California PUC to consider energy storage framework, procurement

In a proposed decision scheduled to be addressed Jan. 14, the California Public Utilities Commission (CPUC) would give flexibility to investor-owned utilities (IOUs) in how they procure energy storage capacity and allow customer-developed storage projects to count toward utility procurement targets, up to a certain level.

The proposed decision, which was made available Dec. 15, 2015, also defers resolution of some issues for later, such as requests to change the Power Charge Indifference Adjustment mechanism for approval of contracts resulting from the 2014 storage solicitation process.

The CPUC in previous decisions adopted a framework and a plan for energy storage, including an October 2013 decision directing Sempra Energy (NYSE:SRE) subsidiary San Diego Gas & Electric (SDG&E), PG&E Corp. (NYSE:PCG) subsidiary Pacific Gas and Electric (PG&E), and Edison International (NYSE:EIX) subsidiary Southern California Edison (SCE) to procure at least 1,325 MW of energy storage in four solicitations through 2020. In addition, the CPUC, in an October 2014 decision, approved different energy storage procurement targets for SDG&E, SCE and PG&E.

The proposed decision, from CPUC Commissioner Carla Peterman, clarifies some of the procurement rules ahead of the 2016 biennial storage solicitations following comments from numerous parties and a “Scoping Memo and Ruling” from an administrative law judge (ALJ) in June 2015. The proposed decision is on the agenda to be considered at the CPUC’s Jan. 14 meeting.

The ALJ “Scoping Memo and Ruling” divided the proceeding into two tracks, according to the proposed decision. The first track addresses those issues that must be resolved prior to the IOUs’ 2016 storage procurement solicitations and the compliance filings of electric service providers and community choice aggregators, while the second track will consider additional issues for the development and refinement of the energy storage procurement framework and design program, Peterman’s decision said.

While the IOUs are still administering their requests for offers (RFOs) the RFO data shows that “there is substantial interest in energy storage development in California, as reflected by the robust number and types of offers received,” according to the decision.

In a previous ruling, the CPUC required IOUs to develop a consistent evaluation protocol to assess and select winning energy storage bids, and in comments, several parties sought to have the CPUC change the solicitation process, the decision related. The IOUs said that “there is a fair amount of uncertainty regarding how storage will integrate and operate as part of the bulk electric system” and as part of the California ISO (Cal-ISO) market.

SCE, for instance, noted that market rules for bidding energy storage into the Cal-ISO market through the Cal-ISO’s non-generation resource model are not robust enough to provide predictability in how storage resources will be dispatched, with SCE and other utilities seeking flexibility from the CPUC, the proposed decision said.

The ruling declined to require IOUs to dictate interconnection requirements associated with the RFOs or to explicitly value all possible revenue streams for multi-use storage applications. The IOUs provided a fair amount of specificity in their RFOs, and the CPUC prefers to provide “broad guidance” instead of some additional specificity sought by storage developers, the proposed decision said.

The storage procurement targets include levels for transmission and distribution domain targets in addition to customer-connected targets.

“Each of the utilities recommends allowing shifting of megawatts into and out of the customer grid domain and allowing all of customer-connected storage to count toward the storage targets,” the proposed decision said.

Some companies challenged that recommendation, or suggested that use of customer storage deployments should be limited to those awarded contracts through the RFO process.

The proposed decision allows the IOUs to satisfy some of their transmission and distribution domain targets through customer-connected projects, up to a “ceiling” of 200% of the existing customer domain targets. The proposed decision lists the storage procurement customer domain targets for SCE and PG&E at 85 MW, with a “ceiling” of 170 MW, and the customer domain target for SDG&E at 30 MW, with a “ceiling” of 60 MW.