California Utilities File Energy Storage Procurement Plans

March 26, 2014

In October 2013, California broke new ground in energy policy with an energy storage procurement mandate. The California Public Utilities Commission (CPUC) unanimously approved a decision (D.13-10-040 or the Decision) requiring the state's investor-owned utilities (IOU) to procure 1.325 gigawatts of energy storage by 2020. The Decision implemented A.B. 2514 (2010),1 and made California the first state to implement an energy storage procurement mandate. At the end of February, Southern California Edison (SCE), Pacific Gas & Electric (PG&E), and San Diego Gas & Electric (SDG&E) each submitted applications to the CPUC for approval of their energy storage procurement plans, providing a road map for how energy storage companies can participate.

Of the 1.325 gigawatts, SCE and PG&E are each required to procure 580 megawatts, while SDG&E is required to procure 165 megawatts by 2020, with all such projects installed by 2024. The CPUC's A.B. 2514 program also sets biennial procurement targets for each utility and allows utilities to own up to half of the storage assets procured under the program. Recognizing the numerous "use cases" for energy storage, the Decision separated the storage procurements into three categories of resources: transmission-connected, distribution-connected, and customer-sided applications. In an effort to encourage a diversity of new technologies, energy storage systems in existence prior to 2010 will not count towards the procurement targets and the program excludes large-scale pumped hydro projects greater than 50 megawatts.

As required by the CPUC, each utility's first request for offers (RFO) under the A.B. 2514 program will be launched on December 1, 2014. The procurement plans set procurement targets for each utility's 2014 RFO, adjusted based on any CPUC-approved energy storage projects that a utility has already procured since January 1, 2010, or expects to procure. Such previously approved projects (including under the Self-Generation Incentive Program, SCE's Local Capacity Requirements, Permanent Load Shifting, and other programs) are permitted to count towards the utility's targets under D.13-10-040. The procurement plans revealed the amount of new storage capacity each utility plans to procure in 2014 as follows:

2014 Energy Storage Procurement Targets
Adjusted for Existing Procurement

(All figures represent MW)
Utility Transmission Distribution Customer Total New Procurement in 2014
 PG&E  50 21.5 6.5 78
SCE 50 16.32 0 66.32
SDG&E 10 6 0 16

The most notable program change proposed in the applications came from PG&E, which requested that the CPUC include biogas as an eligible energy storage technology. Such a designation could allow projects such as dairy digesters, landfill gas, or municipal solid-waste conversion to participate in the energy storage procurement. In addition, if such biogas projects are deemed to be eligible by the CPUC in its decision on the applications, PG&E has proposed that 2.52 MW of dairy biogas resource installed since the beginning of 2010 be counted toward the procurement targets.

The utility applications include a variety of information about the procurement process, including proposed forms of energy storage procurement contracts with the utilities and the proposed methodologies the IOUs plan to use to evaluate the cost-effectiveness of bids. Over the next several months, there will be opportunities to intervene at the CPUC and shape the procurement plans. Protests and responses to the applications are due on April 7, 2014. Replies to such protests and responses will be due April 18, 2014, and a pre-hearing conference will be held on May 14, 2014. Final approval is expected to occur in September 2014.

If you are interested in learning more about California's new energy storage procurement process or other energy storage development opportunities, or if you seek to intervene in the utilities' applications, please contact Peter Mostow, Todd Glass, Sheridan Pauker, or Paul Vercruyssen in Wilson Sonsini Goodrich & Rosati's energy innovation and clean technology practice.

1 California Public Utilities Code § 2836 et. seq.