which is the largest utility in the 
state and before Kauai Utility Co-op came along, it was the 
only utility in the state--recently received approval for six 
new solar and storage projects to provide 247 megawatts of 
solar energy with almost 800 megawatt-hours of storage, enough 
to power 105,000 homes per year while eliminating the use of 
more than 48 million gallons of imported fossil fuel.
    Hawaii was the most imported fossil fuel dependent state in 
the country and we had probably the highest electricity rates 
in the country, possibly with the exception of Alaska.
    So the company is preparing a second round of bids for even 
more solar and storage to replace fossil fuel plants, and there 
will be even more innovation in the future to meet Hawaii's 
goal of 100 percent renewable power by 2045.
    From a utility's perspective, what are the challenges of 
operating a system with technology solutions that do not have a 
long history of commercial use and do you think it is important 
for the Federal Government to reduce the risk of adopting early 
stage technologies? I recognize that research is really 
important, but then we really need to figure out how to deploy 
these technologies in a way that is meaningful. What are your 
thoughts about the Federal Government's role in the deployment 
side of things?
    Mr. Fowke. Well, Senator, thanks for the question.
    You're absolutely right. Regulated utilities really aren't 
designed to do a lot of research because their obligation is to 
pick the most economically efficient resources and put them on 
the grid. And if there's other economic signals, the price of 
carbon, et cetera, we factor that into that but experimenting 
in a large-scale, outside of pilot programs, is difficult. So 
that's where the Federal Government, I think, comes in to do 
the research, provide the incentives to make that more 
affordable so they can be implemented.
    You know, your concept, you talked about the Hawaiian 
islands being an island, I think that's very important because 
I think what we need to focus on is take that concept as we 
look for adding as much renewable onto the big grid, the 
island, if you will, as we possibly can. And depending upon 
what your substitute is and in the case of imported fossil 
fuels, it's a pretty high cost, as you know.
    So we've had a program called Steel for Fuel where 
literally the steel is the renewables and what we're displacing 
is the fuel. And it turns out that the cost of the fuel that 
you save covers, and then some, the cost of the steel.
    That's exactly what, I think, Hawaii is doing. And I think 
you'll find that you can have on that island or the big grid, 
if we were here in the Continental U.S., you'll probably be 
able to get to that 60 percent, maybe even more. But there does 
come a saturation point on the big grid.
    Back to your question about reliability where we're going 
to need storage and we're going to need dispatchable resources, 
I believe. And perhaps they come from biofuels, perhaps they 
come from hydrogen, geothermal. There's a number of different 
things, and I think we need to be technology agnostic about it.
    So my point is we'll put as much renewables as we can 
reliably and affordably do on the grid or the island, then you 
need to look for these other technologies and the research that 
will help us make those technologies viable, is the role, I 
think, the Federal Government plays.
    Senator Hirono. Well, not just in support for research 
though, but we need support for, you know, there are these new 
technologies being developed for storage, et cetera, but we are 
going to need some help in how to implement or to put in place 
these innovations and that is where, maybe, the Federal 
Government has a larger role to play in addition to supporting 
the research aspects.
    Mr. Fowke. I would agree with that. I also would agree 
that's where your utility can play a big role too. We do a very 
good job of starting small and then scaling up to speed of 
value.
    Senator Hirono. Yes. Thank you.
    I do have further questions for the record that I will 
submit.
    Thank you very much.
    The Chairman. Thank you, Senator Hirono.
    Senator King.
    Senator King. Thank you.
    Mr. Fowke, just to follow up. Isn't storage and demand 
response dispatchable? I mean, you turn it on, it comes into 
the system. You seem to imply that it has to be a gas plant or 
something.
    Mr. Fowke. So I'd answer that yes and no and let me 
explain, if I could. There are things that the dispatchable 
resources do that bring attributes to grid health that you're 
not going to necessarily get from renewables. But the biggest 
issue----
    Senator King. I am not talking about renewables, I am 
talking about batteries and demand response.
    Mr. Fowke. That's correct and they----
    Senator King. Those are dispatchable.
    Mr. Fowke. They can play a role with that.
    Senator King. Okay.
    Mr. Fowke. The bigger aspect is if you think about a 
mountaintop, it's a lot easier to shave the peak off the 
mountain than it is as you work down that mountain. That first 
4 hours, once you shave that peak, now you're looking at trying 
to get at 8 hours. And if you think of that mountain, it's 
flattened out and it's wider.
    Senator King. I understand.
    Mr. Fowke. And you start to need a lot more batteries and a 
lot more demand response and as you work down the mountain it 
just comes all the more----
    Senator King. I do understand that, but I just wanted to 
make the point that we are talking about a dispatchable 
resource.
    Mr. Fowke. Yes, frequency regulation, all the things that 
my colleagues talked about, that's where batteries can play a 
big role.
    Senator King. Mr. Crabtree, just for your information and 
the information of our friends that are here--I am working on a 
bill that involves a joint venture between the Department of 
Energy and Department of Defense.
    Carrying fuel is a big risk for our troops. I think that 
there is a relationship, a joint venture, as I say, and also a 
bill that will discuss the issue of how to properly value those 
resources.
    I am asking for your cooperation and assistance in the 
creation of that bill. If there are members here with a lot of 
knowledge in this audience, please be in touch with my office 
as we try to put this bill together. I look forward to your 
suggestions.
    As I listen to this discussion, we talk about value and, 
Mr. Davidson, you talked about how pumped-storage and batteries 
are somewhat the same. They are high capital cost but low 
operating cost. And yet, as I have seen the development of 
energy pricing and markets and all of that, it favors low 
capital cost. I guess what I am getting at is, don't we need 
long-term contracts in order to help develop these capital-
intensive applications?
    Mr. Davidson. Senator, yes, I think that's exactly what we 
do need or some other type of incentive that would encourage 
that large capital investment.
    Senator King. I used to be in the hydro business and if you 
could not have a 15-year contract, you could not have gotten 
financing.
    Mr. Davidson. Right.
    Senator King. Because you have a high capital cost that has 
to be amortized as opposed to just a day-to-day operating cost. 
Mr. Ott, is that correct?
    Mr. Ott. Yes, well, that's the key. And I think one of the 
debates around the capacity market revenue for storage is it's 
the only long-term market we have.
    So one other alternative to long-term contract is to have 
longer-term markets for these grid services like, you know, 
like we see on some of the exchanges for energy. So there's 
other alternatives.
    Senator King. But that is something that we have to be 
talking about because otherwise the financing drives everything 
toward, you know, low capital costs, toward natural gas plants 
that are cheap to build and can be moderately too expensive to 
operate.
    Regulatory hurdles, interconnection delays and those kinds 
of things--talk to me, Mr. Ott, about what the regulatory 
issues are in getting these things permitted and online, and 
are there significant delays? Is that something we can help 
with?
    Mr. Ott. Generally, I think, the volume, the volume of 
interconnections coming in with these distributed resources. 
Like I'd mentioned, we have, you know, a couple 100,000 of 
them.
    I think the real key is for us to streamline, if you will, 
for the small stuff. We don't have to go through the same, you 
know, I'll say, engineering that we would for a bigger 
generator. And I think how streamlining, how we approach that 
and getting FERC to agree to that is probably a way to lower 
barriers even further than they are today.
    So those kind of things----
    Senator King. So I understand interconnection on some of 
these can take more than a year, a lot of work.
    Mr. Kumaraswamy, do you have thoughts on this regulatory 
side?
    Mr. Kumaraswamy. Yeah, no, I think that's a good point. I 
think I may have touched on the point briefly also.
    If you think about energy storage, things are highly 
precise and controllable resources. So they're very different 
from a traditional gas-based generation resource.
    And so, I think you have to think about it from that lens 
of how do you study the interconnection in a manner that's fast 
enough that can let this resource come online and start 
providing services in a matter of like six or eight months and 
not let the interconnection process be the choking point for a 
resource that can deployed in a matter of months. Right? And 
so, that's where, I think, there needs to be a little more 
thinking in terms of the process that you would adapt for, you 
know, a resource like that which is highly controllable.
    Senator King. Mr. Ott, you mentioned several times the 
importance of frequency regulation as an asset. Does that have 
a price? Does that have a value in the current market?
    Mr. Ott. Absolutely. It has a tremendous value, that's why 
we've gotten the response from having 300 megawatts of 
batteries invested on market so it's completely competitive. So 
yes, it absolutely has high value.
    Senator King. So it is a capacity payment. There is a 
frequency, right?
    Mr. Ott. Synchronized reserves, frequency capacity, so 
there's multiple revenue streams that these resources--the only 
one that has a forward component to it though is capacity which 
is why it's controversial. My point is, I think we can make 
some of these other markets have forward components that get 
more----
    Senator King. Well, my understanding is that some of the 
regional RTOs are talking about devaluing batteries to 70 
percent versus 100 percent for other devaluing the capacity 
estimates. Have you encountered that?
    Mr. Ott. That's for the long duration stuff.
    Senator King. Right.
    Mr. Ott. But my point is, is that I think you can 
accentuate the value and frequency regulation of these other 
short-term services. So I think there's a counter balance 
there.
    Senator King. We have talked now mostly about grid-scale. I 
am way over time, I am sorry. But I would like to hear perhaps 
for the record about distributed storage, not grid-scale 
necessarily, but grid-scale in the aggregate, households, other 
kinds of distributed storage. I think that is an important part 
of this aspect, of this, that we haven't talked about.
    Thank you, Madam Chair.
    The Chairman. Thank you, Senator King.
    Senator Barrasso.
    Senator Barrasso. Thank you, Madam Chairman. I thank you 
and thank the Ranking Member for holding this important hearing 
this morning.
    While we are working to advance low-carbon technology 
through innovation in carbon capture technology systems, 
advancement in energy storage in that arena is really important 
in terms of integrating the low-carbon sources on to the grid.
    So we have discussed today one of the main challenges with 
integrating renewable energy sources into the grid is the 
intermittent nature of these sources. Baseload energy sources, 
coal, natural gas is going to continue to play an important 
role in providing low cost, reliable and onsite energy 
solutions into the future.
    In February of this year the Committee held an important 
hearing on cybersecurity efforts in the energy industry. I know 
we are still in the process of researching and developing grid-
scale energy storage technologies but, I think it is from the 
standpoint that one of the books on Bill Gates' recent reading 
list was called, ``The Grid,'' about how it was formed and 
where we are today.
    The question for any of the witnesses is, as we consider 
ways to improve security throughout the electricity grid, how 
are we planning to protect storage facilities?
    Mr. Ott. So effectively, as you look at creating, I'll say, 
resilience, diversity, et cetera, really, it's through, not 
depending on one type of resource, or not depending on any one 
kind of technology. It's really promoting diversity, if you 
will. I think the real answer to resilience is to have more 
than, not all your eggs in one basket and have more 
alternatives. And I think that's really the same approach we 
take for storage.
    Senator Barrasso. Anyone else? Yes, sir, Doctor?
    Dr. Crabtree. If I could comment, I think it's a great 
question and picking up on what we just heard. Diversity is 
very important and flexibility. So if you add storage to the 
grid suddenly there's more than one or more than two or more 
than three ways to provide power in the event of an outage, be 
it a cybersecurity one or a weather outage. And that is a huge 
advantage.
    So I would couple that with one more comment and that is 
decentralization is important. So when things are centralized 
then the central power plant goes out and the whole system goes 
out. When it's decentralized, through microgrids or on the 
distribution grid, it's much safer against every kind of 
outage. So I think this is one of the ways in which we can 
protect the storage.
    Senator Barrasso. And beyond the outage standpoint is the 
issue of the range that we are seeing in terms of energy needs. 
We have had a number of extreme weather events, major cold 
snaps, tornadoes, flooding, hurricanes, each presents specific 
challenges to electricity providers, to the grid 
infrastructure. It is foreseeable that a disaster could damage 
or eliminate an energy storage facility too, so baseload energy 
sources like coal, natural gas, to me are needed in this in 
every instance.
    How can we continue to ensure that affordable, reliable, 
easily dispatched energy sources like coal and gas remain part 
of the electricity generation mix? Anyone? Yes, Mr. Ott?
    Mr. Ott. Again, I think it's key to equitably value the 
contribution. We've had a debate about should we pay, you know, 
15-minute battery capacity payments that are generally suited 
for nuclear plants, coal plants, gas plants. My answer is no. 
There's other kind of revenue streams that they fit better for.
    So I think it's really just to make sure that from an 
infrastructure planning perspective, we recognize the value of 
these baseload assets and make sure we have the markets 
recognize those values.
    Senator Barrasso. Since you mention planning for the 
future, thousands more electric vehicles are expected to come 
online in the near future. We have seen the commercial during 
the Super Bowl from one of the car companies about what high 
percentage of their new sales will be of electric vehicles. To 
me, that is going to add a new major demand to the grid.
    Recent studies showed electricity consumption in the United 
States could increase as much as 38 percent by the year 2050 as 
more and more electric vehicles hit the market. So, for anyone, 
do you believe we are going to be able to develop the energy 
storage technologies in time to meet this incredible 
electricity demand increase?
    Mr. Fowke. Senator, I think that's a really good question.
    I think it's yes, you need to develop the infrastructure, 
but I think the requirements to develop that infrastructure can 
be minimized if we put in the right incentives through rate 
design to encourage off peak charging.
    And that's something we're piloting at Xcel Energy, and 
it's working very nicely. And that requires state regulators to 
be more flexible than perhaps, you know, traditionally one-
size-fits-all have said.
    And I also would tell you that I'm proud to say the 
electric utility industry is not the number one carbon emitter 
in the United States anymore. It's transport. And the 
opportunities for EVs from an economic transition, I think, is 
really quite promising. In fact, if you charge up your car 
today it's a $1 equivalent of gasoline--so with a 70 percent 
carbon emission reduction. I think we've got some real 
opportunities there. The infrastructure, I think, can follow 
that.
    Senator Barrasso. Thank you.
    Thank you, Madam Chairman.
    The Chairman. Thank you, Senator Barrasso.
    Senator Cortez Masto.
    Senator Cortez Masto. Thank you. Thank you very much, Madam 
Chair.
    I do want to follow up on some of the conversation that 
Senator King and some of the others had that I have heard with 
respect to highlighting the role that distributed and 
residential storage has increasingly played, particularly as I 
see it in the State of Nevada as well.
    I know that these technologies provide unique benefits that 
grid-scale cannot provide such as local reliability and 
resiliency. In fact, residential storage installation in the 
U.S. has increased more than 200 percent annually during the 
past four years.
    I guess my question to the panel is, what are the 
challenges to implementing more expansive deployment of 
residential storage units, having them implemented at an 
individual residence, but also putting them to greater use 
within a greater network? I am curious about the conversation 
there. Then along with that conversation, what can we do as the 
Federal Government to also continue to support and incentivize 
residential storage?
    Dr. Crabtree. May I comment on that?
    Senator Cortez Masto. Please.
    Dr. Crabtree. I think it's a very good point that behind-
the-meter storage or distribution grid storage has a huge role 
to play. I would say certainly at the residential level it's 
very important. It might be even more important at the 
neighborhood level.
    So you could imagine an aggregator coming to a neighborhood 
of homes and saying I'll put a solar panel on every roof in 
this neighborhood. I'll pay for it. I'll buy a battery that's 
sized to the neighborhood. I'll pay for it. I will put in an 
energy management system that will direct all of that rooftop 
solar to the neighborhood at the time and place that it's 
needed. For example, I'll charge your electric vehicles at 
night and this will relieve demands on the grid. And I'll do it 
at a lower cost than you are now paying as a ratepayer, because 
we're producing that rooftop solar that we're using locally.
    So, I think one of the, you said, what can we do? We can 
encourage that kind of innovation. At the moment that field is 
wide open and aggregators have not stepped in to take advantage 
of the opportunity, partly because, maybe, it's risky and 
partly because it hasn't been encouraged. So I think there are 
huge opportunities there.
    Senator Cortez Masto. Yes, and I would say it is on the 
drawing board. I have talked to some of our rural co-ops who 
are interested in doing just that.
    I guess my question is what more can we do to incentivize 
it and ensure that it becomes more than just on the drawing 
board and they have the ability to actually put this into 
action?
    Mr. Kumaraswamy. I would say that one of the ways in which 
energy storage provides for some of these other benefits to the 
market typically doesn't value, right? There's a lot of 
benefits that storage brings to the table, including the 
resilience ones that was talked about previously and in many 
cases what we find is that either in a structured market, in a 
wholesale market structure or in a traditionally regulated 
structure. You can at least find it hard to value these types 
of benefits.
    And so, one way of, you know, getting through that puzzle 
is to make sure that you have the Section 48 and 25D of the 
investment tax credit be applicable for standard owner energy 
storage devices, right? We think of it as an incentive to 
better recognize the value that storage provides that are not 
being captured in the wholesale markets or in some of the 
structured markets. That's one.
    I think the second one, honestly, is that we are moving 
into a place where we have to be extremely prudent about 
incurring capital costs on single use assets, right? So any 
capital asset, whether it's a natural gas peaking plant or a 
large transmission distribution line, we have to be extremely 
prudent before we incur an expenditure and put the burden on 
ratepayers for the next 20, 30 years, right?
    And so, I think that's where the collection of whether it's 
grid-scale storage or the combination of resources which 
include demand response or behind-the-meter storage, all of 
them come into play where you look at a portfolio of these 
solutions that can potentially take away the need for you to 
incur large amount of capital expenditures that are 
fractionally utilized for a significantly long period of time. 
That's what we want to avoid.
    Senator Cortez Masto. Anyone else?
    Mr. Fowke. I think all of that is valid but I will have to 
take, Senator, a little bit of a contrast. Scale really matters 
in our business, and so I would say that the underlying 
technologies just need to come down in price so at some point, 
you know, the delta between large and small isn't as pronounced 
as it is.
    And of course, the debate about some regulatory policies 
that were put into place to encourage that nascent technology 
need to be revisited and that's not without controversy. But 
what we need to do, what I am trying to do as the CEO of a 
large utility, is achieve that 100 percent carbon-free goal, 
keep my prices affordable for everyone and reliable.
    So I'm very much focused on avoiding cost shifts because 
that tends to cloud the economic signal that, I think, we all 
need to be looking at to achieve that goal. And so, as we 
advance the technologies, as they make this more possible, we 
do have to be willing to go back and revisit older policies 
that were good at their time but maybe have lived past their 
prime.
    Senator Cortez Masto. Thank you.
    I noticed my time is up.
    The only other question, and I will submit it for the 
record, is the workforce. What is the workforce that we need 
for the discussion that we had here today? And I will submit 
that for the record.
    Thank you.
    The Chairman. Thank you, Senator.
    Well, Senator, I will make it easier for you. I will ask 
that question because that is something that I, too, am curious 
about where when I just came from a speech earlier this morning 
about the future of nuclear and you cannot talk about the 
future of nuclear in this country unless you talk about a 
skilled workforce. Is this an area where we need to be doing 
more to be able to address the growing demand? Doctor?
    Dr. Crabtree. May I comment?
    Great point and I think when you look at the workforce and 
you look at what's happening to the grid, everything we do 
about electricity and the electricity grid is domestic. So when 
we talk about a 30 percent increase in demand from EVs, those 
are domestic jobs and domestic infrastructure that we need to 
build.
    So training that workforce, I think, is critical. There 
will be some dislocations from technologies that, let's say, 
are no longer as relevant as they used to be. We can make up 
for those, some of those, dislocations by retraining or 
training the next generation to do what's needed. I believe 
that it's a huge opportunity that we should embrace.
    The Chairman. Good.
    Let me ask you, Mr. Fowke, a question about your goals 
here, 80 percent carbon-free in your service territory by 2030, 
100 percent by 2050. You have not really outlined what Xcel is 
doing, specifically which technologies you are moving to.
    Is it a fair statement to say that you could not achieve 
these ambitious goals, recognizing we don't have federal 
mandate out there, but as a business decision, you could not 
achieve these goals without greater application of energy 
storage?
    Mr. Fowke. I think that's a fair statement. It really will 
depend on what other technologies, Senator, become economically 
viable.
    I know that if we don't make it affordable and if we 
sacrifice reliability, the clean energy transition is going to 
take a major setback.
    So today with the prices I've seen over, just the last 10 
years, really the last 3 years, in wind and solar, I can do 
this with economics in mind. I have to have reliability.
    So whether that is today, the implementation of storage as 
much as we can until we start to go down that cost curve that I 
mentioned or peaking gas generation, that, the economics is 
what I'm after. And again, I know how to get to that 80 
percent, the next 20 percent is going to take some of these 
other technologies, advances and long duration storage.
    And again, I think, dispatchable generation, and we talked 
about many of the different ways that could be--hydrogen, 
carbon capture, next generation nuclear.
    The Chairman. One last question for me, and then I will 
turn to Senator King and Cortez Masto, if they have more.
    But in their budget request for this fiscal year, DOE has 
proposed the Advanced Energy Storage Initiative. This is a $158 
million cross-cutting program that establishes goals for cost 
competitive energy storage. Your free advice here on how and 
where the Department should focus its research and development 
efforts as they are looking to reduce the cost of energy 
storage technologies. What would you have them do? Dr. 
Crabtree?
    Dr. Crabtree. Yeah, thank you, that's a great question.
    I believe that up until this point the way we've treated 
storage and to a certain extent, the grid, is a little bit too 
piecemeal that one needs to look strategically and holistically 
at the whole system and look for the next 20 or 30 years which 
is how long it will take to make this transition to a fully 
modern grid, that we ought to deliberately take steps that will 
produce the outcomes that we wish to have rather than letting 
the market give us what, you know, what it would produce by 
itself.
    So I think we need, sort of, an energy storage and grid 
ecosystem to look at. This DOE proposal is one step along that 
route but we ought to have a very serious look at strategically 
where are we going and how are we going to get there.
    The Chairman. Any other advice?
    Mr. Kumaraswamy.
    Mr. Kumaraswamy. Sure, that's a great question also.
    I think I noted in my testimony that the National Renewable 
Energy Labs have been a significant source of research on 
studying the capacity value that energy storage brings and, 
quite honestly, they have, given the body of literature that we 
need for us to be successful in many of the efforts that we 
need across the regional power markets.
    And so I think I would say that that's one area that needs 
to continue in terms of making sure that we better get a handle 
on what is the amount of duration of storage that we need to 
capture the full capacity value? Is it four hours? Is it six 
hours? Is it eight hours or is it ten hours, right? And so, 
what fraction of duration would you need to capture what 
percentage of capacity value?
    And that research needs to continue, and then the second 
one that we are still gaining very nascent stages of 
exploration is this use of energy storage for solving some of 
the transmission needs that we have on the grid side, right? So 
how can you use these fast-acting energy storage devices to 
provide for solving congestion issues on the transmission 
system, right? How can we better utilize the existing 
transmission system that we already have in a more efficient 
manner? Are there ways to think about those applications of 
storage? Those are key areas that would significantly benefit 
by, you know, research by the national labs.
    The Chairman. Very good, thank you.
    Senator King.
    Senator King. Thank you.
    I think one of the clearest learnings we have had this 
morning is the importance of research and the importance of the 
role of the Federal Government in conducting that research.
    And again, I think you know, I think of George Mitchell and 
fracking and the importance of revolutionary change and that 
was supported, in some significant measure, by Department of 
Energy research. That changed the world, and I think this is 
another area.
    Again, I think, Madam Chair, this is a place where there 
could be a profitable combination between the Defense 
Department and the Department of Energy because of the 
important role that this plays with them.
    Mr. Crabtree, you mentioned something in passing that I 
think deserves emphasis. Rate design and the use of storage for 
battery-powered automobiles to absorb excess capacity, energy 
and grid capacity, in the nighttime.
    The grid, I have often characterized, is like a church that 
is built for Christmas morning and there are a lot of empty 
pews in February and March, because it is literally designed 
for the hottest, most heavily used day of the year and it has 
to be in order to be reliable.
    But that means there is enormous excess delivery capacity, 
usually at night, particularly in the winter. And so, to the 
extent we could use rate design to encourage charging of 
automobiles or to go further, to encourage things like 
electrothermal storage, heating your water at night. I mean, 
there are a lot of uses like that, I think. I am old enough to 
remember when we looked at our watch when it became nine 
o'clock because the telephone call was cheaper.
    [Laughter.]
    People do change behaviors because of price signals. And 
right now there is really not a price signal, and yet there 
ought to be and it would lead to a more efficient utilization 
of the grid without an increase of the capital cost, no new 
wires or poles which would lower the cost of distribution and 
transmission for everyone because of more kilowatt-hours 
divided by the same capital cost.
    So I think that is a very important point. That is 
essentially a state level decision. But time-of-day pricing, I 
think, is a very important part of this solution.
    Finally, Mr. Fowke, I admire your commitment to where you 
are going, to where you are taking your company and it is a 
very important step for the country.
    On the issue of shifting when we have household solar and 
batteries, I think the important question there is we have to 
be very precise about the value of what you are getting versus 
what it is costing. In other words, it is not a dead loss. 
There are values to the utilities. There is a national security 
value in terms of the distribution of the grid so that if one 
plant or one transmission center goes down, the whole grid does 
not go down. There are carbon avoidance values, resiliency, 
peak shaving, all of those things.
    So I understand, but I just want to be sure the equation is 
on both sides, that the value question is not just what is the 
cost and are we loading these costs on to other consumers, but 
what are also the benefits?
    And that, I think, that is an important part of this 
consideration because there are places in the country where 
utilities have placed, I think, exorbitant penalties to 
discourage the development of distributed energy that are 
really unjustified by the true cost equation.
    I think this is so incredibly important, and I commend the 
panel and the Chair. This has been a very important hearing, 
and I look forward to continuing the discussion.
    To the extent any of you have follow-up thoughts, I hope 
you will submit them to the Committee for our consideration. 
But thank you all for the work that you are doing.
    Mr. Davidson, thank you for the work you do in Maine. I 
think you have 600 or 700 megawatts of hydropower in Maine. It 
is an important part of our energy resource, and I appreciate 
your company's engagement with businesses and entities in our 
state.
    Thank you, Madam Chair.
    The Chairman. Thank you, Senator.
    Senator Cortez Masto, any final thoughts?
    Senator Cortez Masto. So one area that dovetails--and we 
have had hearings on this previously--with this conversation 
and any conversation we have when we are expanding access and 
interconnectivity to the grid is cybersecurity. To me, that 
should be incorporated into all of the discussions we have, 
particularly as we build out the new architecture and we are 
looking at incorporating new technologies.
    I do not know if anybody has a comment because that could 
be a whole other hearing, but to me, that should always be a 
consideration and always be a topic of the conversation when we 
are continuing to figure out our role here at a national level 
and a local level with respect to the grid.
    The Chairman. Clearly a subject that is always on our mind 
as we look at any of these energy matters.
    We appreciate the really good discussion I think that we 
have had this morning. The efforts that you all bring from 
different perspectives here, I think, helps round out the 
conversation in a way that is very helpful to us. So we thank 
you for that.
    We know that we have a lot more work to be done in this 
space, but we recognize that it plays a very key role in how 
our energy future, our energy portfolio, really moves forward.
    We thank you for your contribution, know that you will be 
hearing from us, whether it is additional questions from 
members here on the panel or on follow-on as we look to develop 
legislation.
    With that, I thank you very much, and the Committee stands 
adjourned.
    [Whereupon, at 12 p.m. the hearing was adjourned.]

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