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SB-772 Long duration bulk energy storage: procurement.(2019-2020)

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Date Published: 05/24/2019 09:00 PM
SB772:v96#DOCUMENT

Amended  IN  Senate  May 24, 2019
Amended  IN  Senate  May 17, 2019
Amended  IN  Senate  April 11, 2019

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Senate Bill
No. 772

Introduced by Senator Bradford
(Coauthors: Senators Bates and Coauthor: Senator Stone)
(Coauthors: Assembly Members Cervantes, Cooper, Eduardo Garcia, Mayes, O’Donnell, Rodriguez, Blanca Rubio, Salas, and Santiago)

February 22, 2019

An act to add Section 351 to the Public Utilities Code, relating to energy.


LEGISLATIVE COUNSEL'S DIGEST


SB 772, as amended, Bradford. Long duration bulk energy storage: procurement.
Existing law provides for the establishment of an Independent System Operator (ISO), under the jurisdiction of the Federal Energy Regulatory Commission (FERC), to secure generating and transmission resources necessary to guarantee achievement of specified minimum planning and operating reserve criteria for much of the state’s electrical transmission system.
This bill would require the ISO, on or before June 30, 2022, to complete a competitive solicitation process for the procurement of one or more long duration energy storage projects that in aggregate have at least 2,000 megawatts capacity, but not more than 2,400 megawatts, as provided. The bill would require the ISO, after December 31, 2030, and only if found to be necessary, to complete an additional competitive solicitation process for additional long duration bulk energy storage projects that in aggregate have up to 2,000 megawatts capacity and have targeted commercial operation dates of no later than January 1, 2045. The bill would require that the competitive solicitation processes provide for cost recovery from load-serving entities within the ISO-controlled electrical grid in a manner that allocates those costs among load-serving entities based on cost causation and each load-serving entity’s need for, and benefits realized from, the long duration bulk energy storage. If FERC takes any action that materially affects California’s clean energy and climate laws, programs, or policies, the bill would relieve the ISO from the duty to comply with the bill’s requirements, as specified.
Under existing law, a violation of the Public Utilities Act is a crime.
Because the provisions of this bill would be a part of the 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.
Vote: MAJORITY   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 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.

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 continuously discharge at its capacity for at least eight hours, has at least 400 megawatts in project capacity, and has been proven by way of deployment, and has a minimum useful asset life of at least 40 years. deployment.
(b) (1) On or before June 30, 2022, the Independent System Operator shall complete a competitive solicitation process for one or more long duration bulk storage projects that have an aggregate capacity of at least 2,000 megawatts, but not more than 2,400 megawatts. The Independent System Operator shall ensure that the selected long duration bulk energy storage is feasible feasible, is cost effective after considering all costs and benefits and the overall lifespan of the asset, and can be constructed on a timeline consistent with the California Renewables Portfolio Standard Program (Article 16 (commencing with Section 399.11)) and the state’s targets for reducing emissions of greenhouse gases, taking into consideration the status of the required permits and licenses for each project, project and required additions to the transmission grid, with a targeted commercial operation date for each project of no later than 2030.
(2) After December 31, 2030, and only upon the commission and the Energy Commission each making a finding that after the solicitation process required pursuant to paragraph (1) there is still a need for additional long duration bulk energy storage projects, the Independent System Operator shall complete an additional competitive solicitation process for one or more long duration bulk energy storage projects that have an aggregate capacity of up to 2,000 megawatts and have targeted commercial operation dates of no later than January 1, 2045.
(3) The Independent System Operator shall identify the commercial operation date and technical criteria for each long duration bulk energy storage project to ensure each selected resource provides the electrical grid with the fast ramping fast-ramping and flexible capacity necessary to support eligible renewable energy resource integration, enhance grid reliability, and achieve California’s goals for reducing emissions of greenhouse gases.
(4) The project or projects selected pursuant to this authority shall not be owned or operated by the Independent System Operator.
(c) The Independent System Operator’s competitive solicitation processes, authorized in subdivision (b), shall provide for cost recovery from load-serving entities within the Independent System Operator-controlled electrical grid in a manner that allocates those costs among load-serving entities based on cost causation and the degree to which each load-serving entity contributes to the need for, or otherwise realizes the benefits from, the long duration bulk energy storage. The Independent System Operator cost recovery mechanism shall collect the revenue requirement of any selected long duration bulk energy storage project through a cost-of-service, or similar, rate, net of revenues the project receives from participation in the Independent System Operator-supervised markets.
(d) (1) 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.
(2) If the Federal Energy Regulatory Commission takes any action that would preempt or otherwise supersede the requirements of this section, seeks to impose an alternative market mechanism, expands eligibility to generation resources that consume fossil fuels, or takes any other action that materially affects California’s clean energy and climate laws, programs, or policies, the Independent System Operator shall immediately withdraw its filing with the Federal Energy Regulatory Commission and is not required to comply with this section.
(e) This section does not alter or affect the authority of the Independent System Operator or any state commission to adopt a different definition for long-term bulk energy storage for purposes of any other authority to procure long-term bulk energy storage.
(f) 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.