|Budget Issue:||January Budget Proposal for 3 Positions at Public Utilities Commission to Support Procurement of Advanced Energy Storage (AES).|
|Program:||Public Utilities Commission|
|Finding or Recommendation:||We find it is first necessary to determine the technological feasibility to which AES can play a role in California’s energy mix. This analysis is currently underway at the CAISO and CEC. Until such work is complete, we find the CPUC budget proposal premature. The budget proposal is also premature pending enactment of legislation that provides the Legislature's policy direction in this area. We therefore recommend denying CPUC’s budget request for AES activity in the budget year.|
Governor's January Budget Request. The Governor's 2010-11 budget has requested $310,000 from the Public Utilities Commission Utilities Reimbursement Account and three positions for the commission to evaluate the cost-effective use of advanced energy storage (AES) as an electricity resource.
What Is AES? Energy storage refers to technological devices and systems which have the capacity to hold some form of energy which can be put to use at a later time. The primary example of energy storage in use today is pumped hydroelectric storage which stores energy in the form of water, pumped from a lower elevation reservoir to a higher elevation.
In contrast, other emerging forms of energy storage such as compressed air energy storage, batteries, and flywheels are referred to as "advanced energy storage" due to the fact that, while they seem to hold great promise, they nonetheless remain largely in the research phase of development.
The U.S. Department of Energy (DOE) has stated that developing technology to store electrical energy so that it can be available to meet demand whenever needed would represent a major breakthrough in electricity distribution. DOE reports that fundamental research gaps exist and a great deal of work is still needed in order to make AES a commercially viable option in the future.
AES Research and Analysis Underway at California Energy Agencies. The California Energy Commission (CEC) and the California Independent System Operator (CAISO) recognize that a great deal of research is still necessary in order to make AES a commercially viable option which can be deployed in a cost-effective manner. AES research continues to receive funding from the CEC’s Public Interest Energy Research (PIER) program while the CAISO is developing an AES pilot program to analyze the performance and potential for grid integration of AES devices. According to the CEC’s 2009 Integrated Energy Policy Report (IEPR), this work should be further expanded in time to encourage installation of storage in the 2015 to 2020 time frame.
Legislature Is Currently Evaluating Its Policy on AES. The Legislature is currently considering a bill (AB 2514, Skinner) which, in its current form, would require the CPUC to open a rulemaking proceeding to establish procurement targets for each investor-owned utility and require each publicly-owned utility to adopt energy storage system procurement targets.
LAO Recommendation. While many agree that AES may provide a means for integrating intermittent renewable energy sources onto the electricity grid, we find it is first necessary to determine the technological feasibility to which such technology can play a role in California’s energy mix. This analysis is currently underway in various forms at both the CAISO and CEC. Until such work is complete, we find the CPUC budget proposal both premature and potentially inefficient. The budget proposal is also premature pending enactment of legislation that provides the Legislature's policy direction in this area. As noted above, the Legislature has expressed its policy interest in this subject and is currently developing its policy. We therefore recommend the Legislature deny CPUC’s budget request for advanced energy storage activity in the budget year.