Don’t believe the public utilities: California rocks

Despite lack of interest from public utilities, the Southern California Edison (SCE) announcement of the winners of its 250MW procurement shows the California energy storage market is growing rapidly. Photo credit: AES Energy Storage

Despite lack of interest from public utilities, the Southern California Edison (SCE) announcement of the winners of its 250MW procurement shows the California energy storage market is growing rapidly. Photo credit: AES Energy Storage

The California energy storage market is coming to life in spite of lacklustre backing from the state’s publicly owned utilities. Last week, Southern California Edison (SCE) announced the winners of contracts for 250MW of energy storage, Greentechmedia said, even as California’s publicly owned utilities committed to a mere 27.6MW by 2016, according to the Energy Matters blog.

The blog claims the California public utilities’ targets, all submitted in response to the Assembly Bill 2514 on energy storage procurement, represent about 0.1% of their combined peak load.

The 27.6MW commitment pretty much all came from just two providers: Redding Public Utilities and the Los Angeles Department of Water and Power (LADWP).

Riverside Public Utilities and Vernon Gas and Electric set 0MW targets and Glendale Water and Power adopted an existing 1.5MW facility as its target.

In addition, the City of Cerritos and the City of Victorville have set targets of just 1% of their peak loads for 2015 and 2020, which on current capacity would amount to a total of around only 270kW.

Refusing to set targets

A remaining 24 utilities refused to set targets, arguing energy storage was neither cost-effective nor mature enough.

The City of Banning’s submission summed up the mood for most of the public utilities, declaring: “It is not cost effective for the Electric Utility (sic) to adopt energy storage procurement targets at this time, due to the lack of cost-effective options.”

However, US sources were quick to dismiss this apparent setback for the world’s top energy storage market, pointing out that the ambitious 1.3GW target set by the California Public Utilities Commission last year was for investor-owned utilities only.

“The Public Utilities Commission does not have direct jurisdiction over the publicly owned utilities in California,” says Philippe Bouchard, vice president of business development at Eos Energy Storage in New York.

“Very few private enterprises are going to sign themselves up for a regulatory mandate or target if they don’t have to. Instead, many of these utilities are designing storage programs and deploying projects that create real economic benefit for their customers.”

And despite the failure of public utilities to commit to immediate targets, elsewhere there are signs that the California energy storage market is rapidly gathering momentum.

California energy storage targets for 2021

For example, LADWP, California’s biggest public utility, has already mooted a 154MW target for 2021, made up of 100MW of thermal energy and 54MW of battery storage.

In addition, Energy Storage Report understands that at least two other public utilities, the Imperial Irrigation District and Burbank Water and Power, will likely move ahead with energy storage programmes in spite of their reluctance to commit to targets.

But perhaps the most promising development is that the state’s three investor-owned utilities, SCE, Pacific Gas and Electric Company (PG&E), and San Diego Gas & Electric (SDG&E), are all well on track to achieve their mandated energy storage levels.

Indeed, SDG&E has already issued one of the largest energy storage solicitations ever seen in the US, with a request for offers (RFO) of at least 25MW and potentially up to 800MW going out in September.

This RFO is supposed to be the first of four bi-annual requests but the upper end of its range is already well above SDG&E’s mandated obligation of 165MW.

PG&E, meanwhile, is looking for 8MW as part of a package of 74MW of projects due to be announced before the end of this year. Finally, the SCE contract announcement sees the utility covering its 50MW Local Capacity Requirement five times over.

A 2.2GW procurement programme

Deal winners include AES Energy Storage, which will provide a 100MW, 400MWh battery projectStem, which will deploy 85MW of behind-the-meter storage, and Advanced Microgrid Solutions, with a 50MW order for ‘Hybrid-Electric Buildings’.

NRG Energy and Ice Energy also won contracts in the contest, part of a 2.2GW energy procurement programme to make up for the closure of older generation plants including the San Onofre Nuclear Generating Station.

Greentechmedia claimed: “No utility has made such a big investment in customer-owned, distributed energy storage assets of this type before, making this a step into the unknown.”

And in a press release, Colin Cushnie, SCE vice president of energy procurement and management, said: “This solicitation is the first time that such a wide range of new diverse resources were directly competing in the purchasing process.

“No single energy source can give us everything we need all of the time, particularly with our emphasis to use environmentally clean resources. To provide for flexibility, we need to accommodate a mix of energy resources.”

What is clear is that, in California at least, energy storage is now being seen as very much a part of that mix… not a moment too soon.

Written by Jason Deign

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