Order to solicit batteries in California shows ‘energy storage is effective capacity resource’

(REPOST: Energy Storage News)

On 11 January, the state regulator, the California Public Utilities’ Commission (CPUC) issued Resolution E-4909, which authorised Pacific Gas & Electric (PG&E), one of California’s three main investor-owned utilities (IOUs), to “procure energy storage or preferred resources to address local deficiencies and ensure local reliability”.

In other words, three local specific sub-areas of PG&E’s service area have been identified as locations where the utility is now authorised by the Commission to hold competitive solicitations for energy storage and other preferred resources.

The idea is that expensive capacity contracts, often paid out to natural gas plants which will only run part-time as needed to balance supply with demand on the grid, will not be needed and instead lower cost energy storage projects could be deployed. The resources will have to ensure the required generation capacity is available and to manage voltage issues.

Essentially, while many of the economic and technical considerations around the authorisation are particular to California’s market design and regulation, what has happened is that four natural gas peaker plants owned by power generation company Calpine are considered no longer economic to run at Resource Adequacy and energy capacity prices. Two of those plants are still considered necessary to meet local capacity needs while another is needed to regulate voltage.

Calpine complained that the cost and time need for planning and executing upgrades to the three plants under existing rules would be prohibitive, while the Commission was concerned that creating new reliability must-run resource (RMR) rulings would likewise take too long and could run over budget.

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