California's energy storage policies

No procurement targets, for now; deliberations continue

Phil Carson | Apr 03, 2012


Energy storage is the holy grail of the power industry. No one has escaped hearing that mantra.

But it turns out that a holy grail is a complicated matter. You may find it, but that doesn't mean you can use it. Just as the mythological chalice is elusive, so is energy storage—at least on a utility scale.

In some cases, energy storage technology works—it can receive, store and release energy. But that technology's role on the grid, the output's place in the electricity market and the regulatory framework around valuing its services and allocating costs is fraught with complications.

Should energy storage technology be used to capture intermittent, renewable resources so that that energy can be used at another time? That might make cheap, off-peak power more expensive by time-shifting it away from a period of abundance and low demand to a period of scarcity and high demand. If storage is used for ancillary services, how would that compete with less expensive, existing sources of ancillary services? Who owns the storage technology itself, how is it valued, who pays and how much? Is energy storage an application-specific role that leaves the foregoing questions difficult if not impossible to answer? 

Who knew that a holy grail could be found, only to confound?

Confused? That's the status of energy storage, in an admittedly imperfect summary, at least as it's been considered by the California Public Utilities Commission (CPUC), which has a mandate to resolve the issues around this nascent technology.

Let's move from general ruminations to specifics. Briefly, the background:

California's Assembly Bill 2514 was signed into law Sept. 29, 2010, by Gov. Schwarzenegger. AB 2514 required the CPUC to "determine appropriate targets, if any, for [utilities] to procure viable and cost-effective energy storage systems" by March 1, 2012. The CPUC has until Oct. 1, 2013, to adopt procurement targets and once that's done, utilities would have deadlines on Dec. 31, 2015 and Dec. 31, 2020 to achieve them.

Like the notion of seeking a holy grail, AB 2514's mandates sounded simple enough. And progress toward fulfilling these mandates has not lacked for honest, hard work. But, to cite another cliché, "the devil's in the details."

The CPUC opened a proceeding in December 2010 and in May 2011 it identified the issues to be addressed and a schedule for considering them. An initial workshop was held in June 2011 and another workshop in July 2011 focused on barriers to implementation. Comments were solicited, the CPUC staff issued a draft proposal in December 2011 and parties to the proceeding offered comments and replies to other comments, a process that ended in February this year.

There is, of course, at least one other crucial aspect to this narrative: what do stakeholders say? A brief generalization is fraught with peril, but that's where the man behind the curtain can help. (That's me.) Utilities are already engaged in pilots to discover what roles storage technologies might serve and how they might be valued by the market. Vendors suggest that procurement targets would provide a degree of certainty to their investments and provide real-world scenarios that would be preferable to more modeling and analysis. Critics suggest that forcing procurement targets merely lays more costs at consumers' feet, prior to proven business cases, and, in the market, the services (and value) that storage might provide tend to fluctuate, making storage investments at scale rather perilous. Meanwhile, researchers (see "Energy Storage: Drivers and Goals") have noted that "storage" per se isn't a monolithic concept, that specific applications must be identified and the value of storage to deliver those applications must be established. Cost-effective storage likely means, for instance, using one type of storage for multiple applications. 

In some sense, that's a very short version of how we've arrived at the CPUC staff's final framework proposal, issued yesterday. As the arc of this column reflects, just setting up the background leaves little room for considering the issues. Now to the final CPUC staff proposal, which you simply have to read yourself. I can only cite aspects of the executive summary or we'll be out of space and into the devil's details - which, unfortunately for brevity, it's all about. (As I published, the final staff proposal had not been posted online. Go to the CPUC proceeding R.10-12-007 and check for the latest documents; the one in question may be labeled April 3, 2012. Or go to the CPUC homepage and enter the proceeding number with no punctuation (R1012007) into the search box in the upper right corner.)

The CPUC staff has proposed the adoption of an energy storage "end use" framework" to assist in defining evaluation methods and resource adequacy values.

"CPUC staff believes that this analysis framework, along with a plan for addressing identified barriers, will set a foundation for expanding the ability of energy storage to gain wider adoption," the final staff proposal said. "Specifically, CPUC staff believes that the creation of a resource adequacy value and development of other rules allowing storage providers to participate more effectively in the utilities' procurement programs will mitigate many of the identified barriers. This effort will need to be coordinated with the California Independent System Operator (CAISO) to encourage policies and define products to enable electric energy storage systems to participate in its markets similar to other generation facilities. In parallel, the CPUC will continue to evaluate electric energy storage to make a determination whether or when an energy storage portfolio standard could be adequate."

That quote hardly suffices as a capper here, but it's clear that procurement targets are not being imposed on utilities right now in California. So tomorrow I'll look at the CPUC staff's "energy storage analysis framework," barriers to energy storage implementation and the next steps in this appropriately tortuous issue.

Phil Carson
Intelligent Utility Daily

Related Topics


One Stop Gardens solar-generated electricity storage system

Storage of solar generated electrlicity works impressively  well on a small scale.

We question whether it is practical on a large scale.

Google 'Case No. 12-00007-UT'

Identity is important here

When you use our forum and reference "we," our readers deserve to know who's speaking.

Please do so, as it enables readers to assess your perspective.

Regards, Phil Carson

Let the Utilities Profit from Storage and Barriers Will Drop.

Storage can provide vital services.  We don't need to quantify and categorize all potential benefits into a "framework" that is imposed on the utilities.  The main barrier to adoption is the lack of incentive to the utilities that control access to the grid.  There are two solutions to this problem; either force the utilities through mandates, or allow them to earn income from storage investments.

They don't need to become storage experts and risk ratepayer money.  Hundreds of megawatts of solar PV are being developed in CA through utility programs that do not risk ratepayer money.  Solar developers are installing rooftop PV under power purchase agreements with the utilities.  Let storage developers create energy service agreements to compete with peaker plants and T&D investments.  Level the playing field.  A storage developer should be able to install storage that provides benefits to an industrial host and then sell services to the utility just like a peaker plant. 

Stop the paralysis by analysis and just allow a storage developer access to the same streams of income available to other vendors.  Allow utilities to contract with storage, on a competitive basis, for the same voltage support, capacity, frequency regulation, spinning demand, etc. that is purchased from generators and load.  Make such purchases non-discriminatory, technology neutral, based only on performance, and see if storage can compete.

Charles R. Toca, USR Power Grid Partners


It would be quite helpful to respond to other commenters by name.  Since I  can't...

Pumped storage in California alone amounts to more than 3 GW.  Nationwide I think the amount is well into the double digits of GW.

I'd love to see more thermal storage but unless it's cost-competitive with peaking plants, it's just too expensive.  Even if it's capital costs are comparable to a peaking plant, only the most efficient technologies are competitive on an operating cost basis.  The bottom line, though, is that thermal storage would be readily adopted if it made economic sense.  Since it doesn't make economic sense without sizable out-of-market payments, either it's still too expensive or market conditions don't make sense.  As a long-time observer of the electricity industry in Californis, I suspect  both cost and poor market conditions are responsible for the slow uptake of thermal storage.

Jack Ellis, Tahoe City, CA

Pumped storage cannot solve the issue

On a hot day, California requires somewhere in the neighborhood of 50 GW. So 3 GW of pumped storage is nice (just as important is how long can that 3 GW be maintained), but won't solve the problem and certainly won't back up large scale installations of solar and wind. There is also the issue of tying up a lot of water in a state that is always desperate for it.

As you imply, there aren't a lot of good solutions for storage outside of pumped storage. That's my main point here. Most people (including me) wish we could get rid of fossil fuels, but at the moment there just aren't any solutions that won't cause major disruptions in the economy. Out of all states in the US, California with its looming deficits and fragile economy should be the most sensitive to this.

       Milton Scritsmier

       Boulder, CO


It would be quite helpful to respond to other commenters by name.  Since I  can't...

Pumped storage in California alone amounts to more than 3 GW.  Nationwide I think the amount is well into the double digits of GW.

I'd love to see more thermal storage but unless it's cost-competitive with peaking plants, it's just too expensive.  Even if it's capital costs are comparable to a peaking plant, only the most efficient technologies are competitive on an operating cost basis.  The bottom line, though, is that thermal storage would be readily adopted if it made economic sense.  Since it doesn't make economic sense without sizable out-of-market payments, either it's still too expensive or market conditions don't make sense.  As a long-time observer of the electricity industry in Californis, I suspect  both cost and poor market conditions are responsible for the slow uptake of thermal storage.

Jack Ellis, Tahoe City, CA

CALIFORNIA's Energy Policies

While all parties involved are posturing for position in California and storage happens at a snails pace, proven technologies and regional isos like PJM and ERCOT are moving forward with programs that reward storage customers for participation.  Many of those storage customers use proven affordable thermal energy storage.

According to a March 2012 KEMA Market Storage of Energy Storage study for the copper industry, thermal energy storage has over 1GW of installed capacity in the US.  That is twice as much as pumped hydro and more than all other energy storage technologies combined.  The prediction is that that pattern of growth will continue because of the new control technolgies availabe to TES operators and that TES is affordable today. 

Because of passed experience Californai is slow to adopt thermal energy storage.  A little bit of a CPUC push would result in faster adoption while customers put some skin in the game as well.  While TES is a seasonal storage solution is most areas of the country and it may not be the total solution CALIFORNIA is looking for, TES provides the biggest benefit when the California  grid has the most difficulty - Summertime. A total solution will require all forms of storage to provide the grid reliablity needed when moving away from dispatchable  fossil fuels to intermittant renewable energy. While I understand the slow pace for a total solution, a separate program for distributed thermal energy storage could get the storage movement started with minimal investment.

CALIFORNIA can do nothing and our TES industry will provide capacity at its current pace.  Or the CPUC could at least get some rules in place for distributed thermal energy storage to provide faster addoption within the state to help reduce demand for the summer season. TES could really be of use this summer with San Onofre nuclear plant shutdown by shifting peak demand and capturing more renewable energy.

While waiting for the perfect answer, the TES industry will march forward on its own with the educated customers that have experienced the life cycle cost value of using thermal energy storage.


They might as well pass a bill to set pi to 3

This just shows the whole silliness of treating utilities as social welfare organizations rather than providers of a critical service.

The technology for storage on a cheap, large-scale basis simply isn't there. If it was, utilities would implement it. There would be no need for a government mandate. The same can be said for using renewables. In most cases they aren't the cheapest nor most reliable solution, and bring their own problems.

The hard truth staring everybody in the face is that today the cheapest and most efficient form of energy storage are fossil fuels. Given that we keep finding more and more of them, especially in forms that are excellent for power generation, it's silly to force expensive alternatives on society. One day we are going to stress energy production to the point that we will find ourselves with a third-world power generation system, unable to provide power with the 99.99% reliability a first-world economy needs.

Agree on social welfare

Many would agree with you on storage, however, the rebels in the Hoosier state apparently do not agree on your point about coal.

Regards, Phil Carson

Negative health effects from burning coal and other fossil fuels

 Scientists working for the U.S. Environmental Protection Agency (EPA) are able to predict how many premature deaths, heart attacks, and other impacts are caused by power plant pollution based on recent scientific studies by researchers affiliated with the American Cancer Society, the Harvard School of Public Health and other top universities and research institutions.


EPA consultants estimate that fine particle pollution from power plants shortens the lives of 887 Hoosiers each year. Hoosiers have the fifth highest risk of dying from power plant pollution in the country. "Fine particle pollution from power plants also causes 123,098 lost work days, 845 hospitalizations and 21,532 asthma attacks every year, 1,274 of which are so severe they require emergency room visits."


According to Stephen J. Jay, M.D., Chair of the Department of Public Health at Indiana University School of Medicine, "Indiana’s power plants place it among the nation’s top five polluting states in the country. . . . In April, 2005, the EPA identified 17 counties in Indiana that failed to meet the 1997 air quality standards for health protection regarding fine particles . . . . These counties are home to more than 2.5 million Hoosiers – more than 40% of the state’s total population."


The primary source of fine particle emissions comes from combustion of fossil fuels. "Because of their small size, fine particles can be inhaled deep into the lungs, and may enter the bloodstream. . . . There is broad scientific consensus that fine particle pollution endangers our health. These health effects range in severity from minor symptoms to chronic, serious and fatal outcomes."


Fine particle pollution:

  • causes premature death in people with heart and lung disease, accounting for more deaths in the U.S. each year than either drunk driving or homicide (23,600);
  • triggers thousands of heart attacks each year;
  • worsens respiratory symptoms such as coughing, wheezing, and shortness of breath, triggering over 20,000 asthma attacks per year in Indiana;
  • increases hospital admissions, emergency room visits and clinic visits for respiratory diseases and cardiovascular diseases;
  • causes lung function changes, especially in children and people living with lung diseases such as asthma;
  • causes changes in heart rate variability and irregular heartbeat;
  • is associated with the development of chronic respiratory disease in children.


"Additionally, researchers have found that infants in areas with high levels of particulate matter pollution face a 26 percent increased risk of Sudden Infant Death Syndrome and a 40 percent increased risk of respiratory death." "A recent scientific study by researchers affiliated with the American Cancer Society found that people living in the most polluted cities have approximately a 12% increased risk of cardiopulmonary death over those living in the cleanest areas of the country. Similarly, for lung cancer, there is approximately a 16% increase risk for those living in the more polluted cities. Based on EPA data, each year, 114 lung cancer deaths and 1491 heart attacks in Indiana are attributable to power plant pollution."


According to the American Lung Association’s "State of the Air: 2007" report, Indianapolis ranked 9th on the list of the most polluted cities across the nation.


"Children, the elderly, and people suffering from chronic illnesses are particularly vulnerable to the adverse health effects of air pollution. 'Poor and minority communities are also disproportionately affected by air pollution' because they often live closer to the emission sources. Well over 1 million children in Indiana live within 30 miles of a coal-fired power plant, the area associated with the highest health risks. Over 60,000 of these 1 million children have asthma."


As a result of fine particle pollution, the costs associated with premature mortality, illness, and lost productivity in Indiana exceed $5 billion each year."



One more thing....

I looked up the employment statistics for Indiana. The state currently has 2,818,000 workers (see ). Assuming they work 5 days a week, 50 weeks a year, that's 704,500,000 work days per year. If the total loss due to all effects of particulate matter is the 123,098 work days cited in your reference, that's a loss of 0.018%. That's hardly noticeable. Colds and flus probably cause far more down days.

Unfortunately, the reference you cite does not mention this fact. Instead, all these numbers are presented as terrible, end-of-the-world statistics in bold print. This document is basically a PR stunt which would not be acceptable in scientific circles. Shame on the scientists who presented this info to the public without putting it into perspective.

I'm not saying we should ignore the effects of particulate matter or any other pollution. My next door neighbor, who I grew up with and was in the same grade as me, suffered from severe asthma as a child and died from an asthma attack in her 30s. She left behind a husband and young kids. So it matters to me. I've also known people who died tragically in car crashes. Does this mean we should ban all cars?

Life is a series of trade-offs. Cheap, reliable electricity is important to a first world economy. So is the freedom given by cars. So we do what we can: We put seat belts and air bags in cars and design them to minimize the effects of a collison (which nobody should forget was done by government mandate, and which also saved my life once). With power generation we have recently been blessed with the option of replacing dirty coal with cheap natural gas. Why must we always live life at one extreme or the other?

      Milton Scritsmier

      Boulder, CO

Actually, nobody has asked the Hoosiers yet

It's all nice to cite a bunch of statistical studies, but how do you really tie an asthma attack to particulate matter? The truth is that over the past few decades asthma has been increasing even as our air has become cleaner -- including particulate matter of all sizes. When we don't even know the reason for this increase, how can a bunch of  statistical studies definitely tie particulate matter to asthma? Correlation is not causation. And any study that purports to exactly "123,098 lost work days" when the underlying data is not anywhere near as accurate is blowing a lot of smoke. It's just putting out a lot of numbers for the media to gobble up.

And let's not speak for the Hoosiers. Let them speak for themselves. If you took a vote, they might very well opt for cheaper coal over some theoretical study on particulate matter.

However, if you don't like coal we always have plenty of natural gas. It will even make a good replacement for diesel in long-haul trucks if particulates really bother you. Meanwhile, coal producers in the US will probably find an eager market for their coal in China.

But I am not really opposed to storage. It's just that we currently don't have any economical options for large scale storage, which makes solar and wind very iffy as a replacement for baseload power. This is a simple fact which should be apparent to all. Having grown up in California and seen a great state devolve into navel gazing, I am once again dismayed by their denial of economic realities.

     Milton Scritsmier

     Boulder, CO

[Also the original author of "They might as well pass a bill to set pi to 3"]