Energy storage drumbeat gets stronger as California mandate comes into focus

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By: SGN Staff

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Quick Take: In February, I suggested that California's new storage mandates might signal a tipping pointin grid-scale energy storage, a market that has been perpetually on the verge. And then in May, I suggested that (if passed) new federal tax credits could boost grid-scale storage even more.

 

Now we're getting more clarity on the California mandate. A story in Bloomberg.com suggests that California's Big Three – PG&E, SCE and SDG&E – may need to spend as much as $3 billion to hit the targets set by the state's public utilities commission.

 

Although things continue to look iffy for the growth of the EV battery market, the grid segment may ramp up in time to save some of the storage companies that are currently in financial trouble. As it slowly ramps up, prices will ramp down – and that's good news for everyone, especially utilities that need to integrate large amounts of renewable energy.- By Jesse Berst

 

California’s utilities are required to provide a third of their power from renewables by 2020 – renewables that will greatly benefit from energy storage to buffer their intermittency. As a result, the California PUC proposed recently that the state's three largest utilities procure just over 1.3 GW of storage by 2020. To put that number in context, the California Energy Storage Alliance estimates that the number is "probably comparable" to the current total worldwide.

 

Doubling the world's grid-connected storage, and in a single state, is clearly going to bring about rapid growth for those companies lucky enough to participate. One contender, AES Corp., told Bloomberg that meeting the ruling would cost one to three billion dollars.

 

The three utilities will procure the storage through a series of reverse auctions. The first will take place in June 2014. Still to be determined: whether and how utilities will be allowed to recover the costs in their rates.

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Jesse Berst is the founder and Chief Analyst of SGN and Chairman of the Smart Cities Council, an industry coalition.