California looks to next steps as utilities near energy storage targets
As Golden State utilities approach 2 GW of battery capacity, lawmakers are preparing mandates for 2 GW more.
As California’s investor utilities draw closer to meeting their mandated energy storage targets, work is already underway to up the ante.
One effort involves legislation that calls for an additional 2,000 MW of energy storage in the state. Existing mandates call for California utilities to procure nearly 1,900 MW of energy storage.
Earlier this month, the California Public Utilities Commission approved a proposal by San Diego Gas & Electric (SDG&E) for five new energy storage projects totaling 83.5 MW.
Adding those projects to the utility’s energy storage portfolio "virtually fulfills SDG&E’s energy storage procurement requirement under AB 2514," spokesman Wes Jones told Utility Dive via email.
California established the first energy storage target in the nation in 2010 with the passage of AB 2514, which established a target of 1,325 MW of energy storage by 2020 for the state’s three investor-owned utilities (IOUs). The state added a new target in 2016 with passage of AB 2868, which calls for 500 MW of behind-the-meter storage, or 166.6 MW for each IOU.
California utilities on target toward energy storage goals
|Investor-Owned Utility||Procured storage under AB 2514||Goal|
|Pacific Gas & Electric||243 MW
(including its 2016 application currently before the PUC)
|Southern California Edison||422 MW
(including three pending applications)
|San Diego Gas & Electric||156 MW||165 MW|
|Total||821 MW||1325 MW|
SOURCE: California Public Utilities Commission
SDG&E’s target under AB 2514 is 165 MW. Between existing energy storage projects and projects under development, SDG&E has about 191 MW of energy storage, according to a tally by Strategen Consulting and confirmed by SDG&E. Not all 191 MW of those projects may qualify for meeting the AB 2514 target because the law caps the contribution of utility owned energy storage at 50% of qualifying facilities.
SDG&E is "on track to meet its AB 2514 target and, therefore, is not proposing to conduct further energy storage procurement within its 2018 solicitation cycle to count towards this target," Don Balfour, advanced technologies strategic program manager at SDG&E, told the PUC in February.
California’s utilities are not prohibited nor penalized for meeting energy storage procurement targets early, PUC spokesperson Terrie Prosper told Utility Dive via email.
"Once they meet their targets, they are no longer obligated to procure energy storage, but have been permitted to do so in several instances," Prosper said.
SDG&E also recently filed its energy storage investment and program framework under AB 2868, which included proposed energy storage projects totaling 166 MW. If approved by the PUC, the initial projects — seven projects totaling 100 MW — would be in San Diego County’s rural and urban areas and serve critical public sector facilities such as fire and police stations, emergency operation centers and emergency evacuation sites.
Pending PUC approval, the plan would be implemented in phases over the next few years with all projects in operation by 2024.
Southern California Edison (SCE) is also on track to meet is AB 2514 target of having 580 MW of energy by 2020.
"To date, we have procured approximately 365 MW that count towards the target, but over 500 MW overall," Colin Cushnie, vice president of energy procurement and management at SCE, told Utility Dive via email.
Not all of SCE’s customer-connected energy storage procurement counts towards the utility’s AB 2514 target. Some was purchased to enhance reliability, Cushnie said.
To satisfy AB 2868, SCE has proposed a mix of customer incentive programs for energy storage, totaling about 4 MW, and about 40 MW of utility-owned storage investments.
SCE is also procuring 20 MW of energy storage as part of SB 801, which directed utilities to determine the cost effectiveness and feasibility of deploying 100 MW of storage. The law was designed to help alleviate potential generation shortfalls as a result of the Aliso Canyon gas leaks.
Pacific Gas and Electric (PG&E) issued energy-storage related requests for offers (RFOs) in 2014 and 2016 and to date has executed 13 agreements for energy storage projects totaling 240 MW, of which one 10 MW project is still active, and approvals are pending for six other projects totaling 165 MW.
PG&E plans to issue RFOs in 2018 and 2020 to procure up to 370 MW of energy storage, spokesman Denny Boyles told Utility Dive via email.
Under the state’s Self-Generation Incentive program (SGIP), which counts toward AB 2514 compliance, PG&E offers incentives for business and residential customers to install energy storage systems. As of January 2018, PG&E had 25.3 MW of customer-sited energy storage installed through SGIP with another 75 MW in the pipeline.
And in March 2018, PG&E filed a plan with the PUC to procure 167 MW of distribution connected storage to comply with AB 2868. Those projects are designed to increase reliability and resiliency, especially in areas affected by the 2017 North Bay wildfires, Boyles said.
Mission accomplished, for now
AB 2514 was designed to build up the state’s energy storage capability. "It has accomplished a lot of that," Alex Morris, vice president of policy for the California Energy Storage Association, told Utility Dive. The state is now looking at the larger challenges of integrating renewables, the prospect of a retiring gas plant fleet and leveraging its integrated resource plan model, Morris said.
High on the list of the state’s energy storage planning is a bill introduced by state Sen. Henry Stern, D. The bill, SB 1347, singles out 2,000 MW from the state’s integrated resource plan (IRP) and set up a path for utility pre-approvals.
The bill would require the PUC, direct electrical corporations, community choice aggregators, electric service providers and certain electrical cooperatives to procure their proportionate share of a total of 2,000 MW of energy storage systems by Jan. 1, 2020.
SB 1347 would authorize electric utilities to own and operate a certain percentage of those energy storage systems. The bill would require the PUC to develop and make available to all load-serving entities a cost recovery mechanism for energy storage investments.
Stern’s bill is designed to work in concert with California’s IRP process, which was mandated by SB 350 in 2015. SB 1347 links to the 2,000 MW target in the IRP reference plan, but does not get ahead of the IRP, Morris said. The reference plan is about half way toward implementing the state’s first full IRP cycle. The reference plan was adopted in 2017, and utilities are in the process of drawing up their individual IRPs to present to the commission later this year.
"The greatest strength of energy storage is flexibility — both its fast response and its ability to charge and discharge based on grid needs."
Vice president of energy procurement and management at Southern California Edison
Meanwhile, California’s utilities seem to have so far had a positive experience with energy storage. PG&E envisions a large and growing need for energy storage in the future as California continues to increase renewable energy production and pursue GHG reduction goals, Boyles said. "There is ample opportunity going forward for utilities, third-party storage providers, and retail customers to be part of that energy storage solution."
"Not only does energy storage allow us to integrate more renewable energy, it helps to stabilize the grid and increase reliability, especially as renewable energy drops off in the later afternoon and energy demand throughout the state is rising," Jones at SDG&E said.
In Southern California Edison’s service area, energy storage has already been able to compete successfully with other resource types to enhance reliability, said Cushnie. He said he expects energy storage to play a greater role in the utility’s portfolio as the technology continues to mature.
"The greatest strength of energy storage is flexibility — both its fast response and its ability to charge and discharge based on grid needs," he said.
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