SECTION 1.
The Legislature finds and declares all of the following:(a) California is experiencing unprecedented changes in the generation, delivery, and consumption of electricity. Along with these changes come challenges in operating the state’s electrical grid and resources in the most efficient and reliable manner, particularly in terms of simultaneously matching electrical generation with demand.
(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 eligible renewable energy resources.
(c) The ISO has identified long duration bulk energy storage, when constructed in a sufficiently large scale, as supporting the California electrical grid’s need for fast-ramping capability and the capacity to store generation from eligible renewable energy resources.
(d) The State Energy Resources Conservation and Development Commission has identified bulk energy
storage as a key resource to help meet the challenges of integrating electricity from eligible renewable energy resources into the California electrical grid and of supporting economywide goals for reducing emissions of greenhouse gases.
(e) Pumped hydroelectric storage is a well-established and proven form of long duration bulk energy storage in wide deployment in the world, including in California, and, over many decades, has been shown to be reliable over a useful asset life exceeding 50 years.
(f) 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 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 capabilities and valuable long duration bulk storage
benefits.
(h) The State Energy Resources Conservation and Development Commission has identified a number of barriers to bulk energy storage projects, including their significant upfront capital costs, long development timelines, and uncertainty surrounding cost recovery and allocation caused by the increasing fragmentation of customer load served by California’s growing number of load-serving entities.
(i) Many of the barriers to the development of long duration bulk energy storage would similarly apply to the development of electrical transmission projects if it were not for the transmission planning process implemented by the ISO, which identifies, selects, bids out, and allocates costs to ratepayers for electrical transmission projects. The ISO currently selects
developers of electrical transmission projects by way of a public competitive solicitation process to ensure the cost effectiveness of each project. The ISO’s process also ensures electrical transmission project quality, timing, and cost containment protections for ratepayers and has resulted in the development of projects at significant cost savings relative to presolicitation project cost estimates.
(j) It is in the interest of California to diversify energy storage technologies.
(k) California needs long duration bulk energy storage given its ability both to store excess electricity generated by eligible renewable energy resources and, when needed, to quickly inject that electricity back into the electrical grid to meet ramping, peak demand needs, and other reliability
requirements, including those related to weather or fire events. Such long duration bulk energy storage can serve as part of the new strategy for efficiently operating the electrical grid, while maintaining electrical reliability and satisfying environmental goals. This public policy directive should be implemented by the ISO through a competitive solicitation process that is comparable to the one used in the ISO’s transmission planning process and that is open to all eligible long duration bulk energy storage technologies.
(l) Because long duration bulk energy storage will contribute to systemwide reliability of the electrical transmission grid as additional eligible renewable energy resources are added, it is appropriate that the cost of long duration bulk energy storage be recovered through federal rates charged by the ISO in a manner consistent
with its broad benefits. The ISO should establish a cost recovery framework for such energy storage through a public process.