If you thought California’s lead as an energy storage market might fade in the face of upstarts such as Australia or Germany, then think again. Recent moves might see new gigawatts of capacity being installed across the state by 2020.
The most significant development was the recent reopening of California’s Self-Generation Incentive Program (SGIP) with more than US$448m in funding dedicated to energy storage.
The cash, 79 percent of an almost $567m funding package available through 2019, is expected to create a surge in behind-the-meter energy storage deployments across the state.
Most of the storage budget is aimed at what the California Public Utilities Commission (CPUC) calls ‘large-scale storage,’ or systems of more than 10 kW. But 13 percent, or just over $57m, will be for residential installations.
“The incentive level for energy storage systems larger than 10 kW that do not take the investment tax credit (ITC) and all residential systems 10 kW and smaller will be set at 50 cents/watt-hour,” says the CPUC on its website.
Projects That Are Larger than 10 kW
“Projects that are larger than 10 kW and take the ITC will have a lower initial incentive rate of 36 cents/watt-hour.
“We expect that demand will exceed the amount of funding for incentives at that level very quickly, and we therefore expect incentive levels to decrease by 10 cents/watt-hour shortly after SGIP reopens.”
The new SGIP will act in addition to a provision for behind-the-meter storage that already exists within the Assembly Bill 2514 (AB 2514) mandate that has powered deployments in California so far.
The AB 2514 provision is for 200 MW of capacity, to be procured by 2020 and installed by 2024.
But the SGIP, which had its budget doubled under legislation agreed last year, “is going to blow it out of the water,” said Janice Lin, founder and executive director of the California Energy Storage Alliance (CESA).
Instrumental In Getting the SGIP to Focus on Storage
CESA was instrumental in getting the CPUC to focus the SGIP on storage, she told Energy Storage Report. Originally the program had been solely dedicated to demand response, she said.
Behind-the-meter deployments are also being boosted in California by AB 2868. This last year directed the CPUC to get the state’s three largest electrical utilities to “accelerate widespread deployment of distributed energy storage.”
In practice this will add up to 500 MW more of capacity to the system, up to 25 percent of which could be behind the meter. “We’re waiting for those utility applications,” Lin said.
On top of that, AB 2514, which is a biennial procurement program, is set to continue and is expected to mandate further utility deployments in future. But it doesn’t stop there.
This legislative session has seen no fewer than three bills emerge in the last fortnight that could each add significant further energy storage capacity to the California electricity system.
Procuring 120 MW of Energy Storage Capacity
One is a Senate Bill, SB 801, which requires the Los Angeles Department of Water and Power and Southern California Edison to procure 100 MW and 20 MW, respectively, of energy storage capacity.
The procurement has been put forward on an emergency basis to reduce the impact of the Aliso Canyon natural gas storage failure.
Finally, two other bills, SB 338 and AB 1405, aim to address California’s clean peak energy problem, commonly known as the duck curve. “The neck of the duck is the most challenging portion of our net load,” explained Lin.
And it’s getting worse. This month the California Independent System Operator (CAISO) “is expected to release a new animal,” she said. “What I’ve heard from CAISO is the ramp of the new duck is shocking. The neck is huge.”
CAISO now sees storage as a key tool for dealing with challenges such as the duck curve and Aliso Canyon, she said.
If Clean Peak Energy Bills Are Implemented
If the clean peak energy bills are implemented it is unclear how much extra energy storage capacity they might add since other measures, such as demand response, might form part of any eventual package.
However, CESA roughly calculates that it could amount to “hundreds of megawatts of storage,” said Lin. “The fundamental underlying trends are very solid for storage.
“Storage is a very helpful enabler to more and more clean energy in our mix,” she said. “There is a lot going on in California right now. While California has been trailblazing, in some ways we are just getting started.”