Bill's Passage Boosts California Distributed Energy and Storage

California Gov. Jerry Brown signed a wide-ranging Public/Natural Resources trailer bill into law this past weekend. Among a host of significant new measures and amendments, Senate Bill 861 (SB 861) adds impetus to the California state government's pioneering energy storage initiatives, which extend down from utility-scale energy storage mandates to incentives for small- and medium-sized companies to deploy intelligent solutions.

More specifically, enactment of SB 861 maintains annual funding of $83 million of California's Self-Generation Incentive Program (SGIP), allocating a total $415 million in state funds to assure its operation through 2019. Run by the California Public Utilities Commission (CPUC), SGIP provides “rebates for qualifying distributed energy systems installed on the customer-side of the utility meter.”

In addition to wind turbines, waste heat-to-power systems, pressure reduction turbines, internal combustion engines, micro turbines and fuel cells, qualifying SGIP technologies also include advanced energy storage systems, which are poised to play a significant role in the emergence of a clean energy ecosystem in California.

Building a distributed, clean energy ecosystem

Fostering adoption of intelligent energy storage solutions among small- to medium-sized commercial, industrial and residential utility customers, SGIP now plays a key role in realizing the goals set out in California's Assembly Bill 2514 (AB 2514), “landmark legislation that will create a smarter, cleaner electric grid, increase the use of renewable energy, save Californians money by avoiding costly new power plants, and reduce greenhouse gas emissions and other harmful air pollutants through the use of energy storage technologies by utility companies.”

Whereas AB 2514 focuses on the energy storage at utility scale, SGIP is focused on fostering adoption of distributed energy systems, including intelligent energy storage solutions, “behind the meter” among utility customers. As explained in Section 156 of SB 861:

“It is the intent of the Legislature that the self-generation incentive program increase deployment of distributed generation and energy storage systems to facilitate the integration of those resources into the electrical grid, improve efficiency and reliability of the distribution and transmission system, and reduce emissions of greenhouse gases, peak demand, and ratepayer costs. It is the further intent of the Legislature that the commission, in future proceedings, provide for an equitable distribution of the costs and benefits of the program.”

Energy storage, demand response, load shifting and frequency regulation

SGIP received more rebate requests for energy storage systems ($53 million or 34 percent of the total) than any other eligible distributed energy technology over the course of 2012, according to CPUC's latest, publicly released SGIP Budget Review. SGIP requests for combined heat-and-power (CHP) fuel cells followed a close second with $52 million (33 percent of total SGIP requests).

While the majority of SGIP energy storage applications were submitted by “just a handful of developers,” the variety of applications ranged from peak load shifting and demand reduction to back-up power generation and electric vehicle (EV) charging.

The average storage size of SGIP advanced energy storage rebate requests ranged between 5 to 25 kilowatts (kW), which, SGIP notes, “is relatively small compared to the average size of other participating SGIP technologies.” As a result, SGIP energy storage requests accounted for just 27 percent of overall funding from 2011 through 2012 but over 80 percent of SGIP application volume.

The California Energy Storage Alliance

Janice Lin, chair of Energy Storage North America (ESNA) and co-founder of the Global Energy Storage Alliance (GESA) and California Energy Storage Alliance (CESA), has played a central, pivotal role in California's groundbreaking energy storage initiatives.

Solar energy captured Lin's attention back in the mid-1990s, when she left management consultants Booz, Allen to join Power Light, which evolved and is now known as SunPower Corp., a leading U.S. provider of high-efficiency silicon solar photovoltaic (PV) products and solutions.

Lin's involvement in helping promote and foster development of advanced energy storage systems started gaining momentum post-2005, following her co-founding Stratagen Consulting LLC, a strategic clean energy consulting company.

At that early stage, Lin told 3p in an interview, “there really was no organized advocacy work related to advanced energy storage being done anywhere in the world.” Today, they are cropping up around the world, including in China, Germany, Japan and Ontario, as well as elsewhere in the U.S., in states such as Hawaii and New York, Lin noted with some sense of pride.

Teaming up with Douglass & Liddell principal Don Liddell, Lin in 2009 co-founded CESA. Since then, she and CESA have been working to organize support and help craft California's pioneering advanced energy storage initiatives, including expanding the SGIP to include energy storage systems as qualifying technologies.

California's Self-Generation Incentive Program

Some six years and three bills later, “Storage is now solidly in the [SGIP] program and is absolutely strategic, not only behind the meter, but as the primary vehicle via which investor-owned utilities (IOUs) meet their customer-sited procurement targets for energy storage in California,” Lin explained.

Encouraging investment in advanced energy storage deployment and projects is “really the only way to sort out how to incorporate storage on the grid,” she continued. “You learn by doing. To a utility, storage devices can look like load or they can look like supply.”

Streamlining and how best to carry out the interconnection process and local permitting are among the issues CESA and Stratagen Consulting are focused on at present. “We're helping build the 'ecosystem,'” Lin said.

California AB 2514 set an overall energy storage procurement target of 1.3 gigawatts (GW) by 2020. This will be broken out across three tranches: one for distributed interconnection; a second for transmission interconnected; and a third, totaling 200 megawatts (MW), for customer-sited deployments in which SGIP plays a key role as a provider of incentives.

“We're moving up the energy storage learning curve through SGIP,” Lin elaborated. “Energy storage systems are flexible assets; they can look like load or generation. Many of the behind-the-meter systems today are being used to reduce customers' peak demand and peak demand charges. They're also being used to support the grid, participating in CAISO's (California Independent System Operator) frequency regulation market.

“This [the SGIP] program serves a very important role in encouraging technological innovation for behind-the-meter systems in terms of both generation and storage. All these distributed storage technologies are a tremendous resource for the grid; they can provide services back to the grid.”

Through CESA, Lin and Stratagen Consulting are now looking to fine-tune the energy storage aspects of SGIP. “One of the things we have realized in implementing SGIP projects is that, though small, these behind-the-meter energy storage systems are acting like a wholesale asset.”

The problem is that commercial, industrial and municipal organizations making use of energy storage systems to help balance grid supply and demand, and earn extra revenue in the process, are often buying electricity at retail rates and then selling into CISO's frequency regulation market at wholesale rates.

CESA is looking to level the playing field by enabling those using advanced energy storage systems in the frequency regulation market to be charged and sell at wholesale rates.

Image credits: 1) PNM Prosperity Energy Storage Project; 2) OSI; 3) DOE Global Energy Storage Database; 4) California SGIP Budget Report 2013