BILL ANALYSIS 1
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SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
ALEX PADILLA, CHAIR
AB 2514 - Skinner Hearing Date: June 29, 2010 A
As Amended: June 21, 2010 FISCAL B
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DESCRIPTION
Current law requires investor-owned utilities (IOUs) and energy
service providers (ESPs) to increase existing purchases of
renewable energy by 1% of sales per year such that 20% of retail
sales, as measured by usage, are procured from eligible
renewable resources by December 31, 2010. This is known as the
Renewable Portfolio Standard (RPS).
Current law exempts publicly owned utilities (POUs) from the
state RPS program and instead requires these utilities to
implement and enforce their own renewable energy purchase
programs that recognize the intent of the Legislature to
encourage increasing use of renewable resources.
Current law expresses that the policy of the state is to
modernize the transmission and electrical grid and achieve the
deployment and integration of cost-effective advanced
electricity storage and peak-shaving technologies, including
plug-in electric and hybrid electric vehicles, and
thermal-storage air-conditioning which are all part of a smart
grid.
This bill requires the California Public Utilities Commission
(CPUC) to determine appropriate targets, if any, for load
serving entities (LSEs) to procure viable and cost-effective
energy storage systems by 2013 and for the LSEs to meet those
goals by 2015 and 2020. POUs would also be required to
establish targets by 2014 and meet to meet those targets, if
any, by 2016 and 2021.
Current law requires each IOU to submit a procurement plan to
the CPUC to ensure a reliable and cost-effective electricity
supply in California and to procure renewable energy resources
with the goal of ensuring that at least an additional 1% per
year of retail sales are secured from renewable resources.
This bill requires the IOUs to incorporate energy storage into
their RPS procurement plans and address the acquisition and use
of energy storage systems in order to achieve specified purposes
and to consider and incorporate the CEC's evaluation of energy
storage systems, including locations where the interconnections
on the transmission and distribution grid can be minimized.
BACKGROUND
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 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;
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.
COMMENTS
1)Author's Purpose . 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 keep up with the
demand. The California Energy Commission predicts that this
peak electricity demand will increase by 15% by the year 2020.
AB 2514 will encourage 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. AB 2514 will help
integrate energy storage into utility planning and procurement
which will help California reach the renewable energy goals it
has committed to.
2)If You Mandate It, They Will Come . This bill began as a hard
mandate for the purchase of a specified percentage of storage
technologies. The author and sponsor believe that viable
storage technologies are lurking in small applications and
ready for broad scale deployment and that the agencies and
utilities need a big nudge to stimulate deployment which will
advantage ratepayers. Critics opine that any mandate is
premature - that the industry is still emerging and
commercially viable storage technologies are available in
limited quantities and applications, and the operating
characteristics and potential costs are unknown. The author
responded to this criticism by eliminating a mandated
procurement percentage and now the bill requires the CPUC and
the POUs to determine appropriate targets, if any, and that
the targets must be cost-effective. This leaves open the
possibility that the appropriate targets could be zero.
3)Where Does the Mandate Belong ? It is not yet clear whether
electricity storage should be directly linked to renewable
installations or be procured by the California ISO as an
ancillary service on behalf of the system as a whole and, more
critically, how those technologies should be priced. Answers
to these questions will affect the state's generation resource
planning. The location of the storage (at the renewable
resource's location or elsewhere) will affect the planning of
future power transmission lines as well.
Energy storage technology is rapidly advancing and has been
facilitated by stimulus funding for many projects and
technology development. However integration into electricity
markets, operations, transmission controls and planning all
lag. There is a clear need for demonstration of value and a
need for a means to monetize costs. This bill does not
address this issue but jumps ahead of the answers to those
questions in an attempt to speed development and deployment.
4)Outstanding Issues - Potential Amendments . There are several
issues with the bill which the committee and author may wish
to address through amendments:
a) Small IOUs - There are 4 IOUs with less than 60,000
service connections. Those utilities have requested an
exemption from the bill because deployment of storage for
their customers is disproportionately more expensive for
their ratepayers than those of larger utilities.
b) Definition of Storage - Eligible energy storage is
limited to those mechanical, chemical or thermal processes
that "do not substantially rely on fossil fuels." PG&E has
a 300 MW demonstration project of compressed air storage
which utilizes fossil-fueled generation to move the stored
energy. PG&E is concerned that this bill would limit the
eligibility of that technology. (Page 5, lines 23 through
37).
c) Resource Adequacy - This bill requires the IOUs and POUs
to use storage to meet resource adequacy. This should be
permissive and left to the determination of the CPUC and
the governing boards of the POUs as they deem appropriate.
(Page 7, line 35, strike "shall and insert "may"; page 7,
line 38, strike "shall" and insert "may."
d) CEC Determination of Interconnection Costs - This bill
requires the IOUs to utilize CEC determinations of the
locational value of storage on the transmission and
distribution grid that would require extensive analysis of
the grid. That information is easily attainable by the
IOUs and may also be proprietary. The analysis is better
left with the IOUs. (Page 8, strike lines 36-40; page 9,
strike lines 1-2)
e) POU Oversight - This bill requires the CEC to determine
whether the POUs have complied with the bill and take
specified actions. Other programs (e.g. California Solar
Initiative) require the POUs to report progress but do not
give any enforcement authority to the CEC. These
provisions should be deleted to ensure consistency across
programs and the authority of the POU governing boards.
(Page 9, strike lines 28-39; page 10, strike lines 1
through 7)
5)Ratepayer Impact . This bill requires that only cost-effective
storage technologies be deployed. However what is
cost-effective in the context of storage is not clear.
6)Related Legislation . The following bills have been introduced
in 2010 which affect the RPS program:
SB 722 (Simitian) increases the RPS mandate to 33% by
2020 and makes other program changes. Status: Passed
Assembly Utilities & Commerce Committee, June 24, 2010.
SB 1247 (Dutton) expands the hyrdroelectric facilities
which can count efficiency improvements as RPS eligible.
Status: Passed the Senate Committee on Energy, Utilities &
Communications June 15, 2010; pending in Senate
Appropriations Committee.
SB 1367 (Wyland) extends the RPS compliance timeline to
20% by 2020. Status: Referred to, but held in, the Senate
Committee on Energy, Utilities & Communications.
AB 1954 (Skinner) authorizes the CPUC to permit recovery
of transmission interconnection costs not approved by the
Federal Energy Regulatory Commission. Status: Set for
hearing in the Senate Committee on Energy, Utilities &
Communications; set for hearing June 29, 2010.
AB 2378 (Tran) expands the definition of an eligible
renewable facility to include a facility that uses two
renewable technologies. Status: Pending on the Senate
Floor.
ASSEMBLY VOTES
Assembly Utilities & Commerce (failed)
7-6
Assembly Utilities & Commerce 8-6
Assembly Natural Resources 6-3
Assembly Appropriations 12-5
Assembly Floor 41-28
POSITIONS
Sponsor:
Attorney General Jerry Brown
Support:
A123 Systems
AIC Labs
Altairnano
Applied Intellectual Council
Balanced Clean Energy Solutions
Beacon Power
Breathe California
California Public Utilities Commission (if amended)
CALMAC
California Energy Storage Alliance
CAREBS
Clean Power Campaign
Debenham Energy, LLC
Dow Kokam
Electron Vault
Enersys
EnerVault
Evapco, Inc.
Fafco
Fluidic Energy
HDR-DTA
Green California
Ice Energy
Independent Energy Producers
Large-scale Solar Association
LightSail Energy
Mega Watt Storage Farm
Mohr Davidow Ventures
Natgun
NGK-Locke
Pacific Housing Inc.
Panasonic
Pearl Street Liquidity Advisors
Polaris Venture Partners
PowerGenix
Primus Power
Prudent Energy
PVT Solar
ReStore Energy Systems
Rockport Capital Partners
Sail Venture Partners
Samsung SDI America, Inc.
Sanyo
Seeo, Inc.
Sierra Club
The Solar Alliance
South Coast Air Quality Management District
Suntech
Sunverge
SustainX
Velkess Inc.
The Vote Solar Initiative
Union of Concerned Scientists
Wallrich Landi
Xtreme Power
Oppose:
Bear Valley Electric Service (unless amended)
California Manufacturers & Technology Association
City of Burbank (unless amended)
Modesto Irrigation District
Mountain Utilities (unless amended)
Pacific Power (unless amended)
Sacramento Municipal Utility District (unless amended)
Sierra Pacific (unless amended)
Kellie Smith
AB 2514 Analysis
Hearing Date: June 29, 2010