|Does California have a renewables mandate?||Yes||50 percent renewables by 2026 and 60 percent renewables by 2030|
|Does California have a state mandate or target for storage?||Yes||1,325 MW by 2020|
|Does California offer financial incentives for energy storage development?||Yes|
|Does California have a policy for the strategic deployment of Non-Wires Alternatives or Distributed Energy Resources to defer, mitigate, or obviate need for certain T&D investments?||Yes|
|Does California have a policy addressing multiple use applications for storage?||Yes|
|Does California have a policy on utility ownership of storage assets?||Yes|
|Does California allow or mandate the inclusion of energy storage in utility IRPs?||Yes|
|Has California modified its permitting or interconnection requirements specific to energy storage?||Yes|
|Does California allow customer-sited storage to be eligible for net metering compensation?||Yes|
|Has California revised its rate structures to drive adoption of behind-the-meter storage?||Yes|
|Approximate development of storage capacity in California.||Approximately 4.2 GW|
With its innovative and ambitious policies, California is a global leader in the development and application of energy storage technologies. For the last decade, the state has been a frontrunner in both the development of storage technologies and the legislative and regulatory policies that are needed to enable the growth of a storage marketplace.
It is clear that California has set the course for developing a clean energy future, a course that other states continue to monitor and, in several cases, mirror in their own policies. The specifics of California’s clean-energy infrastructure are impressive. As of 2018, California has generated about 29 percent of its power from renewables. Another 9 percent came from nuclear and 15 percent from large hydropower (both of those count as carbon-free, but the last remaining nuclear plant in the state is slated to retire by 2025). Natural gas provided 34 percent of California’s electricity. Further, since 2010, California has procured 1,514 MW of new energy storage capacity to support grid operations. Also in 2010, California became the first U.S. state to mandate energy storage procurement with targets imposed on the state’s three investor-owned utilities (Pacific Gas & Electric, Southern California Edison, and San Diego Gas & Electric, formalized by the California Public Utilities Commission (CPUC).
California recently upped the ante on its clean-energy goals, with its newly established goal to generate 60 percent of its generation from renewable resources. In addition, California has adopted a 100 percent carbon-free electricity by 2045.
Energy storage factors prominently into California’s clean energy goals, and in fact some market observers have concluded that California’s goals are not achievable without a significant amount of new storage capacity being developed over the next two decades. Policymakers in the state appear to agree on the critical role that storage will play going forward, and in 2018 through legislative and regulatory policy the state formally adopted a new energy storage target of 1,325 MW by 2020. This mandate is the outcome of California’s conclusion that energy storage will continue to be a main ingredient in the mix of strategies the state is using to balance supply and demand, support the California Independent System Operator (CA ISO) in maintaining grid stability; avoid voltage and frequency imbalances; and support the state’s transition to a renewables-centric energy infrastructure.
With approximately 4.2 GW of energy storage capacity already in development, California has a large amount of installations that can be analyzed and used to inform related policy decisions. California also has been a pioneer in testing and utilizing large-scale lithium-ion battery deployments as a swift response to compromised grid conditions, and is the location for prominent demonstrations intended to evaluate storage technologies for various grid-scale applications, including PG&E’s use of batteries to replace gas-powered plants that are shutting down. Moreover, due to the sheer volume of California’s energy storage development and the fact that it has wrestled with what will ultimately be critical storage policy issues for other states, it is no surprise that California has become the benchmark against which policies and market development for storage across the U.S. are being evaluated.
California has used a mix of executive directives, legislation, and regulatory decisions to define energy storage policy, and has relied upon coordinated efforts among the Legislature, CA CPUC, California Energy Commission (CEC), and the CA ISO The policy initiatives related to storage that have been developed by California policymakers over the last decade have been focused in three key areas:
Through these efforts, California has addressed a number of complex technology and policy factors including storage’s role in a clean-energy environment, how a storage market should be designed, barriers that prevent storage’s participation in both retail and wholesale markets, and the various ways in which storage can and should be used. Given that the state’s legislators opted not to define specifics paths for storage development but rather deferred to regulators and market drivers, California has experienced somewhat of a “learning by doing” process as it pertains to developing its storage market. Accordingly, California’s efforts provide many “lessons learned” for other states across the country, many of which have taken very few steps toward developing their own policies for storage. Key storage issues that California has addressed over the last decade include:
California has almost single-handedly jump-started the advanced storage industry by setting statewide mandates for renewables, storage and carbon-free electricity, but the state is still in the early stages of this rollout. That means utilities are still testing how storage works on the grid, and how it performs after several years of service, both of which are crucial to planning a grid that is all renewables
The challenges for the state to achieve its vision are significant. For example, according to a study prepared by the National Renewable Energy Laboratory (NREL), even with optimal grid improvements, California would still need an estimated 15 GW of additional storage just to reach 50 percent solar by 2030. That’s more than 11 times the amount of storage mandated currently in California, and 66 times the total megawatts deployed in the U.S. last year. For now, though, California has solidified its leadership role in building the future paradigm for clean energy and the grid. If it succeeds, others will learn from it. If it falls short, that expensive experiment will be instructive, too.
California’s commitment to a renewables-centric, clean energy infrastructure has been in place for almost two decades, building upon the policies enacted by Governors Arnold Schwarzenegger (R) (2003-2011) and Jerry Brown Jr. (D) (2011-2019) who pushed California toward becoming a global leader in decarbonization. California’s current Governor Gavin Newsom (D) (2019-) campaigned with a pledge to issue a directive to put California on a path toward 100 percent renewables. While Newsom has not enacted any executive orders along these lines as of August 2019, it is anticipated that California will continue with its aggressive clean-energy objectives, which include a prominent place for energy.
The explicit support for green energy by the state’s executive leadership has set the foundation for the number of legislative and regulatory policies enacted in recent years that have defined energy storage’s role in California. It is important to view executive directives within the context of legislation and regulations that have followed and understand the role that executive leadership has played in jump-starting the energy storage market in California.
For instance, On June 1, 2005, Governor Schwarzenegger signed Executive Order S-3-05 which established greenhouse gas emissions targets for the state. The executive order required California to reduce its greenhouse gas emissions levels to 2000 levels by 2010, to 1990 levels by 2020, and to a level 80 percent below 1990 levels by 2050. However, to implement this measure, the California Air Resources Board (CARB) needed authority from the legislature. Consequently, Gov. Schwarzenegger was instrumental in the passage of California’s signature clean energy legislation known as the Global Warming Solutions Act (AB 32) in 2006, which required the state to dramatically cut is greenhouse gas emissions. AB 32 also gave the CARB authority to implement the program.
Governor Brown continued executive support for clean-energy initiatives in California through his own executive orders. In his inaugural address in 2015, Governor Brown increased the state’s target for renewable energy from 33 percent by 2020 to 50 percent by 2030, which subsequently codified with the passage of SB 350.
On April 29, 2015, Governor Brown issued Executive Order B-30-15, which established a new greenhouse gas emissions reduction target for the year 2030Governor Brown issued Executive Order B-55-18 in September 2018, just before he left office, which established California’s goal of achieving statewide carbon neutrality by 2045. Governor Brown also signed two bills representing California’s landmark legislation on energy storage: 1) SB 100, which establishes the state’s goal of achieving zero-emission electricity by 2045, with 60 percent renewables to be achieved by 2030; and 2) SB 700, which provided expanded funding for energy storage and other emerging clean energy technologies, resulting in a total investment of $1.2 billion for customer sited energy storage.
Furthermore, Both Governor Schwarzenegger and Governor Brown supported the expansion of the state’s Self-Generation Incentive Program (SGIP) established in 2001. The SGIP has been California’s way of encouraging residential installations of solar and energy storage systems.
As a leader among states regarding energy storage policy development, California policymakers have driven the development of policy through the state legislature and public utility commission. As is often the case, legislation passed in California has established high-level objectives and goals for clean energy in general and energy storage, to then be implemented with more granular-level regulations created at the CPUC.
Goal-defining legislation passed in the state over the last decade has not only created the energy storage market in California but has also set defined important precedents that other states have referred to as they define their own storage markets. Taken as a whole, the suite of storage policy that has emerged out of legislation has positioned California as the most mature energy storage market in the U.S.
The key pieces of storage-focused legislation in California include:
(passed the Assembly on April 25, 2019; currently in Senate):
(introduced in the Assembly April 12, 2019; currently in Senate):
(introduced in the Senate; currently in the Assembly)
(introduced in the Senate in February 2019)
The CPUC regulates investor-owned electric and natural gas utilities operating in California. Among its many responsibilities, the CPUC oversees energy related functions such as determine electric costs; electric power procurement and generation; infrastructure; customer energy resources; energy efficiency; and electric rates and tariffs. Through its oversight over utilities, the CPUC has played a key role in developing the energy storage market in the state and issuing precedent-setting rules that other states have increasingly referred to as the presence of energy storage accelerates in various markets.
Here is a list of the most significant regulatory proceedings in California pertaining to energy storage that have transpired over the last decade, including key provisions:
· D.13-10-040 set procurement targets for 2014 to 2020, adopted the Energy Storage Procurement Framework and Design Program, and directed the state’s three IOUs to file four biennial storage procurement applications starting in March 2014.
· D.10-13-040 required IOUs to provide proposed procurement details, including Power Purchase Agreements (PPAs), bid evaluation protocols, request for cost-recovery authorizations, and to report on storage procurement to date.
In this decision, the CPUC:
o Approved proposed energy storage procurement proposals of SDG&E (16 MW), SCE (16.3 MW), and modified the storage proposal of PG&E to 80.5 MW;
o Clarified “eligible” technologies including V2G electric vehicle technologies, eligible storage component of biogas, eligible storage component of solar thermal (CSP-TES), eligible storage component of hybrid thermal generation (Hybrid-TES), but excluding V1G and biogas (without eligible storage component);
o Denied request for extension of the PCIA mechanism for market/”bundled” energy storage contracts beyond 10 years;
o Directed SCE and PG&E to provide a more detailed explanation of the type of storage resources and the associated MW quantities the IOU intends to procure, categorized by grid domains, use cases, and locations.
Other relevant regulatory proceedings pertaining to energy storage policy that have been conducted at the CPUC include:
Another regulatory initiative in California that had direct implications for energy storage were the changes that the CPUC made to Rule 21, the tariff that describes the interconnection, operating and metering requirements for certain generating and storage facilities seeking to connect to the electric distribution system.
For background, Rule 21 describes the interconnection, operating and metering requirements for generation facilities to be connected to a utility’s distribution system, over which the CPUC has jurisdiction. This jurisdiction includes the interconnection of all net energy metering (NEM) facilities, ”Non-Export” facilities, and qualifying facilities intending to sell power at avoided cost to the host utility. Rule 21 does not apply to the interconnection of generating or storage facilities intending to participate in wholesale markets overseen by the Federal Energy Regulatory Commission (FERC). Each of California’s large investor owned utilities (IOUs) has its own Rule 21 tariff as part of its electric rules; however, they are largely equal in content.
Rule 21 contains provisions governing many aspects of interconnection, including:
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