Energy Storage

California PUC adopts multi-use energy storage rules

The California Public Utilities Commission on Jan. 11 approved rules for energy storage resources that can provide multiple services.

California’s current rules don’t allow an energy resource to “stack” more than one service so they can’t be paid for the incremental values they bring to the wholesale market, distribution grid, transmission system, resource adequacy requirements and customers, the PUC said in a draft order that was unanimously approved.

“As a result, energy storage cannot realize its full economic value to the electricity system even though it may be capable of providing multiple benefits and services to the electricity system,” the PUC said.

The PUC adopted 11 rules outlining how multiple-use energy storage applications should be evaluated, along with definitions of service domains, reliability services and non-reliability services.

It is “the first time any commission has tried to do anything like this,” PUC Commissioner Carla Peterman said at the commission’s monthly meeting.

It is “an important first step to standardize the rules and to enable the hundreds of megawatts and more than $1 billion and growing in storage investments in California to realize their full economic potential,” she said.

“As we transition to these rules, I do want to make sure that there are no additional limitations to existing storage resources to provide” multiple-use application (MUA) services. Therefore, Peterman noted that she will be asking the PUC’s Energy Division to gather information on this question, “including any contractual restrictions to MUA participation that may exist as a part of other storage asset programs.”

California has been working for several years to spur energy storage development in the state. In 2013, for example, the PUC ordered the state’s three investor-owned utilities to acquire 1,325 megawatts of storage by 2021 through a series of solicitations.

The California Independent System Operator is working with stakeholders to allow energy storage to participate in the wholesale market.

An appendix to the order details the adopted rules, although the commission notes that “these are interim rules, which may be further refined through the working group process.”

Rule 5, for example says that if one of the services provided by a storage resource is a reliability service, then that service must have priority. Rule 6 states that priority “means that a single storage resource must not enter into two or more reliability service obligation(s) such that the performance of one obligation renders the resource from being unable to perform the other obligation(s). New agreements for such obligations, including contracts and tariffs, must specify terms to ensure resource availability, which may include, but should not be limited to, financial penalties.”

Rule 7 states that if using different portions of capacity to perform services, storage providers “must clearly demonstrate, when contracting for services, the total capacity of the resource, with a guarantee that a certain, distinct capacity be dedicated and available to the capacity-differentiated reliability services.”

Rule 9 says that in response to a utility request for offer, a storage provider will be required to list any additional services it currently provides outside of the solicitation. In the event that a storage resource is enlisted to provide additional services at a later date, the storage provider is required to provide an updated list of all services provided by that resource to the entities that receive service from that resource. The intent of this rule is to provide transparency in the energy storage market.

PUC staff, working with the ISO, will form a working group to hash out various issues, including metering, measurement and accounting methodologies for multiple-use applications as well as enforcement of the multiple-use application rules.

PUC orders PG&E to issue solicitation

Meanwhile, the PUC directed Pacific Gas & Electric to issue a solicitation for storage resources and other “preferred” resources such as renewables to replace three reliability-must-run contracts the utility has with Calpine.

The CPUC authorized PG&E to issue a Request for Offer for battery storage or other preferred resources to replace three Calpine fossil fuel plants (Feather River, Yuba, and Metcalf) that do not have long-term contracts with utilities but that have been identified by the California Independent System Operator as needed to serve local reliability needs.

If successful, PG&E’s RFO, as well as transmission solutions, could replace the three gas-fired plants, the commission said.

The PUC noted that its decision does not require PG&E to sign contracts if doing so would result in unreasonable costs or if the solicitation yields proposals that would not prove effective in reducing or eliminating the need for the three gas-fired plants.