A proposed decision issued by the California Public Utilities Commission could be a watershed moment in the energy storage market.

The proposed decision, issued in early September, calls for the state’s three investor-owned electric utilities–Pacific Gas & Electric, Southern California Edison, and San Diego Gas & Electric–to procure 1.325 gigawatts of energy storage by 2020. It would start the procurement process as early as December 2014, using an all source solicitation with a target of 200 megawatts of storage procurement targets for transmission, distribution, and customer-side energy storage systems. The utilities would conduct additional solicitations in 2016, 2018, and 2020, with targets of 270, 365, and 490 megawatts, respectively.

The mandate will encourage energy storage companies and utilities to innovate, driving down costs and making systems more commercially viable, says Theresa Cho, Of Counsel in Morrison & Foerster’s San Francisco office. “California’s experience also will likely inspire other states to consider mandating grid-scale energy storage, creating a host of new opportunities for battery suppliers and other technology providers,” she says.

In 2010, California passed the first state law calling for grid-scale energy storage. The proposed decision is targeted to be voted on by the commission in early October.