BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 2514| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: AB 2514 Author: Skinner (D) Amended: 8/2/10 in Senate Vote: 21 SENATE ENERGY, U.&C. COMMITTEE : 8-2, 6/29/10 AYES: Padilla, Corbett, Florez, Kehoe, Lowenthal, DeSaulnier, Simitian, Wright NOES: Dutton, Strickland NO VOTE RECORDED: Cox ASSEMBLY FLOOR : 41-28, 6/3/10 - See last page for vote SUBJECT : Energy storage systems SOURCE : Attorney General California Labor Federaion DIGEST : This bill requires the Public Utilities Commission to determine appropriate targets, if any, for load serving entities to procure energy storage systems. The bill requires load serving entities to meet any targets adopted by the Commission by 2015 and 2020. The bill requires publicly owned utilities to set their own targets for the procurement of energy storage and then meet those targets by 2016 and 2021. ANALYSIS : Under current law, load serving entities (including both investor owned utilities and energy service providers) are regulated by the California Public Utilities CONTINUED AB 2514 Page 2 Commission (CPUC). Current law requires load serving entities to increase their procurement of renewable energy by one percent per year, such that renewable energy sources make up twenty percent of a load serving entity's electricity supply by December 31, 2011. This requirement is referred to as the Renewable Portfolio Standard. Current law exempts publicly owned utilities from the Renewable Portfolio Standard and instead requires publicly owned utilities to implement their own renewable energy plans. This bill requires the CPUC to determine the appropriate targets, if any, for load serving entities to procure energy storage systems. The Commission is required to develop the targets by October 1, 2013. Load serving entities are required to meet those targets, if any, by 2015 and 2020. The bill requires publicly owned utilities to establish their own targets for procurement of energy storage systems by October 1, 2014 and meet those targets, if any, by 2016 and 2021. Publicly owned utilities are required to report their progress in meeting their targets to the Energy Commission. The bill requires investor owned utilities to integrate the energy storage system targets into their renewable energy procurement plans. The bill's requirements do not apply to investor owned utilities that provide electric service to customers outside California and have 60,000 or fewer customers inside California. What is Energy Storage ? One of the distinctive characteristics of the electric power sector is that the amount of electricity that can be generated is relatively fixed over short periods of time, although demand for electricity fluctuates throughout the day. Developing technology to store electrical energy so it can be available to meet demand whenever needed would represent a major breakthrough in electricity distribution. Helping to try and meet this goal, electricity storage devices can manage the amount of power required to supply customers at AB 2514 Page 3 times when need is greatest, which is during peak load. These devices can also help make renewable energy, the output of which cannot be controlled by grid operators, smooth and dispatchable. Storage devices can provide frequency regulation to maintain the balance between the network's load and power generated. Thus, energy storage holds substantial promise for transforming the electric power industry. Types of Energy Storage . Battery storage and pump hydro storage systems have been around for many years, so the concept of energy storage is not new. Large pump storage facilities have been proven to be very effective in shifting large quantities of low-cost, off-peak energy production to delivery during high cost on-peak energy periods by using excess electricity to pump water uphill into a reservoir. When power is needed, the water can run down through turbines, much like a traditional hydroelectric dam. However, large pump hydro storage facilities are quite costly, and there are very few locations where they can be built. California has a number of pump storage facilities. One of the largest facilities is the Helms Pump Storage Facility that was built in the early 1980s with three units. Each unit is rated at 400 MW in generation mode and 310 MW in pumping mode for a total of 1,200 MW generating mode and -930 MW pumping mode. The facility is owned and operated by PG&E. Pump hydro storage is the largest and most viable storage technology available with nearly 123,000 MW deployed around the world. Excluding pump hydro storage only 2,128 of installed energy storage technologies exist worldwide which include: Batteries - electrical energy is stored for later use in chemical form. Thermal Storage - air conditioners create ice at night then power rates are low. This stored ice then runs a cooling system during the afternoon, when power costs are highest and the power grid is most stressed; AB 2514 Page 4 Flywheels - convert electrical energy to kinetic energy then back again very rapidly; and Compressed Air - electricity is used to compress air into storage tanks or a large underground cavern. The compressed air is used to spin turbines when electricity is needed. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: Yes The CPUC indicates that in order to develop targets and oversee the implementation of those targets by load serving entities, it will need about $1,000,000 per year in additional staff resources. SUPPORT : (Verified 8/17/10) Attorney General (co-source) California Labor Federation (co-source) American Federation of State and County and Municipal Employees, AFL-CIO Asian Health Services California Nurses Association California Professional Firefighters Sierra Club CA State Building and Construction Trades Council of CA OPPOSITION : (Verified 8/17/10) California Chamber of Commerce California Taxpayers' Association California Business Properties Association California Retailers Association California Bankers Association California Manufacturing and Technology Association California Aerospace Technology Association TechAmerica ARGUMENTS IN SUPPORT : California often experiences peak electricity demand growth that increases at a rate faster than electricity can be generated. Currently, backup fossil fuel electricity generation is frequently used to AB 2514 Page 5 keep up with the demand. The California Energy Commission predicts that this peak electricity demand will increase by 15 percent by the year 2020. This bill encourages California to incorporate energy storage to the energy grid thereby decreasing our reliance on fossil fuels, coping with increasing energy demand, and advancing California toward its renewable energy goals. Renewable energy sources such as solar-generated photo-voltaic power and wind-generated power are widely used globally, but these renewable resources generate power intermittently. This energy is not used efficiently due to California's electricity grid design which does not utilize storage. This bill will help integrate energy storage into utility planning and procurement which will help California reach the renewable energy goals it has committed to. ASSEMBLY FLOOR : AYES: Ammiano, Arambula, Bass, Beall, Blumenfield, Bradford, Brownley, Caballero, Charles Calderon, Carter, Chesbro, Coto, Davis, De La Torre, De Leon, Eng, Evans, Feuer, Fong, Fuentes, Furutani, Galgiani, Hall, Hill, Huber, Huffman, Jones, Lieu, Bonnie Lowenthal, Ma, Monning, Nava, V. Manuel Perez, Ruskin, Saldana, Skinner, Swanson, Torlakson, Torres, Yamada, John A. Perez NOES: Adams, Anderson, Bill Berryhill, Blakeslee, Conway, Cook, DeVore, Emmerson, Fletcher, Fuller, Gaines, Garrick, Gilmore, Hagman, Harkey, Hayashi, Jeffries, Knight, Logue, Miller, Nestande, Niello, Nielsen, Norby, Silva, Smyth, Tran, Villines NO VOTE RECORDED: Tom Berryhill, Block, Buchanan, Hernandez, Mendoza, Portantino, Salas, Solorio, Audra Strickland, Torrico, Vacancy DLW:do 8/17/10 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END ****