California Has Now Mandated (Some) Energy Storage

Originally published on San Diego Loves Green
By Roy L Hales.

After two and half years of debate, the California Public Utilities Commission (PUC) has finalized a decision that the state’s investor-owned utilities must  begin buying a combined 200 megawatts of energy storage technology by 2014 and reaching 1.3 gigawatts (1,325 megawatts) by the end of 2020.

All 5 CPUC Commissioners approved the landmark decision. In her introductory comments, Commissioner Carla Peterman stated, “I believe energy storage has great potential to help us address grid reliability and renewables integration issues. This decision is an important and appropriate step, especially considering the leadership role California has and continues to play in advancing progressive energy policy.”

PG&E, SCE and SDG&E will soon be directed to file a procurement application on or before March 1, 2014 that would contain a proposal for the first energy storage procurement cycle, including the first competitive solicitation.

The CPUC will conduct an evaluation of this program no later than 2016 and at least once every three years thereafter through 2022. Based on their findings, the Commission may make adjustments to the program if needed.

This decision was taken in accordance with AB 2514, which was passed in 2010 and calls for the integration of renewable energy and the reduction of greenhouse gas emissions to 80 percent below 1990 levels by 2050.

Assemblywoman Nancy Skinner, the author of AB 2514, expressed excitement about the decision’s impact. “California passed AB 2514 so that we would have the opportunity to harness excess electricity generation and use it when needed. The CPUC’s decision to ensure storage capacity will increase the reliability of our electrical grid and optimize solar, wind and other renewable resources. This decision makes our state the global leader in energy storage, spurring innovation and creating jobs across California.”

All three of the utilities had reservations about the plan.

San Diego Gas & Electric argued that the timeline and level of the targets are arbitrary and there has been no examination as to what level of distribution level, transmission level and customer level energy storage would be beneficial to each utility or local area within a utility’s service area.

In their decision, the CPUC agreed that there must be “flexibility among all three points of interconnection to maximize and balance both developer and ratepayer value. We are persuaded by arguments that overly prescriptive targets, without any necessary adjustments, would ultimately drive up ratepayer costs and hamper the development of necessary market experience that would eventually drive other needed adjustments. Adhering to strict targets or “carve outs” may inappropriately or unfairly advantage or disadvantage specific participants.”

Some of the Decision’s highlights include:

• Specific, biennial energy storage procurement targets for Southern California Edison, San Diego Gas & Electric, and Pacific Gas and Electric beginning in 2014 with targets increasing over time.  By 2020, the three together are expected to have contracted for 1.325 gigawatts of energy storage for their operations with an absolute installation requirement no later than 2024.
• Utilities will be allowed to employ energy storage for a variety of functions throughout the electric power system, such as capacity, ancillary services, and peak shaving, which in turn will provide real-world data for further market expansion.  Energy storage systems can be deployed in three “grid domains”: transmission-interconnected, distribution-interconnected and behind-the-meter-interconnected.
• Utility ownership of storage projects should not exceed 50% of all storage across all three grid domains.
• While large-scale pumped storage (>50MW) projects are excluded from the target, the Commission will hold a workshop to further explore the operational characteristics and uses for pumped storage projects.

“This decision comes at the perfect moment as the state plans for the replacement of San Onofre Nuclear Generating Station,” Said Evan Gillespie, Sierra Club Beyond Coal Campaign, Western Region Deputy Director.

“Improving our energy storage systems is a necessary step in building a modern, sustainable power grid,” added Will Rostov, Earthjustice attorney who has represented Sierra Club California.

“The California Environmental Justice Alliance participated in this proceeding on behalf of low-income communities and communities of color overburdened by pollution, in particular from power plants,” Said Strela Cervas, Coordinator at the California Environmental Justice Alliance. “California does not need any new gas-fired power plants.”

(Photo at top of page: The Edmund G. “Pat” Brown State Office Building, San Francisco. The primary tenant of this building is the California Public Utilities Commission – taken by Coolcaesar on August 31, 2006.)