California takes deliberative stance on storage
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On July 2, California regulators said they would take their staff's advice and institute a framework for further analysis of issues related to energy storage and possible procurement targets for utilities outlined in the state's Assembly Bill 2514.
As energy storage at the utility level is a multi-faceted subject, the decision makes sense in many ways. I say this having rapidly perused the proposed decision by the California Public Utilities Commission and without having read the responses from the myriad parties to the proceeding. We'll follow up with more nuance and arguments from the various sides.
Utilities are exploring the applications as well as the business cases for storage. They don't want to be ordered to implement a technology that, even if cost recovery were to be guaranteed, doesn't have an established business case. Vendors and clean energy advocates have argued that until utilities implement the technology in earnest, real-world conclusions cannot be drawn. Others may take one side or the other, but warn against "paralysis by analysis."
The CPUC favored the approach advocated by Southern California Edison in a white paper, which we abstracted in the column, "Straight Talk on Energy Storage."
From the July 2 proposed decision:
"This approach would bundle certain operational benefits as applied to the electric system and match each application to storage technology types," the CPUC's proposed decision said. "[The] identification of specific applications and associated uses/value streams of storage would allow the commission and parties to identify the issues and impediments presented for each application and the responsible regulatory agency.
"This analysis would then allow the commission to assess and prioritize whether and how it could assist in resolving the application-specific issues.
"Parties' comments suggest that there is general agreement with SCE's application-based approach."
Of course, the phrase "general agreement" could send a few folks right up a wall, so we'll look at the comments that poured forth this month in the wake of this ruling.
And we'll note that one of the issues that remains unclear is whether the CPUC's proceeding in the matter "should be proactively assisting in the commercial deployment of energy storage projects or considering all storage and non-storage alternatives equally." But of course there are other issues, a laundry list of hurdles either to energy storage deployment or to how it should be treated under regulatory and market circumstances.
For today's purposes, we'll just add a note on what's apparently next.
Developing an approach for analyzing energy storage will lean on the CPUC staff proposal, which suggests addressing the regulatory framework, cost effectiveness, procurement objectives and an energy storage roadmap.
If you read through the relatively brief proposed decision, I think you'll see, in part, the anatomy of a smart grid approach that emphasizes careful consideration of the potential (even multi-purpose) applications to a proposed technology, alternatives, cost-effectiveness and the wisdom of mandates when each utility's system is different. It also reflects the potential unintended consequences of what at first blush seems to be an irrefutable truth: if energy storage is the holy grail, let's simply force adoption of it, now.
Lots more to discuss here, as each area of the proposed framework for analysis, from applications to alternatives to cost effectiveness to changes in regulation and market structures and definitions have much broader implications than simply considering energy storage in California.
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