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Inside California’s energy politics, the FERC Order 745 case, and the coming storage cost shift

By Gavin Bade, Utility Dive

[Editor’s Note: The following is part of Utility Dive’s coverage of the 2015 Energy Storage North America conference.]

For many power sector observers, California utilities are the ideal partners for forward-thinking regulators looking to adapt the utility business model to the 21st century. California’s investor-owned utilities proclaim their commitment to clean energy technologies demonstrating how they’ve surpassed mandates, accepted more rooftop solar, or integrated large amounts of storage.

Utility executives from San Diego Gas & Electric (SDG&E), Southern California Edison (SCE), and Pacific Gas & Electric (PG&E), provided apt examples in their keynotes at the Energy Storage North America conference. All these announcements could logically lead observers to conclude that California utilities have been proactive partners in helping set California’s ambitious clean energy goals. Not exactly, two veteran state legislators told Utility Dive at the conference.

Politics of renewable energy policy:

State Sen. Ben Hueso, chair of the Senate energy and utilities committee, ushered SB 350, the bill that set the state’s 50% RPS, through committee earlier this year. He said that the utilities have always fought hard against any mandates behind closed doors, whether it was SB 350 or earlier efforts. Former Assemblymember Nancy Skinner, echoed Hueso’s observations, but said that the power industry doesn’t behave much differently than others in this respect. “No industry likes mandates,” she said, noting that it took three legislative sessions to usher through the state’s previous 33% RPS, which was met with utility pressure behind closed doors.

California’s new RPS, by contrast, was authored and passed in one legislative session, a feat that Skinner said cannot be overstated. Not only does the bill increase the renewables portfolio standard to 50% by 2030, it also specifically calls on utilities to deploy energy storage and combines the renewables goal with an aggressive efficiency standard. So what changed to get such an aggressive bill passed so quickly?

…Clifford Rechtschaffen, a senior advisor to Brown, said the most important thing was that, in the end, “all of the utilities with the tiny exception of some northern California power agencies that had some qualms, they all supported SB 350.” Rechtschaffen said that while the utilities may have shown some resistance as the bill was working its way through the legislature, most of their concerns were operational in nature. “They weren’t quarreling with the notion that we needed to get to 50%,” he said. “They had concerns about how best to do it — some of which we agree with and others which we aren’t completely in line with, but we’re working on those. Storage is a big part of the solution.”

The role of storage in California’s renewable energy economy:

In a keynote panel discussion the California policymakers highlighted energy storage as the technology that can make 50% renewables and beyond possible for California. Once you get to that level of renewables, Rechtschaffen said, “storage is absolutely critical for grid integration. There’s no arguing about that.”

But the situation for storage, especially in the eyes of utilities, wasn’t always so rosy, Rechtschaffen said. Back in 2014, the state’s IOUs were resistant to the PUC’s mandate to deploy over 1,300 MW of storage on the grid by 2020, worried that the technology wasn’t ready and that it would “put storage in a bad light.”

In reality, the opposite happened, and SCE started off the storage procurements by buying 264 MW, when it was only compelled to purchase 50 MW at the time. For the California policymakers, it was a validation of the power of mandates to drive innovation in the power sector.

Read full article from Utility Dive

Related article: Why energy storage is key to a future with ‘no more gas turbines’ (Utility Dive) – Oct. 15, 2015