BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 2514
                                                                  Page  1

          Date of Hearing:  April 22, 2010

                       ASSEMBLY COMMITTEE ON NATURAL RESOURCES
                                Wesley Chesbro, Chair
                   AB 2514 (Skinner) - As Amended:  April 14, 2010
           
          SUBJECT  :  Energy storage systems

           SUMMARY  :  Requires the California Public Utilities Commission  
          (PUC) to open a proceeding to establish procurement targets for  
          each investor-owned utility (IOU), and requires each  
          publicly-owned utility (POU) to adopt energy storage system  
          procurement targets and report their progress to the California  
          Energy Commission (CEC).

           EXISTING LAW  :

          1)Requires the PUC to review and approve a procurement plan for  
            each IOU.

          2)Requires both IOUs and POUs to first acquire all available  
            energy efficiency and demand reduction resources that are  
            cost-effective, reliable, and feasible.

          3)Pursuant to the California Global Warming Solutions Act (AB  
            32), requires the Air Resources Board (ARB) to adopt a  
            statewide greenhouse gas (GHG) emissions limit equivalent to  
            1990 levels by 2020 and to adopt rules and regulations to  
            achieve maximum technologically feasible and cost-effective  
            GHG emission reductions.

          4)Requires IOUs and POUs to achieve a 20 percent renewable  
            portfolio by 2010 and establishes a detailed process and  
            standards for renewable energy procurement by IOUs.

           THIS BILL  :  

           1)Declares that expanding the current use of energy storage  
            systems can:

             a)   Aid IOUs in integrating increased amounts of renewable  
               energy resources into the electrical grid in a manner that  
               minimizes the emission of GHGs.

             b)   Optimize and accelerate the integration of significant  








                                                                  AB 2514
                                                                  Page  2

               amounts of variable, intermittent, and offpeak electrical  
               generation from wind and solar energy sources.

             c)   Reduce energy costs by avoiding or deferring the need  
               for fossil fuel-powered peaking power plants, which can  
               have substantial co-benefits from reduced emissions.

          2)Declares there exist significant barriers to realizing the  
            benefits energy storage including inadequate evaluation of the  
            technology and resource planning on how it may fit more  
            efficiently into the electrical grid, a lack of recognition of  
            current storage technologies and storage market advancements,  
            and inadequate statutory and regulatory support.

          3)Requires the PUC, on or before April 1, 2011, to open a  
            proceeding to establish procurement targets for each IOU for  
            viable and cost-effective energy storage systems.  

          4)Requires the PUC by January 1, 2013, to adopt energy storage  
            system procurement targets to be achieved by each IOU by  
            January 1, 2015 and January 1, 2020.

          5)Requires each POU, on or before April 1, 2011 to initiate a  
            process to establish procurement targets for the utility for  
            viable and cost-effective energy storage systems, and by  
            January 1, 2013, to adopt energy storage system procurement  
            targets to be achieved by January 1, 2015 and January 1, 2020.

          6)Requires each POU to report to the CEC regarding the energy  
            storage system procurement targets and report any  
            modifications made to those targets.

          7)Requires the PUC to consider existing results of testing and  
            trial pilot projects from existing energy storage facilities,  
            to consider information provided by the California Independent  
            System Operator (CAISO), and to consider the integration of  
            energy storage technologies with other programs including  
            energy efficiency or other means of reducing electrical demand  
            that will result in the most efficient use of generation  
            resources and cost-effective energy efficient grid integration  
            and management.

          8)Requires the PUC to ensure that the energy storage system  
            procurement targets that are established are technologically  
            viable and cost-effective. 








                                                                  AB 2514
                                                                  Page  3


           FISCAL EFFECT  :  Unknown

           COMMENTS  :

           1)Renewables, peakers and storage.   California law requires  
            utilities and other retail sellers of electricity to meet at  
            least 20 percent of the retail sales using electricity from  
            renewable resources by 2010; a Renewable Portfolio Standard  
            (RPS).  ARB has identified an advancement of the RPS to 33  
            percent by 2020 as one of the key actions needed to be taken  
            in order to meet the GHG reduction goals of AB 32.  Several  
            bills have been introduced in order to address the 33 percent  
            RPS goal, including SB 722 (Simitian), which requires  
            utilities to procure at least 33 percent of electricity  
            delivered to their retail customers from renewable resources  
            by 2020.  While several studies have determined that a 33  
            percent RPS is achievable, it is predicted that this goal can  
            only be met with a heavy reliance on wind and solar energy,  
            which are intermittent resources.  

             Historically, utilities have increased electricity production  
            to meet increasing peak load needs by building fossil  
            fuel-powered peaker plants, which can be ramped up and down  
            quickly.  Most peaker plants run on natural gas and are less  
            efficient than typical baseload plants, and may cause more air  
            emissions per each kWh of electricity generated compared to  
            renewable energy sources.  While a new natural gas peaker  
            plant may adequately address an increase in peak electrical  
            demand, the resulting increase in GHG emissions does not  
            address the RPS requirement issue.  The ARB, in collaboration  
            with research done at Lawrence Berkeley National Laboratory in  
            2008, has recommended finding ways to store the electrical  
            output of renewable facilities to use at a later time or date  
            to decrease reliance on the peaker plants.  Based upon current  
            and historical peak demand energy use in California, the CEC  
            predicts that peak energy demand load will increase 1.3  
            percent per year, resulting in a total of 15 percent increase  
            in peak load by the year 2020.  

           2)Energy storage has been used for over a century.   The first  
            electric energy storage facility was a pumped hydroelectric  
            facility in Europe built in 1890.  Historically, the vast  
            majority of energy storage facilities have been pumped hydro,  
            and have been used by fossil fuel power plants for load  








                                                                  AB 2514
                                                                  Page  4

            balancing, where low-cost, off-peak power is used to pump  
            water from low elevations to a higher elevation reservoir.   
            Subsequently when energy demand is high and the cost of power  
            increases, water from the reservoir is released through a  
            turbine to generate power that can be sold at a higher rate,  
            while providing electricity during high-demand (peak)  
            electricity time periods that supplements fossil fuel power  
            plants.  In recent years, energy storage has begun to play an  
            important role in the integration of renewable energy sources  
            into the electrical grid.  Many renewable energy sources  
            generate power intermittently, and by nature are not able to  
            produce energy in a way that mirrors energy demand.  For  
            example, wind-generated power is often produced during the  
            night when the demand for energy is low.  If energy storage is  
            utilized to store the excess wind energy during off-peak  
            hours, the energy can be discharged for use the next day  
            during peak hours, or whenever it is next needed.   
            Photovoltaic (PV) energy produced by the sun presents another  
            example.  Power generated by solar energy over the course of  
            one day in Springerville, AZ, was measured at 10 second  
            intervals by a Carnegie Mellon Research group.  The curve as a  
            whole represents the MW generated from the sun between sunrise  
            and sunset, while each "blip" in the curve represents a cloud  
            passing between the sun and the solar panel (Fig. 1).  The  
            figure shows the two dimensions of the intermittent quality of  
            solar generated energy.  The first is that solar energy is  
            only generated during the day when the sun is shining, and  
            without an energy storage system, solar energy alone would not  
            be able to provide electricity during the evening and night  
            hours for necessary uses such as lighting and refrigeration.   
            While this solar energy generation pattern closely mirrors  
            electricity demand in shape, the energy generation curve is  
            often interrupted by quick and temporary decreases in power  
            generation, or blips, which demonstrate the effect of a cloud  
            passing between the PV panel array and the sun on power  
            generation.  If solar-generated energy is utilized without  
            energy storage, power is only available for use during certain  
            hours of the day.  In addition, each time a cloud passed  
            between the PV array and the sun, the available power would  
            suddenly decrease, leading to temporary blackouts and  
            subsequent electrical issues.  In tandem with a statewide  
            electrical grid, the energy stored from this intermittent  
            renewable resource can be more reliably incorporated into the  
            grid as a supplemental energy source to accommodate peak  
            shaping and load leveling.  This strategy may reduce the need  








                                                                  AB 2514
                                                                  Page  5

            to build and power new fossil fuel peaker plants to meet  
            California's growing peak energy demand needs.



            Figure 1.  Diurnal photovoltaic power (MW) generated by the  
            sun in Springerville, Arizona during one day on February 25,  
            2007.  Measurements were taken at 10 second intervals.  The  
            curve as a whole represents the MW generated from the sun  
            between sunrise and sunset, while each "blip" in the curve  
            represents a cloud passing between the sun and the solar  
            panel.

           3)Worldwide installed energy storage capacity totals  
            approximately 122,878 MW.   As of March 2010, the California  
            Energy Storage Alliance compiled survey data at the global and  
            California levels in order to determine the extent to which  
            energy storage technologies had penetrated the market.   
            Technologies significantly utilized globally are pumped hydro,  
            thermal, flywheels, batteries (multiple types), flow  
            batteries, compressed air energy storage (CAES), molten salt,  
            superconducting magnetic energy storage (SMES),  
            supercapacitors, hydrogen fuel cells, and turbines.  At a  
            given point in time, the U.S. stores approximately 2.5 percent  
            (23 Gigawatts (GW)) of its base energy generation load  
            compared to 10 in Europe and 15 percent in Japan according to  
            a Fraunhofer Institute Environmental, Safety and Energy  
            Technology report in 2008.  Storage technologies provide a  
            variety of electrical demand responses.  High-speed flywheels  
            and high-power super capacitors, in the 10 kilowatt (kW) to  
            one MW capacity range, and SMES, at 10 MW capacity, are able  
            to discharge stored electricity quickly, with up to the second  
            and/or minute response time, to provide quick peak shaving and  
            load leveling.  Various types of batteries utilizing  
            Lithium-ion, Nickel-cadmium, and lead-acid chemistry with  
            capacities that vary from one kW to one MW can discharge power  
            within minutes to meet demand.  Metal-air batteries,  
            high-energy super capacitors, flow batteries, pumped hydro,  
            and CAES storage technologies can range in capacity from one  
            kW to one GW, and have a discharge power response time ranging  
            from minutes to hours depending on the storage type.

           4)CAISO includes energy storage in its plan to meet its  
            renewable energy integration goals.   The CAISO recently  
            released a study investigating the potential to integrate  








                                                                  AB 2514
                                                                  Page  6

            renewable resources.  For example, they include a significant  
            amount of wind-generated energy into the grid by 2012 and 2020  
            to help meet RPS goals including the installation of 4,500 MW  
            of newly installed wind generation in 2012 that is in addition  
            to the existing 2,600 MW in the state, plus the corresponding  
            transmission infrastructure.  Since wind energy is generally  
            produced during offpeak hours, CAISO proposes to utilize  
            energy storage to help aid the incorporation of wind-generated  
            energy.  According to CAISO, peak demand in its service  
            territory was 50,270 MW in July 2006.   Since May 2008, CAISO  
            has been evaluating the issues associated with integrating  
            energy storage into the electric power grid including a pilot  
            project that was launched in July 2009, and is expected to be  
            complete by December 2010.  The three largest IOUs are also  
            currently involved in studies to develop cost-effective  
            methods for incorporating demand-side energy storage into the  
            grid.

           5)Research and development in the field of energy storage  .  An  
            energy model created by the National Renewable Energy  
            Laboratory (NREL) recently examined the penetration of  
            wind-generated energy into an electrical grid, with or without  
            incorporating energy storage.  The model determined that  
            incorporating 30 GW of wind energy storage would result in the  
            utilization of 50 GW wind power within the grid by the year  
            2050.  The comparison demonstrated that the use of energy  
            storage allowed for a 17 percent increase in wind generated  
            power penetration compared to no energy storage.  This  
            inclusion of energy storage would also eliminate the need for  
            using natural gas generators to deal with electrical demand  
            variability translating to a 56 percent reduction in GHG  
            emissions per kilowatt-hour (kwh) of electricity.  
           
          REGISTERED SUPPORT / OPPOSITION  :

           Support 
           
          A123 Systems, Inc.
          Altair Nanotechnologies, Inc.
          Applied Intellectual Capital (AIC)
          Beacon Power
          Breathe California
          California Attorney General
          California Energy Storage Alliance (CESA)
          CALMAC Manufacturing Corporation








                                                                  AB 2514
                                                                  Page  7

          Clean Power Campaign
          Coalition to Advance Renewable Energy through Bulk Storage  
          (CAREBS)
          Debenham Energy, LLC
          DOW KOKAM LLC
          EnerVault Corporation
          ElectronVault, Inc.
          EnerSys
          EVAPCO, Inc.
          FAFCO Solar Water Heating Inc.
          Fluidic Energy, Inc.
          HDR/DTA 
          Ice Energy, Inc.
          Independent Energy Producers
          LightSail Energy
          MegaWatt Storage Farms, Inc.
          Mohr Davidow Ventures
          NATGUN Corporation
          NGK-Locke, Inc.
          Panasonic
          Pearl Street Liquidity Advisors, LLC.
          Polaris Venture Partners
          Powergenix
          Prudent Energy International, Inc.
          PVT Solar, Inc.
          Rockport Capital Partners
          SAIL Venture Partners
          Samsung SDIA, Inc.
          SANYO North America Corp.
          SEEO, Inc.
          The Solar Alliance
          Suntech
          SustainX. Inc.
          Union of Concerned Scientists
          Vote Solar
          XtremePower

           Opposition 
           
          California Coalition of Utility Employees (CCUE)
          California Large Energy Consumers Association (CLECA) (unless  
          amended)
          California Manufacturers & Technology Association (CMTA)
          California State Association of Electrical Workers
          Northern California Power Agency (NCPA)








                                                                  AB 2514
                                                                  Page  8

          Pacific Gas and Electric Company (PG&E) (unless amended)
          San Diego Gas & Electric (SDG&E) (unless amended)
          Southern California Edison (SCE) (unless amended)
           

          Analysis Prepared by  :  Jessica Westbrook / NAT. RES. / (916)  
          319-2092