Existing law requires the Public Utilities Commission to adopt a process for each load-serving entities to file an integrated resource plan and a schedule for periodic updates to the plan and to ensure that load-serving entities, among other things, ensure system and local reliability on a near-term, mid-term, and long-term basis and maintain a diverse portfolio of energy resources.

This bill would require the commission to ensure that diverse energy storage duration classes are modeled modeled, as specified, and that authorize energy storage technology that meets an energy storage classs minimum duration requirements is to be modeled within that class to ensure technology neutrality.

Under existing law, a violation of any order, decision, rule, direction, demand, or requirement of the PUC commission is a crime.

Because a violation of a PUC commission action implementing the bills requirements would be a crime, this bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Under existing law, a violation of any order, decision, rule, direction, demand, or requirement of the PUC is a crime.

Because a violation of a PUC action implementing this the bills requirements would be a crime, the this bill would impose a state-mandated local program.

Existing law establishes the Multifamily Affordable Housing Solar Roofs Program, also known as the Solar on Multifamily Affordable Housing Program. Existing law requires the commission, as part of the program, to award monetary incentives for qualifying solar energy systems, as defined, that are installed on multifamily residential property of at least 5 rental housing units that is, or will be, operated to provide deed-restricted low-income residential housing, as defined, and that meet one or more specified requirements, including that at least 66% of the households have incomes at or below 80% of the area median income, through December 31, 2032.

This bill would state the intent of the Legislature to enact future legislation to facilitate the installation of solar energy systems and solar energy storage technologies in multifamily housing.

Date of Hearing: August 7, 2024

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Buffy Wicks, Chair

SBPCA Bill Id:SB 1508

Author:(Stern) – As Amended Ver:May 16, 2024

Urgency: No State Mandated Local Program: Yes Reimbursable: No

SUMMARY:

This bill requires each load-serving entity (LSE), such as an electric utility, in developing its integrated resource plan (IRP) pursuant to existing law, to model diverse energy storage duration classes.

Specifically, this bill requires the California Public Utilities Commission (CPUC), in adopting a process for each LSE to file an IRP with the CPUC, to ensure that diverse energy storage duration classes are modeled, including long-duration energy storage and multiday energy storage, if the CPUC determines multiday energy storage is reasonably available.

FISCAL EFFECT:

It is unclear whether the CPUC will need new resources to incorporate new requirements into its IRP program, since existing law already requires the CPUC to undertake significant activity to adopt a process by which an LSE is to file an IRP, and this bill simply modifies that process.

That said, the CPUC concludes that, as a result of this bill, it will need to determine whether enough multiday storage is reasonably available and to model energy storage types when developing portfolios and the transmission planning process. The CPUC estimates needing $255,000 annually ongoing for a utilities engineer to prepare and run modeling, as well as an annual contract with an outside consultant, costing $310,000 each year. In addition, the CPUC asserts it will need $250,000 once every five years for computing hardware. All costs would come from the Public Utilities Commission Utilities Reimbursement Account.

COMMENTS:

1. Purpose. The author contends achievement of the state’s clean energy goals requires planning for deployment and use of long-duration energy storage and asserts that the CPUC is failing to do so. According to the author:

California has made remarkable progress in deploying solar and short-duration, lithium-ion battery storage on its way to transitioning to 100 percent clean energy. It was recently reported that clean energy resources like solar, wind, hydro, and batteries, have exceeded grid demand at some point during the day for 34 days straight in April and May. However, in order to build on this progress and utilize this excess clean power for use overnight or during peak summer demand months, we have to ensure our state energy agencies are including long duration and multi-day energy storage in their energy planning. By incorporating a wider range of energy storage technologies, we can enhance grid resiliency and support the state's transition away from fossil fuels.

1. Background. State law requires each electric utility, or utility-like entity—both privately owned and municipally owned—to adopt and update every two years what are known as “integrated resource plans,” or IRPs, that demonstrate how the utility will procure energy resources to ensure California has a safe, reliable and cost-effective electrical supply while meeting its environmental and related goals. Statute requires the privately owned utilities, such as Pacific Gas and Electric and San Diego Gas and Electric, commonly referred to as investor-owned utilities or IOUs, to each submit their IRP to the CPUC for review and approval. (In contrast, statute requires the governing body of a large municipally owned utility (also known as a POU) to adopt an IRP and submit it to the California Energy Commission (CEC) for CEC review, but CEC has no authority to approve or reject the IRP).

To begin the IRP process for the privately owned IOUs, the CPUC develops a system-wide plan that chooses the lowest cost energy resources consistent with the state’s clean energy policies but otherwise without regard to technology. This is known as the “preferred system plan.” The electric utilities use this preferred plan as the starting point to develop their own plans, which may select for resources that differ from those included in the CPUC’s system-wide plan, so long as they do not increase costs and comply with the state’s clean energy goals.

The CPUC includes in its IRP process modeling of energy storage, and the CPUC’s preferred system plan calls for procurement of long-duration storage. Nonetheless, supporters of this bill contend the CPUC’s process, in regards to energy storage, is not technology neutral and its lack of neutrality excludes consideration of certain valuable and viable resources.

This contention can be seen in comments filed by energy storage company GreenGenStorage, LLC (GreenGen) with the CPUC regarding a proposed CPUC decision on the preferred system plan. According to GreenGen:

The [preferred system plan] has identified 8-hour lithium-ion (Li-Ion) as the majority of long-duration storage and excludes 8-hour reliable, cost-effective, clean energy technologies like pumped storage lithium-ion (Li-Ion) as the majority of long-duration storage and excludes 8-hour reliable, cost-effective, clean energy technologies like pumped storage…The exclusive use of the 8-hour long-storage duration category for Li-Ion results in less diverse and fewer long duration storage resources being identified for resource and transmission planning purposes. Exacerbating the issue is the higher 12-hour duration standard for pumped storage projects, which is neither a helpful proxy for CA projects in development, nor consistent with the CPUC’s own definition of long duration storage.

Understanding the inputs to the CPUC’s IRP modeling is technically complex, and the process is opaque to those not directly involved in it. Nonetheless, there is no opposition to the current version of this bill, and there seems to be no harm in directing each LSE, in developing its IRP, to model diverse energy storage duration classes, as this bill does.

Analysis Prepared by: Jay Dickenson / APPR. / (916) 319-2081

Date of Hearing: July 1, 2024

ASSEMBLY COMMITTEE ON UTILITIES AND ENERGY

Cottie Petrie-Norris, Chair

SBPCA Bill Id:SB 1508

Author:(Stern) – As Amended Ver:May 16, 2024

SENATE VOTE: 30-8

SUBJECT: Electricity: integrated resource plans: energy storage systems: modeling

SUMMARY: Requires the California Public Utilities Commission (CPUC) to ensure that diverse energy storage duration classes are modeled, including long-duration energy storage and multiday energy storage, if the CPUC determines multiday energy storage is reasonably available. To ensure technology neutrality, energy storage technology that meets an energy storage class’s minimum duration requirements may be modeled within that class.

EXISTING LAW:

1. Vests the CPUC with regulatory authority over public utilities, including electrical corporations, while local publicly owned electric utilities (POUs) are under the direction of their governing boards. (Article XII of the California Constitution)
2. Establishes a renewables portfolio standard (RPS) and requires all retail sellers, including investor-owned utilities (IOUs), energy service providers (ESPs), and community choice aggregators (CCAs), to procure a minimum quantity of electricity products from eligible renewables energy resources, as defined, so that total kilowatt hours of those products sold to their retail end-use customers achieves 25% of retail sales by December 31, 2016, 33% by December 31, 2020, 44% by December 31, 2024, 52 percent by December 31, 2027, and 60% by December 31, 2030. (Public Utilities Code §399.15)
3. Defines “load-serving entities” as IOUs, ESPs, and CCAs. (Public Utilities Code § 380 (k))
4. Requires the CPUC to identify a diverse and balanced portfolio of resources needed to ensure a reliable electricity supply that provides optimal integration of renewable energy in a cost-effective manner as part of the integrated resource planning (IRP) process. (Public Utilities Code §454.51)
5. Requires the CPUC to adopt a process for each LSE to file an IRP and a schedule for a periodic updates to the plan to ensure that LSEs accomplish specified objectives. Requires each LSE to prepare and file an IRP consistent with those objectives on a time schedule directed by the CPUC and subject to CPUC review. (Public Utilities Code § 454.52)
6. Establishes the policy of the state that eligible renewable energy resources and zero-carbon resources supply 90% of all retail sales of electricity to California end-use customers by December 31, 2035, 95% of all retail sales of electricity to California end-use customers by December 31, 2040, and 100% of all retail sales of electricity to California end use customers by December 31, 2045. (Public Utilities Code §454.53)
7. Requires that the IRP of each LSE contribute to a diverse and balanced portfolio of resources needed to ensure a reliable electricity supply that provides optimal integration of renewable energy resources in a cost-effective manner, meets the emissions reduction targets for greenhouse gases (GHG) established by the State Air Resources Board (ARB) for the electricity sector, and prevents cost shifting among LSEs. (Public Utilities Code § 454.54)
8. Requires the CPUC to open a proceeding to determine appropriate targets, if any, for each LSE, to procure viable and cost-effective energy storage systems, as defined, to be achieved by specified dates, and authorizes the CPUC to consider a variety of possible policies to encourage the cost-effective deployment of energy storage systems. (Public Utilities Code §2836(a))
9. Requires the governing board of each POU to initiate a process to determine appropriate targets, if any, for the utility to procure viable and cost-effective energy storage systems and authorizes the governing board to consider a variety of possible policies. (Public Utilities Code §2836(b))
10. Requires each IOU’s renewable energy procurement plan to require the utility to procure new energy storage systems that are appropriate to allow the utility to comply with the energy storage system procurement targets and policies and to address the acquisition and use of energy storage systems in order to achieve specified purposes. (Public Utilities Code §2837)
11. Requires each LSE to submit, by specified dates, reports to the CPUC demonstrating that it has complied with the energy storage system procurement targets and policies adopted by the CPUC. (Public Utilities Code §2838)
12. Designates the California Air Resources Board (CARB), via the California Global Warming Solutions Act of 2006, as the state agency responsible for monitoring and regulating sources emitting greenhouse gases (GHGs). Requires CARB to prepare and approve a scoping plan for achieving the maximum technologically feasible and cost-effective reductions in GHG emissions and to update the scoping plan at least once every five years. Requires CARB to conduct a series of public workshops to give interested parties an opportunity to comment on the plan and requires a portion of those workshops to be conducted in regions of the state that have the most significant exposure to air pollutants, including communities with minority populations, communities with low-income populations, or both. (Health and Safety Code § 38561)

FISCAL EFFECT: According to the Senate Committee on Appropriations, this bill will result in unknown ongoing annual and one-time costs, each likely in the hundreds of thousands of dollars from ratepayer funds for the CPUC to make a determination on multiday energy storage.

BACKGROUND:

California’s Ambitious Goals – SB 100 (De León, Chapter 312, Statutes of 2018) established the state policy that renewable and zero-carbon resources supply 100% of retail sales and electricity procured to serve all state agencies by 2045.^[1] This policy was recently updated under SB 1020 (Laird, Chapter 361, Statutes of 2022), which accelerated the requirement to 100% by 2035 for state agencies, and established interim targets to meet the sector-wide 100% goal. The updated 2022 Scoping Plan^[2] released by CARB in December 2022 calls for targets of 38 million metric tons of carbon dioxide equivalent (MMTCO2e) in 2030 and 30 MMTCO2e in 2035 in the electricity sector.^[3] These sector-wide targets have shifted the manner in which California’s utilities procure their resources and plan their infrastructure deployment. While California has made some strides towards a clean energy future, meeting these ambitious goals over the next two decades will require focused, strategic, and deliberate actions.

SB 100 Report – In March 2021, the California Energy Commission (CEC), CPUC, and CARB released the joint SB 100 report which includes an initial assessment of the additional energy resources and the resource building rates needed to achieve 100% clean electricity, along with the associated costs. The first report identified preliminarily that the state may need, on average, six gigawatts (GW) of new renewable and energy storage annually to meet the SB 100 goals.^[4] The report is required to be updated every four years. The second SB 100 report cycle is intended to pick up the analytical threads left open from the first report, and a final report is scheduled to be issued by the end of 2024.

Integrated Resource Planning (mid- to long-term procurement) – The CPUC developed the IRP process pursuant to SB 350 (De León, Chapter 547, Statutes of 2015). IRP provides the umbrella process by which the CPUC oversees long-term procurement for its regulated LSEs, which serve approximately 75% of the state.^[5] This process ensures that California’s electric sector meets its GHG reduction goals while maintaining reliability at the lowest possible costs. During the IRP process, the CPUC develops an estimate for what those LSEs should be procuring (the Reference System Plan), requires the LSEs to file their individual procurement plans, and then approves those plans based on their consistency with collective system needs – these plans are aggregated into a portfolio called the Preferred System Plan. The Preferred System Plan serves as the basis for a number of additional planning processes, including the SB 100 report and the Transmission Planning Process by the CAISO. Existing law, within the IRP framework, also allows the CPUC to order additional resource procurement outside of individual LSEs’ IRPs in order to meet decarbonization goals.

The IRP operates on a 2-year planning cycle, and forecasts system need over a decade into the future. The most recent IRP analysis identified almost 56 GW of new resources needed by 2035,^[6] arising from a mix of geothermal, biomass, land-based wind, offshore wind, solar battery storage, pumped storage, and long duration storage.^[7] This portfolio represents a more than 66% increase over a span of 10 years of the current nameplate capacity on the system; an enormous goal.

Renewables Portfolio Standard (RPS) – The California RPS program began with a mandate to all retail sellers to provide 20% RPS-eligible generation by the end of 2017.^[8] The initial RPS statute sought to establish a market for renewables, by financially incentivizing long-term contracting between electricity provider and above-market renewable generators. This mandate sought market stimulation, creation of a local economy, and a modicum of environmental benefits. As California has codified more and more clean energy and climate goals, the Legislature has modified the goals and details of the RPS program to urge progress. Compliance with the RPS program occurs separately, but in concert with, the resource mixes selected by LSEs’ IRP filings. Amended most recently by SB 100, the program requires LSEs to deliver 60% of their retail electricity from clean, renewable resources by 2030. Beyond 2030, LSEs must continue increasing the remaining balance of their portfolios that is zero-carbon to meet the final 2045 100% zero-carbon electricity requirement.

Benefits of Energy Storage – Energy storage systems, as defined in statute, are comm­­ercially available technologies that absorb energy, store it for a specified period, and then dispatch the energy when needed. As California strives to meet its clean energy and climate goals, storage systems provide several benefits for energy producers and consumers alike:

• Helps meet energy demand: When supply is high and demand is low, storage can store excess energy for later use. When demand is high and supply is low, storage can discharge stored energy to the electric grid for use, avoiding shortages or outages.^[9]
• Strengthens the electric grid: Due to its ability to discharge energy quickly when needed, energy storage can rapidly respond to changes on the electricity grid. As such, energy storage can help add flexibility and resilience to the electric grid.^[10]
• Supports the integration of renewable energy: While some renewable energy technologies—such as wind and solar—experience intermittent periods of “down-time” during which energy cannot be produced, electricity demand must still be met. Storage helps plug these gaps by providing energy during these periods of variable output and therefore stabilizing the electricity supply.^[11]

Energy storage comes in many forms, including pumped hydroelectricity, lithium-ion batteries, flow batteries, and other technologies. Long-duration storage can store energy for eight hours and more, and is expected to provide even greater capacity as technological advancements continue to evolve.

Energy Storage in California – AB 2514 (Skinner, Chapter 469, Statutes of 2010) required the CPUC to determine appropriate targets for LSEs to procure energy storage. The CPUC was required to develop the targets by October 1, 2013. The bill also required POUs to establish their own targets for procurement of energy storage systems by October 1, 2014. This legislation was the first of its kind in the United States. By that, the CPUC issued a decision establishing the state’s first energy storage procurement target of 1,325 megawatts (MW) by 2020.^[12] According to the CEC, California currently has over 3.3 GW of installed energy storage, with roughly 15 GW needed by 2032 (per the CPUC), of which 1 GW is needed from long-duration storage.

CEC’s Long Duration Energy Storage Program – As the electrical grid continues to face reliability challenges in its transition to clean energy generating resources, driven by an increasing number of retired resources and more climate related weather events, there will be a greater need for long duration storage of these intermittent clean energy resources that can extend from just one evening to multiple days. With a $330 million fund set aside at the CEC, the state has invested $140 million so far into the demonstration of non-Lithium-ion energy storage technologies and projects to implement long duration energy storage systems across California.^[13] A major focus of the program is to foster diversity and competition in the market. One of the most recently awarded projects is a $30 million project with PG&E for a first-of-its-kind 5 MW/100-hour iron-air technology.^[14] The project is expected to begin operation by the end of 2025.

Central Procurement Entity – AB 1373 (E. Garcia, Chapter 367, Statutes of 2023) authorized the CPUC to request the Department of Water Resources (DWR) to act as a central procurement entity (CPE) to conduct procurement of certain eligible long lead-time resources until January 1, 2035. This legislation is specifically intended to stimulate development of resources such as offshore wind, long-duration energy storage and other large-scale, long lead-time resources that are difficult for individual or smaller load-serving entities to procure. Per statute, the CPUC is required to make an initial need determination for procurement by DWR by September 1, 2024. If a need is identified, the CPUC must make a request to DWR to exercise its CPE mechanism within six months. The CPUC must then allocate the costs and benefits of any procurement conducted by DWR. The CPUC has been seeking comments on the central procurement mechanism from parties to the CPUC’s integrated resource planning proceeding. The comment period ended in May 24, 2024.

COMMENTS:

1. Author’s Statement. According to the author, “California has made remarkable progress in deploying solar and short-duration, lithium-ion battery storage on its way to transitioning to 100 percent clean energy. It was recently reported that clean energy resources like solar, wind, hydro, and batteries, have exceeded grid demand at some point during the day for 34 days straight in April and May. However, in order to build on this progress and utilize this excess clean power for use overnight or during peak summer demand months, we have to ensure our state energy agencies are including long duration and multi-day energy storage in their energy planning. By incorporating a wider range of energy storage technologies, we can enhance grid resiliency and support the state's transition away from fossil fuels.”
2. Purpose of the Bill. As discussed earlier, California established the first energy storage target in the nation in 2010 with the passage of AB 2514 (Skinner). According to the author and supporters of this bill, lithium-ion batteries, which had a 4-hour storage capacity, were the first grid-scale battery technology that was commercially available at the time; as a result of timing, these short-duration, lithium-ion batteries have been the primary technology installed as a means to achieving those state targets. They write, “Since AB 2514 was passed, energy markets, technologies and state goals have evolved significantly. To meet these goals and maintain electric reliability most cost-effectively, with the least land use, a broader set of energy storage technologies are needed, including long-duration and multi-day energy storage.”
3. Matter of Definitions. Many promising long-duration energy storage technologies are still emerging and maturing and are not yet commercially available. This bill requires the CPUC to ensure that diverse energy storage duration classes are modeled, including long-duration energy storage. There is no single definition of “long duration”, but according to the National Renewable Energy Laboratory (NREL), the most commonly cited number is 10+ hours. NREL also states that the context regarding application matters when discussing what is meant by “long duration.” For instance, a 6-hour battery might be able to provide firm capacity–the ability to meet peak demand and cover any other adverse conditions like blackouts–in some situations, whereas in others, a storage system with 100 hours of duration might be more necessary. As such, without standardized definitions, it may be challenging for regulatory agencies to proactively consider these technologies in their planning processes.
4. Cost-Effectiveness. Facilitated by stimulus funding for demonstration projects, energy storage technology is rapidly advancing. However, the cost-effectiveness of energy storage varies depending on numerous factors, including: the technology used, the expected life of the system, the expected cost and frequency of ongoing maintenance, the dispatchability of the technology, the location of the system, and how much can be incorporated into the electrical grid. As eluded earlier, long-duration energy storage systems are still nascent technologies, so the valuation of their benefits relative to their costs is yet to be fully grasped. Since the cost to procure these technologies will be borne by ratepayers, it may be worthwhile for energy planners to understand these costs first which will likely influence the pace and scale of the adoption of energy storage in general.
5. Prior Legislation

SB 1020 (Laird) established interim targets to reach SB 100 clean energy goals and required state agencies to purchase 100 percent zero carbon electricity by 2035 to serve their load, including obligations on State Water Project. Status: Chapter 361, Statutes of 2022

SB 423 (Stern) required the CEC to submit to the Legislature an assessment by December 31, 2023, of firm zero-carbon resources that support a clean, reliable, and resilient electrical grid and will help achieve the existing statutory goal of ensuring renewable energy and zero-carbon resources supply 100 percent of all retail sales of electricity to California customers by December 31, 2045. Status: Chapter 243, Statutes of 2021

SB 100 (De León) established the 100 Percent Clean Energy Act of 2017 which increases the RPS requirement from 50 percent by 2030 to 60 percent, and created the policy of planning to meet all of the state's retail electricity supply with a mix of RPS-eligible and zero-carbon resources by December 31, 2045, for a total of 100 percent clean energy. Status: Chapter 312, Statutes of 2018

SB 350 (De León) enacted the "Clean Energy and Pollution Reduction Act of 2015," which established targets to increase retail sales of renewable electricity to 50 percent by 2030 and double the energy efficiency savings in electricity and natural gas end uses by 2030 and also required the CPUC to develop an integrated resource planning process. Chapter 547, Statutes of 2016

AB 2227 (Bradford) deleted provisions from AB 2514 on POUs and clarified the CEC’s role as not having authority to enforce the requirements in AB 2514. Status: Chapter 606, Statutes of 2012

AB 2514 (Skinner) required the CPUC to determine appropriate targets, if any, for load serving entities to procure energy storage systems. This bill required LSEs to meet any targets adopted by the CPUC by 2015 and 2020. The bill required POUs to set their own targets for the procurement of energy storage and then meet those targets by 2016 and 2021. Status: Chapter 469, Statutes of 2010

REGISTERED SUPPORT / OPPOSITION:

Support

Advanced Energy United
California Environmental Voters (formerly Clcv)
Cleanearth4kids.org
Environmental Defense Fund
Form Energy
Greengenstorage LLC
Hydrostor, INC.
Union of Concerned Scientists

Opposition

None on file.

Analysis Prepared by: Lina V. Malova / U. & E. / (916) 319-2083

1. Public Utilities Code §454.53 ↑

2. In its previous draft plan, CARB set the electric sector targets at 38 million metric tons of carbon dioxide equivalent (MMCEC, “TCO2e) in 2030 and 30 MMTCO2e in 2045 ↑

3. Pg.75, CARB, “DRAFT 2022 Scoping Plan Update,” May 10, 2022 ↑

4. CEC, “California Releases Report Charting Path to 100 Percent Clean Electricity;” https://www.energy.ca.gov/news/2021-03/california-releases-report-charting-path-100-percent-clean-electricity ↑

5. Public Utilities Code § 454.51-454.53 ↑

6. 25 MMT scenario resource stack; CPUC, Decision Adopting 2023 Preferred System Plan and Related Matters, and Addressing Two Petitions for Modification, D. 24-02-047; https://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M525/K918/525918033.PDF ↑

7. Table 4, pg. 68; CPUC, D. 24-02-047; Ibid. ↑

8. SB 1078 (Sher, Chapter 516, Statutes of 2002) ↑

9. Union of Concerned Scientists; “Energy Storage: How it Works and Its Role in an Equitable Clean Energy Future;” https://www.ucsusa.org/resources/how-energy-storage-works ↑

10. Union of Concerned Scientists; “Energy Storage in California”; https://ucs-documents.s3.amazonaws.com/clean-energy/energy-storage-in-california-explainer.pdf ↑

11. Ibid ↑

12. D. 13-10-040 ↑

13. CEC, “Long Duration Energy Storage Program”; https://www.energy.ca.gov/programs-and-topics/programs/long-duration-energy-storage-program#:~:text=The%20Long%20Duration%20Energy%20Storage%20program%20invests%20up%20to%20%24330,energy%20storage%20systems%20across%20California. ↑

14. ↑

 THIRD READING  

Bill No: SB 1508

Author: Stern (D)

Amended: 5/16/24

Vote: 21

SENATE ENERGY, U. & C. COMMITTEE: 13-3, 4/22/24

AYES: Bradford, Ashby, Becker, Caballero, Dodd, Durazo, Gonzalez, Limón, Min, Newman, Rubio, Skinner, Wahab

NOES: Dahle, Seyarto, Wilk

NO VOTE RECORDED: Eggman, Grove

SENATE APPROPRIATIONS COMMITTEE: 5-2, 5/16/24

AYES: Caballero, Ashby, Becker, Bradford, Wahab

NOES: Jones, Seyarto

SUBJECT: Electricity: integrated resource plans: energy storage systems: modeling

SOURCE: Author

DIGEST:

This bill requires the California Public Utilities Commission (CPUC) to ensure that diverse energy storage duration classes are modeled, as specified, and authorize energy storage technology that meets an energy storage class’s minimum duration requirements to be modeled within that class to ensure technology neutrality.

ANALYSIS:

Existing law:

1. Establishes and vests the CPUC with regulatory authority over public utilities, including electrical corporations, while local publicly owned electric utilities are under the direction of their governing boards. (Article XII of the California Constitution)
2. Establishes a renewables portfolio standard (RPS) and requires all retail sellers, including investor-owned utilities (IOUs), energy service providers (ESPs), and community choice aggregators (CCAs), to procure a minimum quantity of electricity products from eligible renewables energy resources, as defined, so that total kilowatt hours of those products sold to their retail end-use customers achieves 25 percent of retail sales by December 31, 2016, 33 percent by December 31, 2020, 44 percent by December 31, 2024, 52 percent by December 31, 2027, and 60 percent by December 31, 2030. (Public Utilities Code §399.15)
3. Requires the CPUC to identify a diverse and balanced portfolio of resources needed to ensure a reliable electricity supply that provides optimal integration of renewable energy in a cost-effective manner as part of the integrated resource planning (IRP) process. (Public Utilities Code §454.51)
4. Requires the CPUC to adopt a process for each electrical corporation, ESP or CCA to file an IRP and a schedule for periodic updates to the plan, and to ensure that LSEs meet other specified requirements. (Public Utilities Code §454.52)
5. Establishes the policy of the state that eligible renewable energy resources and zero-carbon resources supply 90 percent of all retail sales of electricity to California end-use customers by December 31, 2035, 95 percent of all retail sales of electricity to California end-use customers by December 31, 2040, 100 percent of all retail sales of electricity to California end use customers by December 31, 2045. (Public Utilities Code §454.53)
6. Requires the CPUC to open a proceeding to determine appropriate targets, if any, for each LSE, to procure viable and cost-effective energy storage systems, as defined, to be achieved by specified dates, and authorizes the CPUC to consider a variety of possible policies to encourage the cost-effective deployment of energy storage systems. (Public Utilities Code §2836(a))
7. Requires the governing board of each local publicly owned electric utility to initiate a process to determine appropriate targets, if any, for the utility to procure viable and cost-effective energy storage systems and authorizes the governing board to consider a variety of possible policies. (Public Utilities Code §2836(b))
8. Requires each electrical corporation’s renewable energy procurement plan to require the utility to procure new energy storage systems that are appropriate to allow the electrical corporation to comply with the energy storage system procurement targets and policies and to address the acquisition and use of energy storage systems in order to achieve specified purposes. (Public Utilities Code §2837)
9. Requires each LSE to submit, by specified dates, reports to the CPUC demonstrating that it has complied with the energy storage system procurement targets and policies adopted by the CPUC. (Public Utilities Code §2838)

This bill:

1. Requires, the CPUC, in furtherance of the various state clean energy goals, to ensure that diverse energy storage duration classes are modeled, including long-duration energy storage and multiday energy storage, if the CPUC determines multiday energy storage is reasonably available.
2. Authorizes energy storage technology that meets an energy storage class’s minimum duration requirements to be modeled within that class to ensure technology neutrality.

Background

1. SB 100 (De León, Chapter 312, Statutes of 2018). SB 100 established the state’s target to meet 100 percent of the state’s electricity retail load with renewable and zero-carbon resources by 2045. SB 1020 (Laird, Chapter 361, Statutes of 2022) established interim goals to meeting the SB 100 target, specifically requiring 90 percent of retail sales by 2035, 95 percent by 2040 to be met with renewable and zero-carbon energy resources. SB 100 Joint Agency Report evaluates the challenges and opportunities in implementing SB 100. It includes an initial assessment of the additional energy resources and the resource building rates needed to achieve 100 percent clean electricity, along with the associated costs. The report is scheduled to be updated every four years. The first report issued on March 2021 identified preliminarily that on average the state may need six gigawatts of new renewable and energy storage annually to meet the SB 100 goals.
2. IRP process. SB 350 (De León, Chapter 547, Statutes of 2015) required each LSE to file a biennial IRP for approval or certification by the CPUC. The CPUC combines all LSEs’ IRPs to ensure the state is on its path to meet its clean energy procurement goals. Publicly owned utilities (POUs) are required to file their own IRPs with the CEC. The goal of the IRP is a two-year planning process to ensure that LSEs are meeting targets that allow the electricity sector to contribute to California’s economy-wide GHG emissions reductions goals and that helps to reduce overall costs. The effort is intended to forecast needs on a 10-year horizon. In this regard, the IRP is a forward-looking activity. Whereas the requirements to meet renewable energy standards is a compliance activity to review whether LSEs and POUs have satisfied their three-year compliance obligation under the Renewable Portfolio Standard (RPS) requirements to meet an increasing share of its retail load with eligible renewable energy resources, until achieving 60 percent by 2035. As part of the IRP process, the CPUC has issued several procurement orders on LSEs to address near-term and mid-term procurement needs, including the need for energy storage resources.
3. Energy storage. Energy storage systems can absorb energy, and store it for a period of time, and thereafter dispatch the energy when needed. Energy storage can provide a multitude of benefits to the electric grid, including supporting the integration of greater amounts of renewable energy into the electric grid, deferring the need for new fossil-fueled power plants, and transmission, and distribution infrastructure, and reducing dependence on fossil fuel generation to meet peak loads. Energy storage comes in many forms, including pumped hydroelectricity, lithium-ion batteries, flow batteries, and other technologies. Long-duration storage can store energy for eight hours and more. Thereby providing these benefits over a greater time period. According to the CEC, currently California has roughly over 10 gigawatts (GW) of installed energy storage, with roughly 15 GW needed by 2032 (per the CPUC), of which 1 GW is needed of long-duration storage. Additionally, the state projects it will need 52 GW by 2045.
4. CEC administering long duration energy storage program. Approved through budget trailer language and budget appropriations, the Long Duration Energy Storage program invests up to $330 million into the demonstration of non-Lithium-ion energy storage technologies and projects to implement long duration energy storage systems across California. The Long Duration Energy Storage program will pave the way for opportunities to foster a diverse portfolio of energy storage technologies that will contribute to a safe and reliable future grid. As part of the program, the CEC is investing in long-duration storage technologies, including a front-of-the-meter project with PG&E using first-of-its-kind 5 MW/100-hour iron-air technology, by one of the sponsors of this bill. There are other projects funded that include long-duration emerging technologies.

Comments

1. Need for this bill. The author of this bill contends:

California’s energy grid is susceptible to power outages from extreme weather conditions and during times of excessive power demand, which often occur during periods of extreme heat, renewable energy lulls, transmission outages, wildfires, and other extreme and atypical weather conditions. These occurrences are increasing and are typically multi-day events that necessitate the need for a variety of energy solutions and demand response to provide grid resiliency. Under current market rules and energy planning processes, the state continues to rely on aging fossil-fueled power plants to provide reliability during these time periods. Emerging firm zero-carbon resources, including long-duration energy storage and multiday energy storage, can replace the state’s reliance on fossil fuel backup and help efficiently incorporate renewables into the grid cost-effectively and with lower land use impacts. These technologies are able to do this by storing energy when it is abundant and low-cost, and then delivering power to the grid, without recharge, at their full rated capacity for periods up to as long as 100 hours. However, agency planning efforts do not fully incorporate appropriate modeling to incorporate these benefits, and market rules do not provide compensation mechanisms for the services that they could provide, given that these constructs were designed before such technologies were commercially available.

1. Current IRP procurement orders and modeling. Supporters wish to accelerate the deployment of long-duration energy storage and to support retirement of conventional resources, including natural gas plants. While the CPUC has proposed 1 GW of long-duration storage, they express frustration with the relative lack of diversity of resources that are procured, largely limited to lithium-ion technologies. As developers of other technologies, including emerging technologies, they find limitations with the assumptions in the CPUC RESOLVE modeling to identify their resources within the procurement. In the 2021 Mid-term Reliability Procurement Order (D. 21-06-035) the CPUC noted:

We have specified that long-duration storage must be able to discharge at maximum capacity over at least an eight-hour period from a single resource, though we also note that 12 hours or even multi-day storage options may be even more favorable, given the grid needs. LSEs should bear these considerations in mind when evaluating proposals to deliver long-duration storage, and strive to increase the diversity of resources on the grid with this category, if possible.

1. This bill requires the CPUC to model various duration classes of energy storage within the IRP and as part of the efforts to meet the state’s various clean energy goals, including achieving the electricity sector’s greenhouse gas emissions reduction targets and the renewable portfolio standard requirements. The proponents of the bill express frustration that current modeling efforts may not fully model the 8-hour, 12-hour, and multiday duration of long duration energy storage categories. This bill would require the CPUC to better consider these duration classes, as part of the IRP modeling, and provides the CPUC discretion to consider whether the multiday duration class is feasible. The proponents of the bill seek to ensure the various long duration storage technologies, including iron-air batteries, zinc-air batteries, pumped hydroelectricity, and others are able to compete fairly against lithium-ion battery energy storage within the modeling efforts that ultimately inform the energy procurement decisions at the CPUC.

Related/Prior Legislation

SB 1020 (Laird, Chapter 361, Statutes of 2022) established interim targets to reach SB 100 clean energy goals and required state agencies to purchase 100 percent zero carbon electricity by 2035 to serve their load, including obligations on State Water Project.

SB 423 (Stern, Chapter 243, Statutes of 2021) required the CEC to submit to the Legislature an assessment by December 31, 2023, of firm zero-carbon resources that support a clean, reliable, and resilient electrical grid and will help achieve the existing statutory goal of ensuring renewable energy and zero-carbon resources supply 100 percent of all retail sales of electricity to California customers by December 31, 2045.

SB 100 (De León, Chapter 312, Statutes of 2018) established the 100 Percent Clean Energy Act of 2017 which increases the RPS requirement from 50 percent by 2030 to 60 percent, and created the policy of planning to meet all of the state's retail electricity supply with a mix of RPS-eligible and zero-carbon resources by December 31, 2045, for a total of 100 percent clean energy.

SB 350 (De León, Chapter 547, Statutes of 2016) enacted the "Clean Energy and Pollution Reduction Act of 2015," which established targets to increase retail sales of renewable electricity to 50 percent by 2030 and double the energy efficiency savings in electricity and natural gas end uses by 2030 and also required the CPUC to develop an integrated resource planning process.

AB 2227 (Bradford, Chapter 606, Statutes of 2012) deleted provisions from AB 2514 on POUs and clarified the CEC’s role as not having authority to enforce the requirements in AB 2514.

AB 2514 (Skinner, Chapter 469, Statutes of 2010) required the CPUC to determine appropriate targets, if any, for load serving entities to procure energy storage systems. This bill required LSEs to meet any targets adopted by the CPUC by 2015 and 2020. The bill required POUs to set their own targets for the procurement of energy storage and then meet those targets by 2016 and 2021

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes

According to the Senate Committee on Appropriations; unknown ongoing annual and one-time costs, each likely in the hundreds of thousands of dollars (ratepayer funds), for the CPUC to make a determination on whether enough multiday storage is reasonably available and potentially model energy storage types when developing portfolios for the preferred system plan and likely the transmission planning process.

SUPPORT: (Verified 5/15/24)

Advanced Energy United
California Environmental Voters

Environmental Defense Fund

Form Energy
GreenGenStorage
Hydrostor, Inc.

Union of Concerned Scientists

OPPOSITION: (Verified 5/15/24)

California Wind Energy Association

Pacific Gas and Electric Company
San Diego Gas and Electric Company

ARGUMENTS IN SUPPORT: In support of this bill, the Union of Concerned Scientists states:

Since AB 2514 was passed, energy markets, technologies and state goals have evolved significantly. California now aims to achieve 100 percent clean energy and achieve carbon neutrality and net negative emissions economywide by no later than 2045. To meet these goals and maintain electric reliability most cost-effectively, with the least land use, a broader set of energy storage technologies are needed, including long-duration and multi-day energy storage. Long-duration and multi-day energy storage are new energy resource classes that complement short-duration lithium-ion storage. These new resource classes are designed to solve a new set of electric grid reliability and renewable energy integration challenges that are upon us, and that will grow more urgent in the coming years.

ARGUMENTS IN OPPOSITION: The entities opposed to this bill express concerns about procurement requirements that were previously in this bill, but were amended out in the policy committee. It is unclear whether they oppose the current proposals in this bill.

Prepared by: Nidia Bautista / E., U. & C. / (916) 651-4107

5/18/24 14:06:57

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SENATE COMMITTEE ON

Senator Anna Caballero, Chair

2023 - 2024 Regular Session

SB 1508 (Stern) - Electricity: integrated resource plans: energy storage systems: modeling

Bill Summary:

This bill would require the California Public Utilities Commission (CPUC) to ensure that diverse energy storage duration classes are modeled, including long-duration energy storage and multiday energy storage, if the CPUC determines multiday energy storage is reasonably available.

*********** ANALYSIS ADDENDUM – SUSPENSE FILE ***********

The following information is revised to reflect amendments

adopted by the committee on May 16, 2024

Fiscal Impact:

• Unknown ongoing annual and one-time costs, each likely in the hundreds of thousands of dollars (ratepayer funds), for the CPUC to make a determination on whether enough multiday storage is reasonably available and potentially model energy storage types when developing portfolios for the preferred system plan and likely the transmission planning process.

Author Amendments:

These amendments would allow, rather than require, for technology that meets an energy storage class’s minimum duration requirements be modeled within that class to ensure technology neutrality.

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SENATE COMMITTEE ON

Senator Anna Caballero, Chair

2023 - 2024 Regular Session

SB 1508 (Stern) - Electricity: integrated resource plans: energy storage systems: modeling

Bill Summary:

This bill would require the California Public Utilities Commission (CPUC) to ensure that diverse energy storage duration classes are modeled, including long-duration energy storage and multiday energy storage, if the CPUC determines multiday energy storage is reasonably available.

Fiscal Impact:

• The CPUC estimates ongoing costs of about $555,000 annually and one-time costs of $250,000 (ratepayer funds) to make a determination on whether enough multiday storage is reasonably available and model energy storage types when developing portfolios for the preferred system plan (PSP) and likely the transmission planning process (TPP).

Background:

SB 100 (De León, Chapter 312, Statutes of 2018). SB 100 established the state’s target to meet 100 percent of the state’s electricity retail load with renewable and zero-carbon resources by 2045. SB 1020 (Laird, Chapter 361, Statutes of 2022) established interim goals to meeting the SB 100 target, specifically requiring 90 percent of retail sales by 2035, 95 percent by 2040 to be met with renewable and zero-carbon energy resources. SB 100 Joint Agency Report evaluates the challenges and opportunities in implementing SB 100. It includes an initial assessment of the additional energy resources and the resource building rates needed to achieve 100 percent clean electricity, along with the associated costs. It uses a computer model to analyze these factors under various conditions and technologies. The report is scheduled to be updated every four years. The first report issued on March 2021 identified preliminarily that on average the state may need six gigawatts of new renewable and energy storage annually to meet the SB 100 goals.

IRP process. SB 350 (De León, Chapter 547, Statutes of 2015) required each LSE to file a biennial IRP for approval or certification by the CPUC. The CPUC combines all LSEs’ IRPs to ensure the state is on its path to meet its clean energy procurement goals. Publicly owned utilities (POUs) are required to file their own IRPs with the CEC. The goal of the IRP is a two-year planning process to ensure that LSEs are meeting targets that allow the electricity sector to contribute to California’s economy-wide GHG emissions reductions goals and that helps to reduce overall costs. The effort is intended to forecast needs on a 10-year horizon. In this regard, the IRP is a forward-looking activity. Whereas the requirements to meet renewable energy standards is a compliance activity to review whether LSEs and POUs have satisfied their three-year compliance obligation under the Renewable Portfolio Standard (RPS) requirements to meet an increasing share of its retail load with eligible renewable energy resources, until achieving 60 percent by 2035. As part of the IRP process, the CPUC has issued several procurement orders on LSEs to address near-term and mid-term procurement needs, including the need for energy storage resources.

Proposed Law:

This bill would require the California Public Utilities Commission (CPUC) to ensure that diverse energy storage duration classes are modeled, including long-duration energy storage and multiday energy storage, if the CPUC determines multiday energy storage is reasonably available.

Related Legislation:

SB 1020 (Laird, Chapter 361, Statutes of 2022) established interim targets to reach SB 100 clean energy goals and required state agencies to purchase 100 percent zero carbon electricity by 2035 to serve their load, including obligations on State Water Project.

SB 423 (Stern, Chapter 243, Statutes of 2021) required the CEC to submit to the Legislature an assessment by December 31, 2023, of firm zero-carbon resources that support a clean, reliable, and resilient electrical grid and will help achieve the existing statutory goal of ensuring renewable energy and zero-carbon resources supply 100 percent of all retail sales of electricity to California customers by December 31, 2045.

SB 100 (De León, Chapter 312, Statutes of 2018) established the 100 Percent Clean Energy Act of 2017 which increases the RPS requirement from 50 percent by 2030 to 60 percent, and created the policy of planning to meet all of the state's retail electricity supply with a mix of RPS-eligible and zero-carbon resources by December 31, 2045, for a total of 100 percent clean energy.

SB 350 (De León, Chapter 547, Statutes of 2016) enacted the "Clean Energy and Pollution Reduction Act of 2015," which established targets to increase retail sales of renewable electricity to 50 percent by 2030 and double the energy efficiency savings in electricity and natural gas end uses by 2030 and also required the CPUC to develop an integrated resource planning process.

AB 2227 (Bradford, Chapter 606, Statutes of 2012) deleted provisions from AB 2514 on POUs and clarified the CEC’s role as not having authority to enforce the requirements in AB 2514.

AB 2514 (Skinner, Chapter 469, Statutes of 2010) required the CPUC to determine appropriate targets, if any, for load serving entities to procure energy storage systems. This bill required LSEs to meet any targets adopted by the CPUC by 2015 and 2020. The bill required POUs to set their own targets for the procurement of energy storage and then meet those targets by 2016 and 2021.

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SENATE COMMITTEE ON ENERGY, UTILITIES AND COMMUNICATIONS

Senator Steven Bradford, Chair

2023 - 2024 Regular

Bill No: SB 1508 Hearing Date: 4/22/2024

SUBJECT: Electricity: energy storage systems

DIGEST: This bill would require the California Public Utilities Commission (CPUC), by March 1, 2025, to adopt appropriate targets for each load-serving entity (LSE) to procure viable and cost-effective energy storage systems, including long-duration energy storage systems, multiday energy storage systems, and emerging energy storage technologies to be achieved by specific

ANALYSIS:

Existing law:

1. Establishes and vests the CPUC with regulatory authority over public utilities, including electrical corporations, while local publicly owned electric utilities are under the direction of their governing boards. (Article XII of the California Constitution)
2. Establishes a renewables portfolio standard (RPS) and requires all retail sellers, including investor-owned utilities (IOUs), energy service providers (ESPs), and community choice aggregators (CCAs), to procure a minimum quantity of electricity products from eligible renewables energy resources, as defined, so that total kilowatt hours of those products sold to their retail end-use customers achieves 25 percent of retail sales by December 31, 2016, 33 percent by December 31, 2020, 44 percent by December 31, 2024, 52 percent by December 31, 2027, and 60 percent by December 31, 2030. (Public Utilities Code §399.15)
3. Requires the CPUC to identify a diverse and balanced portfolio of resources needed to ensure a reliable electricity supply that provides optimal integration of renewable energy in a cost-effective manner as part of the integrated resource planning (IRP) process. (Public Utilities Code §454.51)
4. Requires the CPUC to adopt a process for each electrical corporation, ESP or CCA to file an IRP and a schedule for periodic updates to the plan, and to ensure that LSEs meet other specified requirements. (Public Utilities Code §454.52)
5. Establishes the policy of the state that eligible renewable energy resources and zero-carbon resources supply 90 percent of all retail sales of electricity to California end-use customers by December 31, 2035, 95 percent of all retail sales of electricity to California end-use customers by December 31, 2040, 100 percent of all retail sales of electricity to California end use customers by December 31, 2045. (Public Utilities Code §454.53)
6. Requires the CPUC to open a proceeding to determine appropriate targets, if any, for each LSE, to procure viable and cost-effective energy storage systems, as defined, to be achieved by specified dates, and authorizes the CPUC to consider a variety of possible policies to encourage the cost-effective deployment of energy storage systems. (Public Utilities Code §2836(a))
7. Requires the governing board of each local publicly owned electric utility to initiate a process to determine appropriate targets, if any, for the utility to procure viable and cost-effective energy storage systems and authorizes the governing board to consider a variety of possible policies. (Public Utilities Code §2836(b))
8. Requires each electrical corporation’s renewable energy procurement plan to require the utility to procure new energy storage systems that are appropriate to allow the electrical corporation to comply with the energy storage system procurement targets and policies and to address the acquisition and use of energy storage systems in order to achieve specified purposes. (Public Utilities Code §2837)
9. Requires each LSE to submit, by specified dates, reports to the CPUC demonstrating that it has complied with the energy storage system procurement targets and policies adopted by the CPUC. (Public Utilities Code §2838)

This bill:

1. Requires the CPUC, on or before March 1, 2025, to adopt appropriate targets for each LSE to procure viable and cost-effective energy storage systems, including long-duration energy storage systems, multiday energy storage systems, and emerging energy storage technologies, to be achieved by specified dates, and would require the CPUC to determine the amount of new energy storage systems, as defined, that each LSE would be required to deploy in order to facilitate a reliable, zero-carbon electricity grid, and achieve net-zero greenhouse gas (GHG) emissions as soon as possible.
2. Requires the governing board of each local publicly owned electric utility, on or before March 1, 2025, to initiate a process to determine appropriate targets, if any, for the utility to procure viable and cost-effective energy storage systems, to be achieved by specified dates, and to report those targets to the State Energy Resources Conservation and Development Commission (California Energy Commission (CEC)).
3. Requires that each electrical corporation’s renewable energy procurement plan achieve additional specified purposes, including reducing the demand for electricity during net peak periods, achieving permanent load shifting, achieving the objectives of a reliable, zero-carbon electricity grid and net-zero GHG emissions as soon as possible, and achieving an optimized overall portfolio of resources that use renewable energy generation and energy storage systems. Updates the specified dates by which each LSE is required to submit reports to the CPUC demonstrating that it has complied with the energy storage system procurement targets and policies adopted by the CPUC.

Background

SB 100 (De León, Chapter 312, Statutes of 2018). SB 100 established the state’s target to meet 100 percent of the state’s electricity retail load with renewable and zero-carbon resources by 2045. SB 1020 (Laird, Chapter 361, Statutes of 2022) established interim goals to meeting the SB 100 target, specifically requiring 90 percent of retail sales by 2035, 95 percent by 2040 to be met with renewable and zero-carbon energy resources. SB 100 Joint Agency Report evaluates the challenges and opportunities in implementing SB 100. It includes an initial assessment of the additional energy resources and the resource building rates needed to achieve 100 percent clean electricity, along with the associated costs. It uses a computer model to analyze these factors under various conditions and technologies. The report is scheduled to be updated every four years. The first report issued on March 2021 identified preliminarily that on average the state may need six gigawatts of new renewable and energy storage annually to meet the SB 100 goals.

IRP process. SB 350 (De León, Chapter 547, Statutes of 2015) required each LSE to file a biennial IRP for approval or certification by the CPUC. The CPUC combines all LSEs’ IRPs to ensure the state is on its path to meet its clean energy procurement goals. Publicly owned utilities (POUs) are required to file their own IRPs with the CEC. The goal of the IRP is a two-year planning process to ensure that LSEs are meeting targets that allow the electricity sector to contribute to California’s economy-wide GHG emissions reductions goals and that helps to reduce overall costs. The effort is intended to forecast needs on a 10-year horizon. In this regard, the IRP is a forward-looking activity. Whereas the requirements to meet renewable energy standards is a compliance activity to review whether LSEs and POUs have satisfied their three-year compliance obligation under the Renewable Portfolio Standard (RPS) requirements to meet an increasing share of its retail load with eligible renewable energy resources, until achieving 60 percent by 2035. As part of the IRP process, the CPUC has issued several procurement orders on LSEs to address near-term and mid-term procurement needs, including the need for energy storage resources.

Comments

Need for this bill. The author of this bill contends:

California’s energy grid is susceptible to power outages from extreme weather conditions and during times of excessive power demand, which often occur during periods of extreme heat, renewable energy lulls, transmission outages, wildfires, and other extreme and atypical weather conditions. These occurrences are increasing and are typically multi-day events that necessitate the need for a variety of energy solutions and demand response to provide grid resiliency. Under current market rules and energy planning processes, the state continues to rely on aging fossil-fueled power plants to provide reliability during these time periods. Emerging firm zero-carbon resources, including long-duration energy storage and multiday energy storage, can replace the state’s reliance on fossil fuel backup and help efficiently incorporate renewables into the grid cost-effectively and with lower land use impacts. These technologies are able to do this by storing energy when it is abundant and low-cost, and then delivering power to the grid, without recharge, at their full rated capacity for periods up to as long as 100 hours. However, agency planning efforts do not fully incorporate appropriate modeling to incorporate these benefits, and market rules do not provide compensation mechanisms for the services that they could provide, given that these constructs were designed before such technologies were commercially available.

Energy storage. Energy storage systems can absorb energy, and store it for a period of time, and thereafter dispatch the energy when needed. Energy storage can provide a multitude of benefits to the electric grid, including supporting the integration of greater amounts of renewable energy into the electric grid, deferring the need for new fossil-fueled power plants, and transmission, and distribution infrastructure, and reducing dependence on fossil fuel generation to meet peak loads. Energy storage comes in many forms, including pumped hydroelectricity, lithium-ion batteries, flow batteries, and other technologies. Long-duration storage can store energy for eight hours and more. Thereby providing these benefits over a greater time period. According to the CEC, today California has roughly over 3.3 gigawatts (GW) of installed energy storage, with roughly 15 GW needed by 2032 (per the CPUC), of which 1 GW is needed of long-duration storage.

CEC administering long duration energy storage program. Approved through budget trailer language and budget appropriations, the Long Duration Energy Storage program invests up to $330 million into the demonstration of non-Lithium-ion energy storage technologies and projects to implement long duration energy storage systems across California. The Long Duration Energy Storage program will pave the way for opportunities to foster a diverse portfolio of energy storage technologies that will contribute to a safe and reliable future grid. As part of the program, the CEC is investing in long-duration storage technologies, including a front-of-the-meter project with PG&E using first-of-its-kind 5 MW/100-hour iron-air technology, by one of the sponsors of this bill. There are other projects funded that include long-duration emerging technologies.

Supporters wish to accelerate the deployment of long-duration energy storage and to support retirement of conventional resources, including natural gas plants. While the CPUC has proposed 1 GW of long-duration storage, they express frustration with the relative lack of diversity of resources that are procured, largely limited to lithium-ion technologies. As developers of other technologies, including emerging technologies, they find limitations with the assumptions in the CPUC RESOLVE modeling to identify their resources within the procurement. In the 2021 Mid-term Reliability Procurement Order (D. 21-06-035) the CPUC noted:

We have specified that long-duration storage must be able to discharge at maximum capacity over at least an eight-hour period from a single resource, though we also note that 12 hours or even multi-day storage options may be even more favorable, given the grid needs. LSEs should bear these considerations in mind when evaluating proposals to deliver long-duration storage, and strive to increase the diversity of resources on the grid with this category, if possible

Need for amendments. The Legislature may wish to proceed with caution. While long-duration energy storage has the ability to provide benefits to the electric grid, the costs of the proposed procurement and concerns about the specific carve-outs are warranted. The author and committee may wish to amend this bill to delete the provisions currently in this bill and replace with language to have the CPUC to model long duration storage within its IRP process.

Prior/Related Legislation

SB 1020 (Laird, Chapter 361, Statutes of 2022) established interim targets to reach SB 100 clean energy goals and required state agencies to purchase 100 percent zero carbon electricity by 2035 to serve their load, including obligations on State Water Project.

SB 423 (Stern, Chapter 243, Statutes of 2021) required the CEC to submit to the Legislature an assessment by December 31, 2023, of firm zero-carbon resources that support a clean, reliable, and resilient electrical grid and will help achieve the existing statutory goal of ensuring renewable energy and zero-carbon resources supply 100 percent of all retail sales of electricity to California customers by December 31, 2045.

SB 100 (De León, Chapter 312, Statutes of 2018) established the 100 Percent Clean Energy Act of 2017 which increases the RPS requirement from 50 percent by 2030 to 60 percent, and created the policy of planning to meet all of the state's retail electricity supply with a mix of RPS-eligible and zero-carbon resources by December 31, 2045, for a total of 100 percent clean energy.

SB 350 (De León, Chapter 547, Statutes of 2016) enacted the "Clean Energy and Pollution Reduction Act of 2015," which established targets to increase retail sales of renewable electricity to 50 percent by 2030 and double the energy efficiency savings in electricity and natural gas end uses by 2030 and also required the CPUC to develop an integrated resource planning process.

AB 2227 (Bradford, Chapter 606, Statutes of 2012) deleted provisions from AB 2514 on POUs and clarified the CEC’s role as not having authority to enforce the requirements in AB 2514.

AB 2514 (Skinner, Chapter 469, Statutes of 2010) required the CPUC to determine appropriate targets, if any, for load serving entities to procure energy storage systems. This bill required LSEs to meet any targets adopted by the CPUC by 2015 and 2020. The bill required POUs to set their own targets for the procurement of energy storage and then meet those targets by 2016 and 2021.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes

SUPPORT:

Advanced Energy United
Form Energy
GreenGenStorage
Union of Concerned Scientists

OPPOSITION:

Pacific Gas and Electric Company
San Diego Gas and Electric Company
Southern California Edison

ARGUMENTS IN SUPPORT: In support of this bill, the Union of Concerned Scientists states:

Since AB 2514 was passed, energy markets, technologies and state goals have evolved significantly. California now aims to achieve 100 percent clean energy and achieve carbon neutrality and net negative emissions economywide by no later than 2045. To meet these goals and maintain electric reliability most cost-effectively, with the least land use, a broader set of energy storage technologies are needed, including long-duration and multi-day energy storage. Long-duration and multi-day energy storage are new energy resource classes that complement short-duration lithium-ion storage. These new resource classes are designed to solve a new set of electric grid reliability and renewable energy integration challenges that are upon us, and that will grow more urgent in the coming years.

ARGUMENTS IN OPPOSITION: The utilities oppose this bill contending it is a procurement carve-out for energy storage resources. They argue that LSEs are currently able to sign contracts for these resources. They raise concerns about obligating customers to use a specific resource, as it would not be efficient or cost-effective. They state:

Regulations should be technology agnostic to preserve competition and ensure the best possible outcome for customers. Additionally, this procurement order could be duplicative of other forthcoming or current procurement orders that exist within CPUC proceedings such as the Integrated Resource Plan or the Reliable and Clean Power Procurement Plan.

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