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AB-2787 Long duration bulk energy storage: procurement.(2017-2018)

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Date Published: 08/28/2018 09:00 PM
AB2787:v93#DOCUMENT

Amended  IN  Senate  August 28, 2018
Amended  IN  Senate  August 21, 2018
Amended  IN  Senate  July 05, 2018
Amended  IN  Assembly  May 25, 2018
Amended  IN  Assembly  April 26, 2018
Amended  IN  Assembly  April 03, 2018

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Assembly Bill No. 2787


Introduced by Assembly Member Quirk
(Principal coauthor: Assembly Member Burke)
(Coauthors: Assembly Members Cervantes, Cooper, Eduardo Garcia, Mayes, O’Donnell, Rubio, and Salas) Salas, and Santiago)
(Coauthors: Senators Bradford and Stone)

February 16, 2018


An act to add Section 351 to the Public Utilities Code, relating to energy storage, and declaring the urgency thereof, to take effect immediately.


LEGISLATIVE COUNSEL'S DIGEST


AB 2787, as amended, Quirk. Long duration bulk energy storage: procurement.
Existing law provides for the establishment of an Independent System Operator (ISO) as a nonprofit public benefit corporation and requires the ISO to make certain filings with the Federal Energy Regulatory Commission (FERC) and to seek authority from the FERC as needed to give the ISO the ability to secure generating and transmission resources necessary to guarantee achievement of planning and operating reserve criteria no less stringent than those established by the Western Electricity Coordinating Council and the North American Electric Reliability Council.
This bill would require the ISO, on or before December 31, 2019, to complete a process for the procurement of long duration energy storage projects that in aggregate have at least 1,000 megawatts capacity, but not more than 2,000 megawatts, except as provided. The bill would require the ISO to develop a methodology for allocating the cost of that procurement to all load-serving entities within the ISO-controlled electrical grid, as provided.
Under existing law, a violation of the Public Utilities Act or any order, decision, rule, direction, demand, or requirement of the commission is a crime.
Because the provisions of this bill would be a part of the act and because a violation of an order, decision, or rule of the commission implementing its requirements act, a violation of which would be a crime, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
This bill would declare that it is to take effect immediately as an urgency statute.
Vote: 2/3   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  

The people of the State of California do enact as follows:


SECTION 1.

 The Legislature finds and declares the following:
(a) California is experiencing unprecedented changes in the generation, delivery, and consumption of electricity. Along with these changes come challenges for operating the state’s electrical grid and resources in the most efficient manner, particularly in terms of the time-sensitive need to match generation to the demand for electricity.
(b) As part of the long-term procurement planning process at the Public Utilities Commission, the California Independent System Operator (ISO) has identified a need for fast-ramping and flexible resources to balance the electrical grid and store low-cost energy from renewable energy resources.
(c) The ISO has identified long duration bulk energy storage and, in particular, pumped hydroelectric storage, when constructed in a sufficiently large scale, as helping to meet the California electrical grid’s need for fast-ramping capability and the capacity to store generation from renewable energy resources.
(d) The State Energy Resources Conservation and Development Commission has identified bulk energy storage, including pumped hydroelectric storage, as a key resource to help meet the challenges of integrating renewable energy onto the California electric grid.
(e) Pumped hydroelectric storage is a well-established and proven technology in wide deployment in the world, including in California, and, over many decades, has been shown to be reliable, with a useful asset life of 40 to 50 years or longer.
(f) The Public Utilities Commission, pursuant to Chapter 7.7 (commencing with Section 2835) of Part 2 of Division 1 of the Public Utilities Code, established a 1,325 megawatts energy storage procurement mandate; however, pumped hydroelectric storage facilities larger than 50 megawatts were not included as an eligible technology under the commission’s implementation of that chapter. Battery energy storage projects have been the primary energy storage technology procured to meet that mandate.
(g) Other bulk energy storage technologies, including compressed air and those that store energy by chemical, thermal, or other means, also provide similar capabilities and valuable bulk storage benefits in comparison to pumped hydroelectric storage.
(h) The State Energy Resources Conservation and Development Commission has identified a number of barriers to bulk energy storage projects, including their high upfront capital costs, long development timelines, and uncertainty surrounding cost allocation.
(i) It is in the interest of California to diversify energy storage technologies.

(d)

(j) California needs long duration bulk energy storage, with its unique ability both to utilize excess electricity generated by renewable energy resources and, when needed, to quickly inject that electricity back into the electrical grid to meet ramping and peak demand needs, as a part of the new strategy for efficiently operating the electrical grid in a manner that best protects electric reliability and the environment. This public policy directive should be implemented by the ISO.

(e)

(k) Because long duration bulk energy storage will contribute to the reliability of the entire electric electrical transmission grid as additional renewable energy resources are added to it, it is appropriate that the cost of this energy storage is reflected in the transmission rates charged by the ISO for the use of the ISO-controlled grid. The ISO shall establish the cost recovery framework for such energy storage, but shall not own or operate any bulk energy storage projects.

SEC. 2.

 Section 351 is added to the Public Utilities Code, to read:

351.
 (a) For purposes of this section, “long duration bulk storage project” means an energy storage resource interconnected to the electrical grid in California that has the capability to discharge at its capacity continuously for at least eight hours and cycle through its discharge and charge cycle on a daily basis. basis, has a minimum useful asset life of 40 years, has been proven by way of deployment, and is at least 500 megawatts in project capacity size.
(b) (1) On or before December 31, 2019, the Independent System Operator shall complete a procurement process for procuring one or more long duration bulk storage projects that have an aggregate capacity of at least 1,000 megawatts, but not more than 2,000 megawatts, unless the Independent System Operator determines that procurement in excess of the 2,000-megawatt limit maximizes the efficiency of sizing the long duration bulk energy storage projects procured.
(2) The Independent System Operator shall identify the targeted procurement capacity, commercial operation date, and technical criteria for the long duration bulk energy storage projects necessary to ensure support for renewable energy resource integration, to enhance grid reliability, and to achieve California’s greenhouse gas emissions reduction goals by providing fast-ramping and flexible resources of the Independent System Operator-controlled electrical grid.
(3) The Independent System Operator shall select one or more long duration bulk energy storage projects that are feasible and that can be procured and constructed on a timeline consistent with the California Renewables Portfolio Standard Program (Article 16 (commencing with Section 399.11)) and the state’s greenhouse gas emission reduction targets, taking into consideration the status of the required permits and licenses for the projects.
(4) The Independent System Operator shall select a project that will use a reservoir or other substantial infrastructure owned by a public entity only if all work on the project will be conducted pursuant to a project labor agreement that meets the requirements of Section 2500 of the Public Contract Code.
(c) (1) The procurement process shall provide for cost recovery to all load-serving entities within the Independent System Operator-controlled electrical grid for the revenue requirements of any selected long duration bulk energy storage project through a cost-of-service rate that takes into account any offsetting revenues that a long duration bulk energy project may receive from participation in the Independent System Operator markets or other revenues the project may receive.
(2) The Independent System Operator shall develop a methodology for allocating those costs, net of offsetting market or other revenues, to all load-serving entities within the Independent System Operator-controlled electrical grid.
(3) For any future requirement to procure long duration bulk energy storage, the commission shall credit each load-serving entity with its proportionate share of the long duration bulk energy storage project required pursuant to this section based on the cost allocation determined pursuant to paragraph (2).
(d) The Independent System Operator shall give preference when procuring long duration bulk energy storage projects to those projects that include an option to an electrical corporation, or any combination of electrical corporations, as participating transmission owners in the Independent System Operator to acquire an ownership interest in the project.
(e) The capacity required pursuant to this section is in addition to any procurement requirement pursuant to Section 2836.
(f) To the extent that approval is required by federal law, the Independent System Operator shall implement this section subject to the approval of the Federal Energy Regulatory Commission.
(g) This section does not alter or affect, in any manner, the authority of the Independent System Operator or other state agencies to adopt a different definition for bulk energy storage for purposes of any other authority to procure bulk energy storage.
(h) The provisions of this section are severable. If any provision of this section or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.

SEC. 3.

 No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.

SEC. 4.

 This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the California Constitution and shall go into immediate effect. The facts constituting the necessity are:
In order to develop imminently necessary large scale grid support in the amount of 1,000 to 4,000 megawatts as soon as possible, it is necessary for this bill to take effect immediately.