BILL ANALYSIS AB 2514 Page 1 ASSEMBLY THIRD READING AB 2514 (Skinner) As Amended May 28, 2010 Majority vote UTILITIES & COMMERCE 8-6 NATURAL RESOURCES 6-3 ----------------------------------------------------------------- |Ayes:|Buchanan, Carter, Fong, |Ayes:|Chesbro, Brownley, De | | |Furutani, Ammiano, Ma, | |Leon, Hill, Ammiano, | | |Skinner, Bradford | |Skinner | | | | | | |-----+--------------------------+-----+--------------------------| |Nays:|Knight, Tom Berryhill, |Nays:|Gilmore, Knight, Logue | | |Fletcher, Fuentes, | | | | |Swanson, Villines | | | | | | | | ----------------------------------------------------------------- APPROPRIATIONS 12-5 ----------------------------------------------------------------- |Ayes:|Fuentes, Ammiano, | | | | |Bradford, | | | | |Charles Calderon, Coto, | | | | |Davis, | | | | |Monning, Ruskin, Skinner, | | | | |Solorio, Torlakson, | | | | |Torrico | | | | | | | | |-----+--------------------------+-----+--------------------------| |Nays:|Conway, Harkey, Miller, | | | | |Nielsen, Norby | | | | | | | | ----------------------------------------------------------------- SUMMARY : Requires California Public Utilities Commission (PUC) to establish procurement targets for energy storage systems for all load-serving entities for 2015 and 2020, and requires the governing board of each publicly owned utility (POU) to adopt energy storage system procurement targets to be achieved by 2016 and 2021 and report their progress to the California Energy Commission (CEC). Specifically, this bill : 1)Declares, among other things, that energy storage systems are AB 2514 Page 2 necessary and that there is inadequate evaluation of the use of energy storage and inadequate statutory and regulatory support. 2)On or before March 1, 2012, requires PUC to open a proceeding to establish procurement targets for each IOU for viable and cost-effective energy storage systems, and adopt energy storage system procurement targets to be achieved by each IOU by December 31, 2015, and a second target to be achieved by December 31, 2020. 3)On or before October 1, 2014, requires the governing board of each POU to adopt procurement targets for the utility for viable and cost-effective energy storage systems and adopt energy storage system procurement targets to be achieved by December 31, 2016, and a second target to be achieved by December 31, 2021. 4)As part of PUC proceeding, permits PUC to consider a variety of possible policies to encourage the cost-effective deployment of energy storage systems, including incentives and refinement of existing procurement methods to properly value energy storage systems, and permits PUC to apply different policies to different load serving entities. FISCAL EFFECT : According to the Assembly Appropriations Committee: 1)Ongoing special fund costs to PUC of $1.1 million for nine positions to establish a regulatory program for energy storage through a ratemaking proceeding, monitor compliance with the commission decisions, monitor procurement of storage services and evaluate the cost- effectiveness of such procurement through an annual compliance proceeding, and monitor the impacts on ratepayers of energy storage technologies. 2)Costs to CEC would be absorbable, except one position might be needed in the future, at a cost of $100,000, to review POU compliance with the 2016 and 2021 targets. COMMENTS : The most common form of energy storage device in use today is batteries. However, there are no commercially available batteries that could cost-effectively store the large amounts of electricity that can be produced by large-scale wind AB 2514 Page 3 farms or solar facilities. Another form of electricity storage that is already in use in California is pump storage, where water is pumped into a reservoir at night and then released through turbines during the day to produce electricity. Additional research is taking place to develop other storage devices using compressed air, flywheels, fuel cells, and other innovative technologies. Since May 2008, the California Independent System Operator (CAISO) has been coordinating a stakeholder process to identify the issues associated with integrating different types of energy storage technology on the electric power grid. CAISO launched 18-month pilot projects in July 2009, and is expected to be complete by December 2010. The three IOUs are running a study to develop cost-effectiveness methods for storage (permanent load shifting) and ways to deliver incentives to end-use customers to motivate customer investments in demand-side storage. Pacific Gas and Electric (PG&E) is piloting an energy storage project that includes a 4 MW Sodium Sulphur (NaS) battery project. PG&E states that the cost is "extremely expensive" at about $4 million per MW. It is also implementing a 300 MW compressed air energy storage (CAES) Kern Demonstration Project that uses a porous rock reservoir in Kern County near where 4,500 MW of new wind is projected to connect to the grid. The total cost of the facility is estimated to be $356 million. Southern California Edison (SCE) is engaged in three energy storage pilots. They are scheduled to be complete in 2012, 2014, and 2015. Analysis Prepared by : Gina Adams / U. & C. / (916) 319-2083 FN: 0004740