California IOUs Request Approval of 175 MW of New Energy Storage Resources

On December 1, 2017, two of the three major California investor-owned utilities (“IOUs”), Pacific Gas & Electricity (“PG&E”) and Southern California Edison (“SCE”), submitted applications for approval of the results of their 2016-2017 energy storage request for offers.

Background on the Energy Storage Mandate in California

In September 2010, the Governor of California signed AB 2514, which required the California Public Utility Commission (“CPUC”) to determine, by October 21, 2013, appropriate targets, if any, for each load-serving entity to procure viable and cost effective energy storage resources.  Consistent with AB 2514, the CPUC issued D.13-10-040 on October 21, 2013, which adopted the Energy Storage Procurement Framework and Design Program, providing biennial storage procurement targets for each of the three large California IOUs – SCE, San Diego Gas & Electric Company, and PG&E. Overall, the mandate called for the IOUs to procure a total of 1,325 MW of storage capacity by 2020.

The IOUs held their first biennial solicitation for energy storage contracts on December 1, 2014. As a result of those solicitations, SCE executed two contracts totaling 16.3 MW of distribution connected energy storage resources, and PG&E contracted for 74 MW new energy storage resources. Subsequently, the CPUC issued two decisions addressing the results of PG&E’s 2014 Energy Storage Request for Offers (“2014 ES RFO”). In D.16-09-004 the CPUC approved four Energy Storage Agreements proposed by PG&E, and rejected two Purchase and Sale Agreements associated with distribution reliability projects. In D.16-12-004 the CPUC rejected a 4 MW behind-the-retail-meter Energy Storage Agreement proposed by PG&E, determined that PG&E had not met its 2014 energy storage target, and directed that PG&E’s 2016 energy storage target should be increased to account for the identified shortfall.

Results of 2016 Requests for Offer

PG&E issued its 2016-2017 ES RFO on December 1, 2016 to seek new energy storage offers to reach its 2016 goal and cover the shortfall of the 2014 ES RFO.

Following receipt of offers, PG&E has executed six energy storage agreements totaling 165 MW of new energy storage capacity. Five of these agreements (totaling 145 MW) call for the delivery of resource adequacy capacity and one agreement is a purchase and sale agreement for a 20 MW / 80 MWh distribution-connected storage project designed to provide distribution deferral benefits. These projects are summarized below:

SCE issued its energy storage and distribution deferral request for offers on December 1, 2016 (“ES&DD RFO”). The ES&DD RFO sought offers for up to 20 MW of resource adequacy-eligible energy storage projects in specified locations. This solicitation sought a lower amount of procurement because SCE had already satisfied its 2016 biennial storage procurement target.

In response to the bids, SCE selected one offer from Powin SBI, LLC for a 10 MW lithium iron phosphate battery storage project with a delivery period expected to begin on January 1, 2022 and end on December 31, 2031.

Next Steps

PG&E has sought CPUC approval of the agreements by August 2018, and SCE has sought approval by June 2018. Interested parties are encouraged to submit comments on the applications. Since the energy storage procurement is carried out biennially, the next round of IOU RFOs with regard to energy storage procurements should start around the end of 2018.