The likely procurement carve-out for energy storage is a response to the need to integrate an increasing amount of intermittent renewable resources on to the California electricity grid. As California builds towards a 33%-by-2020 renewable portfolio standard and considers mandates for even higher levels of renewable generation in subsequent years, integration needs will continue to drive procurement decisions. However, storage is not the only option for meeting renewable integration needs. “Flexible capacity” from natural gas-fired power plants that can ramp up or down rapidly is another option that is also gaining favor.

The CPUC is considering beginning in 2014 to set specific procurement requirements for flexible capacity that can help to integrate intermittent renewable resources.

Preliminary proposals would require flexible resources to, at minimum, be able to ramp up and sustain energy output for a minimum of three hours. There may be other requirements. These requirements, along with mechanisms for determining and satisfying flexible capacity compliance obligations and implementation, contracting issues, and validation issues, are being addressed in a resource adequacy proceeding (R.11-10-023). A proposed decision on these matters is scheduled for late May 2013. Once these matters have been determined, then specific flexible capacity requirements are likely to appear in the utilities’ solicitations for medium- and long-term power contracts, as well as their solicitations for shortterm resource adequacy capacity.

As integration needs become better understood, the CPUC’s policies regarding energy storage and flexible capacity are likely to be refined. There is already a push to better define “flexibility” and perhaps to define several types of flexibility to more closely match system needs in different time periods. Storage, some argue, is an expensive means of obtaining flexibility, since thermal power plants can provide these services more cheaply. As a result, it is not clear that energy storage will remain classified as a preferred resource over the longer term barring significant cost reductions.