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Energy storage and policy

Today's column will review a few good documents as well as sources of discussion around energy storage to set the stage for tomorrow's look at comments received by the California Public Utility Commission (CPUC) in the past week on its policy deliberations.

As you may know, California is under intense pressure to balance supply and load in a constrained system, while adding prodigious amounts of renewable energy, cutting its carbon footprint and avoiding the debacles of the Enron era of a decade ago. Lots going on, thus we often look California's way to anticipate issues likely to crop up elsewhere in the country.

The CPUC is currently deliberating how to implement the provisions of Assembly Bill 2514, which conceivably might mean mandated use of energy storage technologies and applications. You can get a sense of the legislative language here and the arguments of proponents such as the California Energy Storage Alliance (CESA) here.

For the CPUC, consideration of AB 2514 means reviewing the technologies, applications, use cases, costs/benefits, market impacts and regulatory options before it. This past November the California Energy Commission held a workshop to receive the report, "2020 Strategic Analysis of Energy Storage in California," and hear from its authors. The report is well worth your attention and it is being cited by parties commenting on the CPUC proceedings.

Subsequent to that presentation, one faithful Intelligent Utility reader posted his critical appraisal of the report in an essay on our site under our "Industry Expert" column, titled, "Energy Storge: Not So Fast." The fundamental point: markets should determine the right application and the right price; mandates by regulators will further distort market forces and should be avoided.

In response, the report's authors corrected several misperceptions about the intent of the report reflected in the critique we printed. My column, "Energy Storage in California: Prose and Cons," delivered those clarifications. Essentially, the report delivered policy options without advocating any of them; it left decisions up to the CPUC's discretion, which must balance the public benefits against utilities' stances and vendors' advocacy.

Predictably, California's largest utilities have made the case that mandated levels of energy storage procurement don't make sense due to the ripple-like impacts of such a move. Storage, unlike many technologies, can have a ripple effect across the grid and electricity markets. As you place value on storage applications in one place, you distort the electricity market, devaluing other applications in the process, goes the argument.

In the column "Straight Talk on Energy Storage," Southern California Edison attempted to clear the fog around the issues from one utility's perspective. I found its arguments clear and persuasive and you may as well.

In fact, in a hearing before the California Energy Commission, four of the largest California utilities (two investor-owned, two municipals) made several key points about their position and their research into storage's potential roles. We covered that hearing in "Four Ways to Think About Energy Storage."

Comments by those four utilities follow here, because they set up the utility perspective—admittedly, hardly the last word—on several key issues that must be addressed in the CPUC's deliberations.

First, who should own grid-connected energy storage?

Second, how will California's utilities implement the energy storage development, demonstration and deployment plan for meeting AB 2514 requirements?

Consider the following remarks, peruse the sources noted here and we'll meet back here tomorrow to consider further comments from various parties (besides the utilities) just filed with the CPUC in this proceeding.

"Energy storage is not a single application or technology," according to San Diego Gas & Electric (SDG&E).

"Identifying where and how storage may be used on the electric system (i.e., applications) is a logical and ideal starting point for discussions about storage," according to Southern California Edison. "'Storage' as a unified concept is impractical and misleading."

"The focus should be on the cost effectiveness of benefits delivered," according to the Sacramento Municipal Utility District (SMUD). "We shouldn't pursue storage for storage's sake, we should pursue the value it provides. Other technologies such as renewables, energy efficiency and load control may provide equivalent value more cost effectively."

On that question—is storage really an answer to real-world needs or would existing alternatives meet the same requirements?—Pacific Gas and Electric Co. (PG&E) had the following thoughts: First, identify the need, which is technology neutral. Then use a competitive process to determine the best resource to meet that need.

All the utilities were of one mind on the question of mandates.

"Do not create a set aside for storage," PG&E said. "Set asides lead to sub-optimal solutions and higher customer costs."

Further, "wide-scale deployment of energy storage technologies is not yet mature," said SDG&E. "Energy storage systems are currently expensive. Energy storage systems should be assessed on a case-by-case basis."

You'll find additional resources in the following articles:

"Energy Storage Economics 101"

"Energy Storage: Drivers and Goals"

"Energy Storage Research Just Published"

Phil Carson
Intelligent Utility Daily

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