On October 17, 2013, the California Public Utilities Commission (CPUC) passed an ambitious measure that would require California’s investor-owned utility companies to purchase 1,325 megawatts of energy storage (enough to power roughly one million homes) by 2020. Energy storage allows operators to balance the supply and demand of electricity by storing energy during off-peak hours and sending stored power to the grid when demand is high. By March 1, 2014, PG&E, Southern California Edison (SCE), and San Diego Gas & Electric (SDG&E) will have to come up with a plan to comply with this new measure. [1] The energy storage market has been slow to develop, as many grid-scale energy storage applications lack the right mix of regulatory support, costs, revenues and other attributes to be economically viable, but the industry is entering the early stages of what may become a giant global industry, analysts say, see GTM Research reportGrid-Scale Energy Storage Opportunities in North America: Applications, Technologies, Suppliers, and Business Strategies. [2] California’s first-in-the-nation mandate and utilities’ investments in storage applications are expected to catalyze innovation in energy storage technologies from batteries to flywheels to pumped water. California is building an energy storage ecosystem, encompassing grid batteries, thermal energy storage systems, compressed-air energy storage (CAES) system developed by PG&E, plug-in electrical vehicle storage projects at SCE, and microgrid projects in SDG&E territory. Along with increasing the use of renewable energy, better storage capabilities facilitate growth of microgrids and resilient infrastructure during extreme weather events. Big players poised to succeed in the grid-scale energy storage industry include ABB, AES Energy Storage, Convergent Energy + Power, Eos, S&C Electric, and Seeo, see full report here, and see also emerging companies to watch here. [3] Government R&D funding is strong, regulatory reform is underway, and utilities are beginning to embrace the idea of investing in energy storage as a valuable asset they own, control and use. [2] Once large amounts of energy can be stored, the utilities can make better use of renewable energy sources like wind and solar, which produce sporadic amounts of energy over the course of a day. More efficient storage technology will help California utilities comply with the California Renewables Portfolio Standard (RPS), a law that requires that 33 percent of electricity come from renewable sources. For more information on energy storage providers, see this report (subscription required). [1]
The CPUC’s action has generated a national discussion and McGuireWoods is active in the energy storage area around the country. Those wanting to learn more about energy storage in California can attend a California State Bar conference at Berkeley Law on November 14, 2013, where Senior Counsel Dana Palmer will moderate a panel concerning strategies to integrate renewable energy into the grid in a manner that maintains reliability and meets the state’s renewable energy goals. Energy storage will be a key topic. The brochure for the conference can be found here.
