Energy, Project Development, and Project Finance Practice Chair Joseph Karp and Associate Louise Dyble co-authored the Daily Journal article “AB 2868: Energy Storage Acceleration” published on January 18, 2017. The article discusses renewable energy storage and California’s Assembly Bill 2868.

According to the article, storage is the next frontier to increased reliance on renewable energy. Assembly Bill 2868 directs the California Public Utilities Commission (CPUC) to encourage the state’s three largest electrical utilities to “accelerate widespread deployment of distributed energy storage systems” by adding up to 500 megawatts of new storage capacity supported by “reasonable mechanisms for cost recovery.”

Mr. Karp and Ms. Dyble explain that expanding energy storage could be valuable in addressing the biggest challenge to increasing our dependence on renewables and the mismatch between production from intermittent sources and daily patterns of demand. Storage supports load shifting, using surplus energy that would otherwise be wasted in off-peak periods to meet high-consumption demand, thus improving efficiency and reducing costs. Storage programs also enhance the self-generation incentive programs in California that promote a greener, more resilient, decentralized energy system and departs from the traditional centralized energy production and long-distance distribution.

AB 2868 is intended to “achieve ratepayer benefits, reduce dependence on petroleum, meet air quality standards and reduce emissions of greenhouse gas.”

While there is broad agreement on the potential benefits of expanded storage, the impact of AB 2868 on the renewable energy industry has raised concern. While this legislation allows the state’s three largest energy utilities open discretion to design programs and propose funding mechanisms, amendments to the original bill limit their potential scope. The bill only allows programs that “do not unreasonably limit or impair the ability of nonutility enterprises to market and deploy energy systems.”

The article highlights how AB 2868 stops short of a mandate and directs the CPUC to encourage voluntary investments by three utility companies. However, it could be an indication of more stringent requirements to come. In seeking to “accelerate” energy storage deployment, this bill signals California's continued commitment to advancing renewable energy.