BILL ANALYSIS Ó AB 33 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 33 (Quirk) As Amended August 19, 2016 Majority vote -------------------------------------------------------------------- |ASSEMBLY: | |(June 3, 2015) |SENATE: |39-0 |(August 23, | | | | | | |2016) | | | | | | | | | | | | | | | -------------------------------------------------------------------- (vote not relevant) ---------------------------------------------------------------------- | | | | | | | | | | | | |COMMITTEE VOTE: |14-0 |(August 30, |RECOMMENDATION: |concur | | | |2016) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ---------------------------------------------------------------------- (U. & C.) Original Committee Reference: NAT. RES. SUMMARY: Requires the California Public Utilities Commission (CPUC), in coordination with the California Energy Commission AB 33 Page 2 (CEC), to evaluate and analyze the potential for all types of long duration bulk energy storage resources. The Senate amendments delete the previous content of the bill and replace it with the following: 1)Require the CPUC, in coordination with the CEC, as part of a new or existing proceeding, to evaluate and analyze the potential for all types of long duration bulk energy storage resources to help integrate renewable generation into the electrical grid. 2)Require, as part of the evaluation, the CPUC to assess the potential costs and benefits of all types of long duration bulk energy storage resources, including impacts to the transmission and distribution systems of location-specific long duration bulk energy storage resources. EXISTING LAW: 1)Defines "load-serving entity" as an electrical corporation, electric service provider, or community choice aggregator. (Public Utilities Code Section 380) 2)Requires the CPUC, on or before March 1, 2012, to open a proceeding to determine appropriate targets, if any, for each load-serving entity to procure viable and cost-effective energy storage systems to be achieved by December 31, 2015, and December 31, 2020. Requires the governing board of each local publicly owned electric utility, on or before March 1, 2012, to initiate a process to determine appropriate targets, if any, for the utility to procure viable and cost-effective energy storage systems to be achieved by December 31, 2016, and December 31, 2020. As part of the proceeding, the CPUC or local publicly owned electric utility governing board may consider a variety of possible policies to encourage the cost-effective deployment of energy storage systems, including refinement of existing procurement methods to properly value energy storage systems. (Public Utilities Code Section 2836) AB 33 Page 3 3)Requires the CPUC and the CEC in furtherance of meeting the state's clean energy and pollution reduction objectives to, among others, where feasible, authorize procurement of resources to provide grid reliability services that minimize reliance on system power and fossil fuel resources and, where feasible, cost effective, and consistent with other state policy objectives, increase the use of large- and small-scale energy storage with a variety of technologies, targeted energy efficiency, demand response, including, but not limited to, automated demand response, eligible renewable energy resources, or other renewable and nonrenewable technologies with zero or lowest feasible emissions of greenhouse gases, criteria pollutants, and toxic air contaminants onsite to protect system reliability. (Public Utilities Code Section 400) FISCAL EFFECT: According to the Senate Appropriations Committee, pursuant to Senate Rule 28.8, negligible state costs. COMMENTS: 1)Background: A distinctive characteristic of electric power is that the supply of electricity that can be generated throughout a day is relatively fixed over short periods of time, whereas, demand for electricity fluctuates throughout the day. Developing electricity storage devices and other technology, such as pump storage systems or battery storage, to store excess generation can help in addressing demand during peak load. 2)AB 2514 (Skinner): In 2010, the Legislature passed AB 2514 (Skinner), Chapter 469, Statutes of 2010, which required the CPUC to determine appropriate targets, if any, for load serving entities to procure energy storage systems and required those load serving entities to meet any targets adopted by the CPUC by 2015 and 2020. AB 2514 also required publicly owned utilities to set their own targets for the procurement of energy storage and meet those targets by 2016 and 2021. In December 2010, the CPUC opened Rulemaking (R.) AB 33 Page 4 10-12-007 to implement the provision of AB 2514. R.10-12-007 established an energy storage procurement target of 1,325 megawatts (MW) to be procured by the Pacific Gas and Electric Company, the Southern California Edison Company, and the San Diego Gas and Electric Company by 2020. 3)Large-Scale Pumped Storage Projects: As part of R.10-12-007, the CPUC excluded large-scale pumped storage projects from the energy storage system procurement mechanisms established as directed by AB 2514. According to the CPUC, because the majority of pumped storage projects are 500 MW and over, a single project in a utility service territory could be used to reach the energy storage procurement targets. Hence, the CPUC felt that the sheer size of pumped storage projects would dwarf other smaller, emerging technologies and would inhibit the fulfillment of market transformation goals, contrary to the intent of AB 2514. Opponents argued that large-scale pumped storage met the definition of eligible energy storage system under statute and because AB 2514 did not specify any size limitations, the CPUC was improperly favoring certain energy storage technologies over others. The CPUC argued that AB 2514 allows the CPUC to consider a variety of possible policies to encourage the cost-effective deployment of energy storage systems; hence, the CPUC must adopt policies and procedures that would provide opportunities for the cost-effective deployment of all types of energy storage technologies. Although statute does not exclude large pumped facilities from being eligible to meet the energy storage procurement targets adopted by the CPUC, the concern is that utilities could simply rely on a few very large pumped hydroelectric storage facilities to reach its targets, which could harm smaller, still developing storage technologies. This is not to say that pump storage serves as a complete counter to other storage technologies such as batteries, for example, pumped storage may not be effective during local power outages resulting from infrastructure or network failures, whereas AB 33 Page 5 battery storage could provide customers with power until repairs are made to the system. This bill requires the CPUC, in coordination with the CEC, to evaluate and analyze the potential for all types of long duration bulk energy storage resources, as specified. Analysis Prepared by: Edmond Cheung / U. & C. / (916) 319-2083 FN: 0004996