CPUC has proposed policies and mechanisms for its landmark energy storage procurement program that sets a 1,325 MW energy storage mandate.
On September 3, 2013, the California Public Utilities Commission (CPUC) issued a proposed decision detailing policies and mechanisms for its energy storage procurement program established under the 2010 Assembly Bill 2514, the first state law requiring grid-scale energy storage. The program, proposed in June, would require California’s three major investor-owned utilities (IOUs) – Southern California Edison, San Diego Gas & Electric, and Pacific Gas and Electric – to procure 1,325 MW of energy storage by 2020.
According to CPUC, its energy storage procurement policy is guided by three main purposes – grid optimization, renewable energy integration, and emissions reduction to 80 percent below 1990 levels by 2050. The proposed procurement targets for the IOUs increase over time and would be met with solicitations every two years through 2020. Under the proposal, community choice aggregators and electric service providers would have to procure energy storage equal to one percent of their annual peak load by 2020 and 2016, respectively.
The proposal limits utility ownership of storage projects to 50 percent across the three grid domains – transmission, distribution, and customer-side. It calls for utilities to consider several forms of resource ownership, such as utility-owned, third-party owned, customer-owned, and joint ownership, and opportunities to enter into contracts with customer-sited resources.
Source: California Public Utilities Commission
The proposal would allow IOUs to defer up to 80 percent of their procurement targets to later procurement periods provided they demonstrate their inability to procure sufficient projects to meet targets within the set period. Large-scale (50 MW or more) pumped energy storage projects, which comply with AB 2514 storage definitions, are excluded from the procurement mechanism outlined in the proposal. CPUC expounded that the large size of these projects would override smaller emerging technologies, thereby hindering the AB 2514 goal to enable a market transformation for emerging technologies.
CPUC calls for a “request for offer” (RFO) solicitation process instead of the reverse auction mechanism suggested in its preliminary proposal. RFOs are suitable for the changing technology environment of energy storage and enable utilities to tailor a targeted RFO to reflect specific resource needs and criteria. CPUC lays out two processes to evaluate costs and benefits of storage technologies. First, it would require each IOU to perform cost-effectiveness analysis of solicitation results using models developed by Electric Power Research Institute and DNV KEMA, a utility consultancy. Additionally, the IOUs and CPUC would work together to develop a consistent evaluation protocol.
The proposed decision directs the IOUs to apply for their first energy storage solicitation by January 1, 2014 and schedules the initial solicitation for no later than December 1, 2014.
September 4, 2013 via Energy Solutions Forum
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