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AB-2255 Long-duration energy storage systems.(2019-2020)

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Date Published: 04/30/2020 09:00 PM
AB2255:v98#DOCUMENT

Amended  IN  Assembly  May 04, 2020

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Assembly Bill
No. 2255

Introduced by Assembly Member Eggman

February 13, 2020

An act to amend Section 345.5 of add Sections 351 and 2839.5 to the Public Utilities Code, relating to electricity.


LEGISLATIVE COUNSEL'S DIGEST


AB 2255, as amended, Eggman. Independent System Operator. Long-duration energy storage systems.
Under existing law, the Public Utilities Commission (PUC) has regulatory authority over public utilities, including electrical corporations. Existing law requires the PUC to open a proceeding to determine appropriate targets, if any, for each load-serving entity, as defined, to procure viable and cost-effective energy storage systems to be achieved by December 31, 2015, and December 31, 2020. If determined to be appropriate, the PUC is required to adopt the procurement targets, by October 1, 2013, and to reevaluate the determinations not less than once every 3 years. Pursuant to these provisions, the PUC has adopted decisions establishing energy storage system procurement targets. Existing law requires each load-serving entity, by January 1, 2016, and again by January 1, 2021, to submit a report to the PUC demonstrating that it has complied with the energy storage system procurement targets and policies adopted by the PUC.
This bill would require the PUC and the State Energy Resources Conservation and Development Commission (Energy Commission) to timely incorporate consideration of long-duration energy storage systems, as defined, into their energy and resource planning. The bill would require the PUC and the Energy Commission to consider measures to advance described objectives for long-duration energy storage, including support through research and development, demonstration, procurement, and incentives.
Existing law requires the PUC to adopt a process for each load-serving entity to file an integrated resource plan and a schedule for periodic updates to the plan to ensure that load-serving entities accomplish specified objectives. Existing law requires each load-serving entity to prepare and file an integrated resource plan consistent with those objectives on a time schedule directed by the PUC and subject to PUC review.
This bill would require the PUC, as part of the integrated resource planning process, to undertake specified activities to support eligible renewable energy resource goals, to support operational flexibility and reliability, and to enhance resiliency on the local and distribution level.
Existing law provides for the establishment of an Independent System Operator (ISO) as nonprofit public benefit corporations and requires the ISO to ensure efficient use and reliable operation of the electrical transmission grid consistent with achieving planning and operating reserve criteria no less stringent than those established by the Western Electricity Coordinating Council and the North American Electric Reliability Council. Pursuant to existing law, the PUC sought and received authority for the ISO from the Federal Energy Regulatory Commission (FERC) to enable the ISO 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, with stakeholder engagement, to review the modeling done by the PUC as part of the 2017–18 integrated resource planning proceeding or, if available, the modeling inputs and assumptions identified as part of the last succeeding integrated resource planning proceeding cycle, with regard to the 30,000,000 metric ton carbon emissions target for the electric sector under the high-load, low natural gas generation availability scenario, to make an assessment as to whether long-duration energy storage is needed under that scenario on or before 2030, and to make specified related determinations. The bill would require the ISO, by March 31, 2021, to report its conclusions based upon its review and assessment and the reasons supporting its conclusions to the PUC, the Energy Commission, and the Governor. Within 90 days after receipt of the conclusions of the ISO, the bill would require the Governor, in consultation with the PUC and the Energy Commission, to determine whether to accept the conclusions of the review and assessment. The bill would require the Governor, in determining whether to accept the conclusion of the review and assessment, to consider specified matters. If the Governor, after consideration of those matters, determines to accept the conclusions of the review and assessment and to proceed with the development of long-duration energy storage systems, the bill would require the Governor to notify the ISO that it is authorized to develop, pursuant to a public process, a competitive solicitation process and operational and cost-recovery mechanisms to enable the development of long-duration energy storage systems, meeting specified requirements. If, following submission of an application for approval by the ISO with the FERC, the FERC seeks to take certain actions, the bill would require the ISO to withdraw its application and the ISO would not be required to develop and implement a competitive solicitation process and operational and cost-recovery mechanisms to enable the development of long-duration energy storage systems.

Existing law establishes the Independent System Operator (ISO) as a nonprofit public benefit corporation. Existing law requires the ISO to manage the transmission grid and related energy markets and maintain open meeting standards and meeting notice requirements consistent with the Bagley-Keene Open Meeting Act. Existing law further requires the ISO to provide public access to corporate records consistent with the general policies of the California Public Records Act and afford the public the greatest possible access, consistent with the other duties of the corporation.

This bill would make nonsubstantive changes to the provisions imposing upon meeting and open records requirements on the ISO..

Vote: MAJORITY   Appropriation: NO   Fiscal Committee: NOYES   Local Program: NO  

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


SECTION 1.

 The Legislature finds and declares all of the following:
(a) The foundation for achieving the state’s clean energy goals is the requirement that eligible renewable energy and zero-carbon resources supply 100 percent of the state’s retail sales of electricity by December 31, 2045, with the interim goal that 60 percent of all retail sales of electricity be supplied by eligible renewable energy resources by 2030.
(b) California’s transition to a clean energy electrical grid has contributed to unprecedented changes in the generation, delivery, and consumption of electricity. With these changes come challenges in operating the state’s electrical grid in the most efficient and reliable manner, particularly in terms of simultaneously matching electrical generation with demand.
(c) California remains heavily reliant on natural gas generation, large hydroelectric generation, and imported electricity to meet customer demand and balance the variable production of generation by eligible renewable energy resources. Changes to the generation portfolio outside of California, including the anticipated retirement of aging coal plants and the adoption of more stringent restrictions upon the emission of greenhouse gases or more demanding renewable portfolio standard procurement requirements, render the projected reliance on those resources ill advised.
(d) The state’s clean energy targets necessitate a focus on low-carbon, flexible resources to integrate generation from eligible renewable energy resources to meet customer demand. As this occurs, substantial additional energy storage resources will be needed to provide operational flexibility and to reliably meet customer demand during periods when variable wind and solar resources are not generating electricity. The operational flexibility, reliability, and resiliency expected from energy storage can be improved by pursuing a portfolio of diverse storage technologies that can be deployed both on a large scale through interconnection with the high-voltage bulk electrical system and on a more geographically dispersed, smaller scale through interconnection with the lower voltage distribution system.
(e) Multiple energy storage technologies hold promise to help maintain reliability while also cost-effectively integrating increasing amounts of eligible renewable energy resources to achieve the state’s 2030 and 2045 renewable and zero-carbon electricity goals. They include, but are not limited to, electrochemical, compressed air, pumped hydroelectric, flow batteries, electrolytic and renewable hydrogen, and several other chemical, mechanical, gravity-based, and thermal energy storage technologies.
(f) Modeling being conducted by the Public Utilities Commission as part of its 2019–20 integrated resource planning process, using a conservative statewide target emissions of greenhouse gases by the electrical sector, indicates that more than 11 gigawatts of incremental energy storage will be needed. To achieve 100 percent renewable and zero-carbon electricity resources by 2045, the commission’s analysis indicates that as much as 70 gigawatts of energy storage may be needed, and all storage needed beyond 2030 will have to have discharge durations of six to eight hours or longer. Furthermore, the commission found that the reliability capacity contribution of shorter four-hour duration storage systems declines significantly over time. The target being used is within the planning scenario developed by the State Air Resources Board as part of its 2017 scoping plan to meet statewide 2030 carbon reduction goals that includes, among other elements, reliance on renewable generation deployment consistent with those levels subsequently mandated by The 100 Percent Clean Energy Act of 2018 (Chapter 312 of the Statutes of 2018).
(g) The State Energy Resources Conservation and Development Commission (Energy Commission) has identified a number of barriers to long-duration energy storage systems and certain other zero-carbon resources, including, for some technologies, long development timelines and uncertainty surrounding cost recovery and allocation. The state’s consumers of electricity benefit to the extent that necessary new and supplemental energy and capacity infrastructure is realized through orderly and timely processes that remove barriers and foster fair competition among diverse technologies that encompass large-scale and distributed resources.
(h) Pursuant to Chapter 7.7 (commencing with Section 2835) of Part 2 of Division 1 of the Public Utilities Code, the Public Utilities Commission established a 1,325-megawatt energy storage procurement mandate. To date, compliance with this mandate has involved procurement of short-duration storage. Further, integrated resource plans submitted by load-serving entities to the commission indicate that commercial barriers do not exist for energy storage that is of shorter duration.
(i) Given both the system need modeled by the Public Utilities Commission for long-duration energy storage and, unlike storage of shorter durations, the barriers to development of long-duration energy storage, a different procurement approach may be required for long-duration energy storage in order to meet 2030 needs. This act is intended to provide the tools necessary to enable the timely development and deployment of these resources in the years leading up to 2030 and 2045.
(j) The Independent System Operator is charged with ensuring the efficient use and reliable operation of the state’s high-voltage bulk transmission system and, in that capacity, periodically conducts assessments of projected resource capabilities required for the safe and reliable operation of the electrical grid.

SEC. 2.

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

351.
 (a) For purposes of this section, “long-duration energy storage system” means an electrolyzer or an energy storage system, as defined in Section 2835, interconnected to the electrical grid in California that has the capability to continuously discharge at its full discharge capacity for at least eight hours, including both energy storage systems designed to complete a full charge and discharge cycle within a single day and those designed to do so over multiple days.
(b) (1) In order to support operational flexibility, reliability, and resiliency on the high-voltage, bulk electrical system, the Independent System Operator shall, with stakeholder engagement, review the modeling done by the commission as part of the 2017–18 integrated resource planning proceeding or, if available, the modeling inputs and assumptions identified as part of the last succeeding integrated resource planning proceeding cycle, with regard to the 30,000,000 metric ton carbon emissions target for the electric sector under the high-load, low natural gas generation availability scenario and make an assessment as to whether long-duration energy storage is needed under that scenario on or before 2030. The Independent System Operator’s assessment should also determine whether the portfolio identified in the commission’s 30,000,000 metric ton carbon emissions target under the high-load, low natural gas generation availability scenario will result in a portfolio that enables the Independent System Operator to reliably and cost-effectively operate the electrical grid. The assessment should also specify the capacity or possible ranges of capacity, and targeted in-service dates, of the long-duration energy storage capacity required to achieve the assumptions and modeling of the most recent integrated resource planning cycle.
(2) On or before March 31, 2021, the Independent System Operator shall report its conclusions based upon its review and assessment and the reasons supporting its conclusions to the commission, Energy Commission, and the Governor.
(c) Within 90 days after receipt of the conclusions of the Independent System Operator made pursuant to paragraph (2) of subdivision (b), the Governor, in consultation with the commission and Energy Commission shall determine whether to accept the conclusions of the review and assessment. In determining whether to accept the conclusions of the review and assessment, the Governor shall consider existing electrical generation procurement and energy storage procurement authority and mechanisms, and further consider all of the following:
(1) Whether long-duration energy storage systems are needed by 2030 to meet the state’s clean energy goals and to maintain systemwide electrical grid reliability.
(2) Whether market and other institutional barriers, including, but not limited to, the absence of a financially capable or willing counterparty, prevent the commission from ensuring the timely and efficient development of long-duration energy storage systems by 2030.
(3) Whether the state’s preferred approach to obtain adequate long-duration energy storage systems is to have the Independent System Operator take steps necessary to enable development of the amount of long-duration energy storage systems identified in the review and assessment, or some other amount designated by the Governor, in consultation with the commission and the Energy Commission.
(d) If the Governor, after consideration of the matters described in paragraphs (1), (2), and (3) of subdivision (c), determines to accept the conclusions of the review and assessment and to proceed with the development of long-duration energy storage systems, the Governor shall notify the Independent System Operator that it is authorized to develop, pursuant to a public process, a competitive solicitation process and operational and cost-recovery mechanisms to enable the development of long-duration energy storage systems. The Independent System Operator’s solicitation and cost-recovery process shall ensure that both the quantity and in-service dates of the long-duration energy storage systems align with the conclusions of the review and assessment and shall assign benefits and cost responsibility to load-serving entities, as defined in Section 380, in a manner that respects cost-causation principles.
(e) The Independent System Operator shall ensure that long-duration energy storage system selected in the solicitations authorized pursuant to subdivision (d) is reasonably expected to be feasible and cost effective, considering all costs, benefits, and overall asset life, and is projected to be constructed and operational by December 31, 2030.
(f) A project selected pursuant to subdivision (d) shall not be owned or operated by the Independent System Operator.
(g) (1) The Legislature finds and declares that the Independent System Operator’s implementation of this section is subject to the approval of the Federal Energy Regulatory Commission.
(2) If the Federal Energy Regulatory Commission takes any action in connection with an application by the Independent System Operator to implement this section that would preempt or otherwise supersede the requirements of this section, seeks to impose a market mechanism materially different to that proposed by the Independent System Operator in its application, including any assignment of costs to local publicly owned electric utilities, expands solicitation selection eligibility to generation resources that consume fossil fuels, or takes any other action that materially and negatively impacts the ability of the state to achieve the state’s renewable energy resource and climate change goals for 2030 and 2045 as described in subparagraph (B) of paragraph (2) of subdivision (b) of Section 399.15 and subdivision (a) of Section 454.53, the Independent System Operator shall withdraw its application with the Federal Energy Regulatory Commission and is not required to comply with subdivisions (d) and (e).
(h) Implementation of this section by the Independent System Operator shall not disrupt, delay, or supersede any procurement of, or otherwise disturb any final finding as to the need for, other generation or storage capacity ordered by the commission, whether before or after the effective date of the act adding this section, including requirements established by the commission pursuant to Sections 2839.1 and 454.51 to 454.54, inclusive.

SEC. 3.

 Section 2839.5 is added to the Public Utilities Code, to read:

2839.5.
 (a) For purposes of this section, “long-duration energy storage system” has the same meaning as defined in Section 351.
(b) It is the intent of the Legislature that the state support the development of a robust market for long-duration energy storage systems that will eventually be free of commercial barriers, including barriers to multiple technologies and technologies capable of providing storage over multiple days, to cost-effectively integrate increasing amounts of electricity from eligible renewable energy resources and meet the state’s renewable energy resource goals for 2030 and 2045 as described in subparagraph (B) of paragraph (2) of subdivision (b) of Section 399.15 and subdivision (a) of Section 454.53, while maintaining electrical system operational flexibility and electrical grid reliability.
(c) The commission and the Energy Commission shall timely incorporate consideration of long-duration energy storage systems into their energy and resource planning.
(d) The commission and the Energy Commission shall consider measures to advance the objective set forth in subdivision (b), including, but not limited to, support through research and development, demonstration, procurement, and incentives. Any measures adopted pursuant to this subdivision shall be in addition to any solicitation process authorized by Section 351.
(e) In order to support eligible renewable energy resource goals, to support operational flexibility and reliability, and to enhance resiliency on the local and distribution level, the commission, as part of the integrated resource planning process, shall do all of the following:
(1) Evaluate and analyze the potential for long-duration energy storage systems to help integrate generation from eligible renewable energy resources into the electrical grid on a daily, multiday and seasonal basis, including, but not limited to, consideration of the capacity contribution of long-duration energy storage systems as a function of duration.
(2) Identify the role of long-duration energy storage systems to ensure grid reliability during multiday weather events that reduce output from eligible renewable energy resources.
(3) Identify mechanisms to encourage eligible renewable energy resources to be increasingly firmed and dispatchable.
(4) Develop a long-term assessment of the capacity contribution of combined eligible renewable energy resources and energy storage that considers the installed capacity of the generating and storage resources and storage duration.
(5) Incorporate consideration of long-duration energy storage systems into the commission’s preferred system plans.
(f) Nothing in this section prohibits the commission from evaluating or approving an application for funding or recovery of costs for any ongoing or new development, demonstration, or testing of a long-duration energy storage system outside of the process required by this chapter.

SEC. 4.

 The provisions of Sections 2 and 3 of this act are severable. If any provision of Section 2 or 3 of this act 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.
SECTION 1.Section 345.5 of the Public Utilities Code is amended to read:
345.5.

(a)The Independent System Operator, as a nonprofit, public benefit corporation, shall conduct its operations consistent with applicable state and federal laws and consistent with the interests of the people of the state.

(b)To ensure the reliability of electric service and the health and safety of the public, the Independent System Operator shall manage the transmission grid and related energy markets in a manner that is consistent with all of the following:

(1)Making the most efficient use of available energy resources. For purposes of this section, “available energy resources” include energy, capacity, ancillary services, and demand bid into markets administered by the Independent System Operator. “Available energy resources” do not include a schedule submitted to the Independent System Operator by an electrical corporation or a local publicly owned electric utility to meet its own customer load.

(2)Reducing, to the extent possible, overall economic cost to the state’s consumers.

(3)Applicable state law intended to protect the public’s health and the environment.

(4)Maximizing availability of existing electric generation resources necessary to meet the needs of the state’s electricity consumers.

(5)Conducting internal operations in a manner that minimizes cost impact on ratepayers to the extent practicable and consistent with the provisions of this chapter.

(6)Communicating with all balancing area authorities in California in a manner that supports electrical reliability.

(c)The Independent System Operator shall do all of the following:

(1)Consult and coordinate with appropriate state and local agencies to ensure that the Independent System Operator operates in furtherance of state law regarding consumer and environmental protection.

(2)Ensure that the purposes and functions of the Independent System Operator are consistent with the purposes and functions of nonprofit, public benefit corporations in the state, including duties of care and conflict-of-interest standards for officers and directors of a corporation.

(3)Maintain open meeting standards and meeting notice requirements, consistent with the general policies of the Bagley-Keene Open Meeting Act (Article 9 (commencing with Section 11120) of Chapter 1 of Part 1 of Division 3 of Title 2 of the Government Code) and affording the public the greatest possible access, consistent with other duties of the corporation. The Independent System Operator’s Open Meeting Policy, as adopted on April 23, 1998, and in effect as of May 1, 2002, meets the requirements of this paragraph. The Independent System Operator shall maintain a policy that is no less consistent with the Bagley-Keene Open Meeting Act than its policy in effect as of May 1, 2002.

(4)Provide public access to corporate records, consistent with the general policies of the California Public Records Act (Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code) and affording the public the greatest possible access, consistent with the other duties of the corporation. The Independent System Operator’s Information Availability Policy, as adopted on October 22, 1998, and in effect as of May 1, 2002, meets the requirements of this paragraph. The Independent System Operator shall maintain a policy that is no less consistent with the California Public Records Act than its policy in effect as of May 1, 2002.