Energy Debate in California
Posted December 6th, 2013
California recently adopted the nation’s first energy storage mandate. The California Public Utilities Commission (CPUC) instructed the state’s three utilities to expand their capacity to store electricity to support the state’s power grid by 2020.
This includes renewable energy generated by solar and wind.
The utilities must collectively buy a capacity target of 1.3 gigawatts — or 1,325 megawatts — of energy storage capacity by the end of decade – roughly enough energy to supply nearly 1 million homes.
The mandate was approved over the objections of many within the utility industry who argued that the requirements will be too expensive to Californians, given the nascent state of the storage industry and the fact that large pumped storage (i.e. hydraulic) facilities do not qualify. In addition, San Diego Gas and Electric argued that the timelines and capacity targets were arbitrary.
The CPUC rejected these arguments, stating that the same points were made about renewable energy when the state adopted the Renewable Portfolio Standard. Since then, the costs of renewable energy have come down – leading many to believe the same might be said for energy storage.
The storage mandate grew out of a 2010 California bill, AB 2514, which required the PUC to determine appropriate procurement targets for energy storage. The bill left the door open for that target to be zero; however, the CPUC set an aggressively high level of 1.3 gigawatts. This suggests that the CPUC finds budding energy storage technologies quite promising.
The new source of demand created by the mandate certainly helps. In addition, it can alleviate the issue around “resource intermittency” which is prevalent when dealing with renewable sources of energy (i.e. wind and solar). These resources are available at the whim of weather vs. straight-up demand. If the two variables do not coincide (ex: windy day and high demand) there are supply and demand imbalances. Energy storage can smooth these imbalances by holding excess supply during windy or sunny periods, and then releasing it during periods when there is no wind and/or it is cloudy.
Creating a storage mandate is a bold step for a state PUC, given most state commissions’ focus on maintaining “just and reasonable” rates for their states’ electricity customers. But the California PUC has long been one of the most progressive in the country, and it has been commonly stated that wind and solar power can only reach their full potential only if storage is available. However, this is happen only if energy storage technologies can deliver their envisioned benefits at a price that ratepayers can live with (approximately $700-750 per kilowatt-hour).
Stay tuned for more information on the progress of this mandate.
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