POWER August 2014 - 24

Bright Future for Energy
Storage
Patrick Ferguson
C
alifornia has set an ambitious target of connecting 1.3 GW
of energy storage to the grid by 2020. In October 2013,
the California Public Utilities Commission (CPUC) mandated
that 200 MW of this goal come in the form of energy storage
installed in individual buildings and homes. These energy storage
systems have the ability to address one of the most difficult
challenges for renewable energy: storing the power created when
the sun is shining and the wind is blowing and then accessing
that power during peak energy demand periods. Energy storage
systems can also improve overall grid capability and efficiency by
providing services such as demand response and frequency regulation.
(For more on energy storage, see " The Year Energy Storage
Hit Its Stride " in the May 2014 issue.)
Battery systems have long offered a means to store renewable
energy. But batteries are back in the spotlight due to improvements
in technology, falling production costs, and the
evolution of electricity markets to reward energy storage. Two
recent decisions by California regulators have the potential to
accelerate this trend. These initiatives could serve as a roadmap
for other states seeking to encourage the further development
of energy storage.
Lower Interconnection Barriers
New installation of solar photovoltaic (PV) panels supported by
battery systems has been stalled in California in recent years.
The states' utilities were requiring that applicants complete extensive
interconnection studies and pay thousands of dollars in
additional fees before they approved the connection of batterybacked
solar systems to the grid. Such requirements had stifled
the interconnection of these types of behind-the-meter energy
storage systems.
A May 2014 CPUC decision exempts many solar storage projects
from these fees and interconnection study requirements. The decision
clarifies existing policy set out in the Renewables Portfolio
Standard Eligibility Guidebook regarding the treatment of energy
storage systems under the state's net energy metering (NEM)
program. Energy storage systems are to be exempt from interconnection
application fees, supplemental review fees, costs for
distribution upgrades, and standby charges when interconnecting
under the current NEM tariffs, provided these systems: (1) are
paired with NEM-eligible generation facilities (such as a rooftop
solar installation), and (2) qualify under the guidebook as an " addition
or enhancement " to an NEM-eligible system. The decision
also places certain limitations on the size of the storage systems
and implements metering requirements aimed at protecting the
NEM program. These conditions are intended to help ensure that
any energy sent onto the grid from these battery systems is truly
" green " energy from the solar PV system and not simply " brown "
energy that had previously been pulled from the grid.
The CPUC's decision is widely considered a victory for distributed
storage and correspondingly a rebuke to the California utilities
24
for having failed to take " a more proactive and collaborative approach "
with customers and companies desiring to interconnect
these battery systems.
If the California experience portends the future of energy storage
regulation, other state utility commissions should be expected
to adopt new policies or clarify existing policies aimed at
lowering the barriers to entry for the installation of behind-themeter
battery storage systems.
Distributed Storage Rebate Program
The California legislature has also recently re-approved funding
through 2019 for the Commission's Self-Generation Incentive Program
(SGIP). California launched SGIP in 2001 with the goal of
reducing peak load demand by supporting emerging distributed
energy resources. The SGIP provides rebates for qualifying energy
systems installed on the customer's side of the utility meter. The
SGIP was one of the key programs to encourage development of
solar PV systems in the state. In fact, these systems became so
popular that the CPUC launched a solar PV-only program known
as the California Solar Initiative.
The CPUC has confirmed that battery storage systems can qualify
for SGIP rebates. While there have been relatively few battery
storage projects completed under the SGIP, the pace has increased
in recent years. In 2013 alone, the CPUC received SGIP proposals
for almost 25 MW of battery storage systems. California's decision
to provide $83 million in annual SGIP funding through 2019 (for
a total of $415 million) should further accelerate the pace of
customer-sited storage. It offers a necessary " bankable " source
of funding for these projects.
Energy Storage Development Across the Country
The federal government is also helping to provide a platform for
the development and grid-scale testing of technologies such battery
storage. For instance, in 2013, the Department of Energy
opened the Energy Systems Integration Facility (ESIF) at the National
Renewable Energy Lab in Colorado. ESIF is the country's
first research facility that will help researchers scale up promising
clean energy technologies and offer the tools needed to test
how they interact with each other and the grid at utility scale.
Many Americans will likely someday rely in part on battery
systems to power their appliances and cars, store electricity generated
by their solar PV panels, and help regulate the frequency
and efficiency of the overall power grid. By setting aggressive
targets, reducing the barriers to entry, and providing long-term
funding, California has incentivized the development of battery
storage systems. If these programs prove successful in California,
other states could begin offering similar incentives in the coming
years. ■
-Patrick Ferguson (patrickferguson@dwt.com) is a senior associate
in Davis Wright Tremaine's energy practice group in the
firm's San Francisco office.
www.powermag.com
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