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by Shelley Welton, Deputy Director
On Thursday, October 17, 2013, California adopted a policy requiring its utilities to procure a total of over 1300 MW of energy storage capacity by 2020. The California Public Utilities Commission (PUC) approved this mandate over the objections of many in the utility industry who argued that the requirements will be too expensive for California ratepayers, given the nascentstate of the storage industry. In rejecting these arguments, the PUC noted that the same was said of the renewable energy industry at the time California adopted its aggressive Renewable Portfolio Standard. Nevertheless, in the wake of the RPS, costs have come down for renewables, suggesting that the same might happen for energy storage. Even in the shorter term, costs should be contained by the fact that the order requires utilities to procure “viable and cost-effective energy storage systems from among emerging storage technologies.”
The storage mandate grew out of a 2010 California bill, AB 2514 [version available to lexis.com subscribers], . . . .
which required the PUC to determine appropriate procurement targets for energy storage. The bill left open, however, the possibility that the PUC could determine that the appropriate target was zero. The fact that the PUC set what utilities consider an aggressive target suggests that the Commission finds emerging energy storage technologies quite promising.
In addition to helping spur the still-small energy storage industry by creating a source of demand, California’s new storage requirement could help address some of the concerns that California has been experiencing over “resource intermittency” as it sources an increasing percentage of its power from renewable sources like solar and wind. These resources are available at the whims of the weather rather than on human demand, potentially creating supply and demand imbalances. Storage can smooth these imbalances by holding excess supply during windy or sunny periods, and then releasing it during periods where these resources are not capable of meeting demand. Storage could therefore prove a key component of a climate-friendly energy supply strategy.
Creating a storage mandate is a bold step for a state PUC, given these entities’ traditional focus on maintaining “just and reasonable” rates for state electricity customers. But the California PUC has long been one of the most progressive and path breaking in the country. With this step, hopefully it again sets a precedent that others might follow. But this is only likely to be the case if energy storage technologies can deliver their envisioned benefits at a price that Californians can live with.
Reprinted with permission from Climate Law Blog
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