There were about a dozen proposals in the California legislature this session that related to energy storage development, funding and regulation—but if that sounds like a lot, it's not.
Steve Chadima, who heads up California policy for Advanced Energy Economy, called it a “fairly typical” year in terms of legislation the group tracked. “There are always a good eight to 12 bills that rise to the level that demand our attention. Mostly they are bills we support, but sometimes there are bills not heading in the right direction," he said. "Usually we can work with legislators to remove any kind of egregious language."
That was the case earlier this year, when AEE was opposing AB 2868, proposed by Assembly Member Mike Gatto. While the state has already directed investor-owned utilities to add 1,325 MW of storage on the grid, the new bill would allow them to own an additional 500 MW of storage capacity behind customers' meters, using ratepayer money to finance the investments.
That provision drew concerns from private storage providers.
“It is a general competitive concern for anyone offering any sort of distributed energy resource," Chadima said. "If a regulated entity is allowed to participate directly they will have an unfair advantage."
"They have all the customer contacts, a lower cost of capital and they get a guaranteed rate of return on any investment they make," he added. "It’s a 1-2-3 punch if you’re a private company trying to compete.”
Ultimately, compromise language was inserted conditioning utility projects on a determination that they "do not unreasonably limit or impair the ability of non-utility enterprises to market and deploy energy storage systems." Regulators will ultimately make those determinations.
AEE wound up neutral on the bill, which passed both the Senate and Assembly on the last day of the legislative session in August. Like several other bills, they are waiting on review from Gov. Jerry Brown (D), who is expected to sign them.
Chadima points out that AEE has a diverse membership that includes storage developers who would benefit equally from a large utility order.
“The compromise language was designed to allow utilities to play, but not dominate the market," he said.
“There is a growing sense that storage is the next frontier," Chadima said. But he added, "storage has been hungry for some long-term support until last year, when the storage mandate was put in place."
The bill hasn't been signed into law yet, so while utilities may be excited about the opportunity to ratebase resources on the customer side of the meter, the focus is still on California's initial storage mandate.
"We absolutely support the state's efforts to enable energy storage, and we're working to implement the current requirement. We're going to use what we learn" in the next phase, said Pacific Gas & Electric representative Lynsey Paulo.
As for how PG&E would approach BTM assets, Paulo said it's too soon to tell. "We'll be determining that as we move forward."
AB 1637 - Expanding California's Self-Generation incentive
The other major storage bill is AB 1637, introduced by Assembly Member Evan Low and also now waiting on Brown's signature. It would double the size of California's Self-Generation Incentive Program (SGIP), and expand and extend net energy metering for fuel cell resources.
Earlier this summer, the California Public Utilities Commission made changes to the program, which provides $83 million a year through 2019 for behind-the-meter generation technologies. The revised SGIP allocates 75% of program funds for energy storage with 15% of that amount carved out for residential projects. Generation is allocated the remaining 25%, with 40% designated for renewable generation projects.
It's a bipartisan measure, receiving support from two Republican Assembly members in the 47-27 vote. Brown is expected to sign the measure, and it will be vital to keeping incentives flowing to storage projects.
"If they hadn’t done that, they would have run into a wall in the middle of the year," said Chadima.
Funding of the SGIP projects, specifically the divide between storage and fuel cell incentives, has grown into something of a feud, as Utility Dive previously reported. The PUC does not use a straightforward competitive bidding process for SGIP because the program is intended to incentivize emerging technologies and encourage small vendors.
Once the bill has been signed, Paulo said PG&E would need to file a new tariff and the California Air Resources Board would need to determine eligible projects.
Though not typically considered as the same type of storage as lithium-ion batteries, lawmakers also passed AB 33, which calls on the CPUC to look at the potential for large-scale storage, specifically pumped hydro. The bill comes after the California ISO identified a need for fast-ramping, flexible resources to balance the grid and mitigate the potential impacts of over-generation from renewables.
The law would directs regulators to "assess the potential costs and benefits of all types of long duration bulk energy storage resources, including impacts to the transmission and distribution systems of location-specific long duration bulk energy storage resources."
Another measure, AB 2861, directs the CPUC to establish a resolution process for interconnection disputes. The bill sets a goal of resolving disputes within 60 days, and would require the commission to appoint a "qualified electrical systems engineer with substantial interconnection expertise to advise the director of the energy division and to provide adequate commission staff to assist in resolving interconnection disputes."
Moving fast on energy storage integration
While the SGIP program and other incentives are not new, California has been pressing to integrate more storage recently. In addition to aggressive clean energy goals, the Aliso Canyon gas leak in the southern part of the state added new urgency. With fear of brownouts and potential blackouts, the California Public Utilities Commission approved expedited storage purchases for utilities in the region.
San Diego Gas & Electric has planned a 150 MWh project for the region, and Southern California Edison has a plan to retrofit an existing gas plant with 80 MWh of batteries. To the north, PG&E wants to use energy storage paired with renewable energy to retire the Diablo Canyon nuclear plant and replace it with zero-carbon resources.
"I think there is this general sense that storage is a critical element in realizing the goal to decarbonize the grid, so people are stepping forward with different ideas," said Chadima. "We’re in that period where we're trying each one to see what works, but the ultimate goal is to rapidly increase the amount of storage available and push the industry to lower costs. … Storage is today where solar was 10 years ago, it’s right on the precipice of a big explosion and a decrease in prices.”
But as for the state's laws, helping to push those technologies forward: "The whole sausage making process is a tough one in California," he said.