If the California Public Utilities Commission (CPUC) has its way, investor-owned utilities (IOUs) around the state will have a mandate to acquire 1,325 MW of storage capacity by 2020 as part of the plan to have one-third of all electricity come from renewable sources, according to a report from Bloomberg.
The CPUC’s proposed ruling would allow IOUs to acquire energy storage as part of the “general rate case” process by which utilities build infrastructure and pass the cost on to their rate payers.
Energy storage is widely viewed as a critical piece of adding more renewable sources to the grid, given its ability to smooth out the peaks and valleys that come with renewable sources like solar PV and wind. Possible storage technologies include lithium-ion batteries and even molten salt to store heat to later run a turbine to produce electricity. Cost of this exercise? As much as $3 billion, or $2.26/Watt.
The proposed rule making is the result of legislation, AB 2514, by our old friend Nancy Skinner, and it is evident that the CPUC “gets it”:
Energy storage has the potential to transform how the California electric system is conceived, designed, and operated. In so doing, energy storage has the potential to offer services needed as California seeks to maximize the value of its generation and transmission investments: optimizing the grid to avoid or defer investments in new fossil fuel-powered plants, integrating renewable power, and minimizing greenhouse gas emissions.
The proposal allocates portions of the 1,325 total to each IOU with SCE targeted to procure 580 MW of storage, of which 80 MW should be customer side, as opposed to transmission or distribution connected.
A final adoption of storage targets is due in October.
Meanwhile, in a separate but related announcement, SolarCity made some news when it disclosed that it intends to incorporate a storage offering by 2015 that would serve customers without net metering. In other words, the storage system would be capable of storing any excess energy created by the solar power system and then feeding it back to local loads without ever sending any energy back onto the grid. If such a system could be deployed in a cost-effective manner, it would eviscerate the utility’s “fairness” argument in opposing the additional penetration of solar.
But can it be cost-effective? SolarCity is hoping that its partnership with Tesla Motors will enable it to procure battery packs at a low enough cost to succeed in this new arena.
Of course, a successful energy storage system is more than just batteries, and as we head to Intersolar in a little over a week, a great deal of attention there will be devoted to the energy storage realm. We will be there and will report back after the show.