California adopts first-in-nation energy storage plan

In a bold move being closely watched by utilities, environmentalists and the clean technology industry, California on Thursday adopted the nation’s first energy storage mandate.

State regulators with the California Public Utilities Commission, meeting in Redding, unanimously approved Commissioner Carla Peterman’s groundbreaking proposal that requires PG&E, Southern California Edison and San Diego Gas & Electric to expand their capacity to store electricity, including renewable energy generated from solar and wind.

“The decision lays out an energy storage procurement policy guided by three principles: optimization of the grid, integration of renewable energy and reduction of greenhouse gas emissions,” said Peterman, a rising star who was appointed to the agency by Gov. Jerry Brown in late 2012.

The state’s three investor-owned utilities must collectively buy 1.3 gigawatts — or 1,325 megawatts — of energy storage capacity by the end of 2020. That is roughly enough energy to supply nearly 1 million homes. The 1.3 gigawatts is a capacity target, because different storage technologies have different rates at which they can accept and discharge energy, and the mandate aims to be technology-neutral.

“Storage really is the game changer in the electric industry. And while this new policy is not without risk, the potential rewards are enormous,” said Commissioner Mike Florio, widely seen as the strongest consumer advocate on the five-member PUC. Florio praised Peterman for bringing the ambitious energy storage proposal forward: “It seems like here in California, behind every groundbreaking energy policy is a visionary woman.”

California’s Renewable Portfolio Standard, which requires utilities to get 33 percent of their electricity from renewable sources like solar and wind, is widely credited with accelerating the state’s cleantech economy. Thursday’s decision to mandate energy storage is expected to spur innovation in emerging storage technologies, from batteries to flywheels.

The impact on household utility bills won’t be known until after the procurement process begins. Utilities must begin moving toward the 1.3 gigawatt goal by buying a combined 200 megawatts of energy storage technology by 2014.

“This decision comes at the perfect moment as the state plans for the replacement of the San Onofre Nuclear Generating Station,” said Evan Gillespie of the Sierra Club. “Today’s decision will spark new ideas and storage methods that can move us out of a destructive energy system and into a safe, healthy and efficient system of renewable energy.”

Assemblywoman Nancy Skinner, D-Berkeley, authored AB 2514, the law that put the PUC decision in motion.

“There are times during the day when we are producing more electricity than we need, and other times when demand exceeds what is on the grid,” Skinner said Thursday. “This will help us avoid blackouts without having to build new generation.”

Contact Dana Hull at 408-920-2706. Follow her at Twitter.com/danahull.