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California's zero-carbon grid bid could supercharge energy storage

Q2: U.S. Solar and Wind Power by the Numbers

Essential Energy Insights - September 17, 2020

Essential Energy Insights September 2020

Rate case activity slips, COVID-19 proceedings remain at the forefront in August


California's zero-carbon grid bid could supercharge energy storage

SNL Image

Berkshire Hathaway's 579-MW Solar Star project in Southern California is among the driving forces
behind the state's growing need for energy storage.

Source: SunPower Corp.

For California to completely decarbonize its power system by 2045, as prescribed in the landmark bill recently passed by the state Legislature, much more than Gov. Jerry Brown's signature will be required. Among the prerequisites is a massively expanded energy storage industry, placing energy storage among the bill's biggest potential beneficiaries.

"This bill, in our view, would significantly activate the market for energy storage within the state," said Kiran Kumaraswamy, market applications director at Fluence Energy LLC, an energy storage joint venture of AES Corp. and Siemens AG. Getting to a 100% zero-carbon energy system will require "several thousands of megawatts of energy storage, in addition to what's already been proposed, to make sure that the flexibility needs of the system are met in the longer term," he said.

Proposals already range up to 10,000 MW of new energy storage in the state by 2030, compared to 177 MW of battery storage and roughly 4,500 MW of pumped hydroelectric storage installed as of June 2018, according to the California Energy Commission.

Opponents of the measure question whether even a greatly expanded ecosystem of energy storage installations would be able to manage large new volumes of intermittent solar and wind, citing the existing difficulties experienced by the California ISO at current renewables levels. Industry officials argue that batteries would likely be up to the task, pointing to strong global demand for electric vehicles and energy storage on the grid that are driving fast-rising lithium-ion battery manufacturing capacities.

One thing is clear: without explosive growth in high-capacity, low-cost battery storage, the zero-carbon goal is almost certainly out of reach. A recent report from the California Energy Commission found that achieving 100% zero-carbon generation "appears to be cost-prohibitive without major advances in low-cost energy storage."

"There's really not that many other options for flexibility," said Alex Morris, policy director for the California Energy Storage Alliance. Morris cited several "major roles for storage" as the state aims to reach its interim target of 60% renewable energy by 2030. These include "deep cycling" to absorb excess solar generation during midday peak production periods, as well as instantaneously discharging to offset drops in solar output, for instance when clouds pass, and providing "fast ramping" when solar energy fades toward sunset and demand spikes.

Another measure lawmakers passed in August would support up to 2,000 MW of additional behind-the-meter battery installations at homes and businesses, including systems directly coupled with rooftop solar arrays.

"If we are going to get to 100% clean energy, we need to be using solar power every hour of the day, not just when the sun is shining," the bill's author, Sen. Scott Wiener, said in a news release.

SNL Image

Projects like San Diego Gas & Electric's 30-MW Escondido battery array could multiply rapidly
under the state's zero-carbon grid proposal.

Source: Fluence Energy LLC

Beyond batteries

Much debate in the final days of the legislative session centered on the additional flexible resources California may need beyond batteries. Pumped hydro storage was one of the options most discussed. Assembly Bill 2787, a last-minute proposal introduced by Assemblymember Bill Quirk, sought to require the California ISO to procure up to 2,000 MW of long-duration, bulk energy storage by the end of 2019.

"We already have problems with too much solar during the day. This is the way to manage this," Quirk said in testimony at an Aug. 27 committee hearing.

"California will need long-duration energy storage to meet its carbon objectives," added Kerry Hattevik, the western U.S. government affairs director for NextEra Energy Resources LLC. The NextEra Energy Inc. subsidiary, one of the largest owners of renewable energy projects in California, is behind the proposed 1,300-MW Eagle Mountain Pumped Storage Hydroelectric Project, which it is co-developing with Eagle Crest Energy Co.

Going beyond 60% renewables will likely require bulk energy storage on that scale, and AB 2787 would help fill a gap in existing energy storage programs, which focus primarily on batteries, Hattevik said. The San Diego Water Authority, which is planning a new 500-MW pumped storage project, also backed the bill.

The measure failed to pass before the legislative session ended Aug. 31. Nevertheless, as renewable energy volumes grow, calls for policies to support pumped storage are likely to proliferate.

"Long lead-time resources should have a pathway to compete," Morris said. "The state's going to need a lot of storage."