Governator Says “Hasta la Vista” to Storage-Free Energy

On September 30, California’s Governor Schwarzenegger signed Assembly Bill 2514 into law, which sets mandatory targets for energy storage systems in the utility sector. Groups such as the California Energy Storage Alliance have been working hard to promote this bill, the first of its kind.

Energy storage is being championed as one of the keys to unlocking renewable energy, especially wind energy. Energy losses due to wind curtailment, for example, in which the utility or grid operator deliberately removes wind-generating capacity from the grid to avoid overloading the grid with power, could be avoided with storage devices and help the state meet its aggressive RPS target of 33 percent by 2020. Storage can also be used as a substitute for expensive new construction of transmission lines and infrastructure and perform crucial ancillary services on the grid.

AB 2514 requires the California Public Utilities Commission (CPUC) to establish roadmaps for major electricity providers to procure energy storage systems. These systems must be both “viable” and “cost-effective,” which is a tricky part of the puzzle, as many of the storage technologies in use today—batteries, in particular—might not satisfy the cost-effectiveness requirement of the bill. Other technologies, such as pumped hydro or CAES, may stand a better chance of coming in on budget.

Widespread deployments of storage won’t happen overnight, though. The bill requires private electric companies to establish their procurement targets by October 2013, and the first stage is to be implemented by December 2015—over five years from now. The dates are set even further back for publicly owned utilities, to 2014 and 2016, respectively. That may give battery vendors enough time to drive down the costs of their systems and have a chance at this market.

The act leaves little room for utilities to avoid using energy storage in future build-outs of renewable energy and fossil fuel-based assets that provide ancillary services. The first version of the bill, which was eventually struck down, would have required the state’s three largest utilities—PG&E, SCE, and SDG&E—to have energy storage systems with a capacity measuring 2.25 percent of average peak electrical demand by 2020. The final version defers the target-setting to a later time.

Of the 16 DOE-funded “Energy Storage Demonstrations” announced in November 2009, seven will be installed at sites in California for household names including SCE and PG&E. These, along with other announcements such as Community Energy Storage (CES) projects, represent almost three-fifths of all energy storage capacity announced for the U.S. in the last year. The results of these demonstrations will provide hard data on the performance and costs associated with grid-connected storage as CPUC establishes its 2015 and 2020 targets.

Article by Eric Bloom, appearing courtesy Matter Network.