• California Passes First U.S. Renewable Energy Storage Law
  • September 3, 2010 | Author: Michael A. Nesteroff
  • Law Firm: Lane Powell PC - Seattle Office
  • The California Legislature's passage of the energy storage bill, AB 2514, is the first measure in the U.S. that could require utilities to store part of the electricity they generate.   If a goal is established as a result of AB 2514, it could provide an important incentive to the development of clean energy that renewable portfolio standards ("RPS") have been unable to do on their own.

    RPS Goals

    California, like 28 other states and the District of Columbia, has adopted standards for increasing the amount of renewable energy utilities procure to sell to their retail customers.  In California's case, a 2006 statute established a goal of 20 percent by the end of 2010, and two executive orders set a target of 33% by 2020.  California's three investor-owned utilities, however, will fall short of the 2010 goal by around five percent.

    Energy Storage

    AB 2514 adds another layer of incentive, or potential incentive, by giving the California Public Utilities Commission ("CPUC") authority to determine whether and, if so, what targets to set for energy storage systems that the three investor-owned utilities (Pacific Gas & Electric, Southern California  Edison and San Diego Gas & Electric) must meet by 2015 and 2020.  The bill as passed does not go as far as the original proposal, which would have set a fixed storage goal of at least 2.25 percent of peak demand by 2015 and five percent by 2020.   But, if CPUC does set a target, it should provide a significant boost to development of energy storage technologies.

    Making Progress

    The real issue may be whether the technology can meet the statutory and regulatory goals.  All indications are that it can.  A new report by Pike Research indicates that the grid energy storage market could jump from $1.5 billion this year to $35 billion by 2020.  With California adopting AB 2415, and if the CPUC follows through with actual adoption of a goal, that could be a significant positive signal.

    The statute gives the CPUC until March 2012 to start a proceeding to determine whether to set targets, but utilities such as Pacific Gas & Electric and others are not waiting.  As the NEXT 100 blog describes, PG&E is working on technologies such as pumping compressed air into an underground reservoir for usage during peak hours and pumping water.  Others are working on battery storage technologies, such as the new $17 million loan guarantee from the Department of  Energy to AES for development of a lithium ion battery storage for 20 megawatts.