California Opening Up to Independent Developer Distributed Energy Storage Projects

A recent administrative law judge ruling in California may pave the way for more private-sector development of the state's mandated distributed energy storage system projects.

In September 2016, the state passed Assembly Bill 2868, known as the "Energy Storage" bill. It requires California's public utilities commission (PUC) to determine appropriate targets for each of the state's three investor-owned utilities (IOUs) to "procure viable and cost-effective energy storage systems to be achieved by Dec. 31, 2020." The bill also required the PUC to encourage the three IOUs to "accelerate widespread deployment of distributed energy storage systems."

In addition, according to the bill, "The state, through the Public Utilities Commission, has taken action to promote energy storage, including setting energy storage procurement targets applicable for certain load-serving entities, totaling 1,325 megawatts, and for all other load-serving entities, to be met by 2020, with installations of the energy storage systems meeting the procurement targets by no later than the end of 2024."

Since that time, the IOUs have made headway. However, they have focused on their own (utility-owned) projects, rather than making open solicitations that would allow independent developers to become involved in these projects.

Last week, a California administrative law judge (ALJ) handed down a decision that would require the IOUs to issue requests for offers (RFOs) for these projects without bias toward any ownership model. In his decision, the administrative law judge stated, "When procuring energy storage systems through competitive RFOs, the utilities shall consider all forms of resource ownership (utility-owned, third-party owned, customer-owned, joint ownership)."

While the decision is not a final order, the PUC has a history of generally adopting all ALJ decisions with few if any changes. If the PUC does adopt the ALJ's decision at its meeting at the end of March, private contractors would be on a "level playing field" with the IOUs themselves when it comes to being involved in these energy storage system projects.

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