By Gavin Bade, Utility Dive
[Editor’s Note: The following is part of Utility Dive’s coverage of the 2015 Energy Storage North America conference.]
For many power sector observers, California utilities are the ideal partners for forward-thinking regulators looking to adapt the utility business model to the 21st century. California’s investor-owned utilities proclaim their commitment to clean energy technologies demonstrating how they’ve surpassed mandates, accepted more rooftop solar, or integrated large amounts of storage.
Utility executives from San Diego Gas & Electric (SDG&E), Southern California Edison (SCE), and Pacific Gas & Electric (PG&E), provided apt examples in their keynotes at the Energy Storage North America conference. All these announcements could logically lead observers to conclude that California utilities have been proactive partners in helping set California’s ambitious clean energy goals. Not exactly, two veteran state legislators told Utility Dive at the conference.
Politics of renewable energy policy:
State Sen. Ben Hueso, chair of the Senate energy and utilities committee, ushered SB 350, the bill that set the state’s 50% RPS, through committee earlier this year. He said that the utilities have always fought hard against any mandates behind closed doors, whether it was SB 350 or earlier efforts. Former Assemblymember Nancy Skinner, echoed Hueso’s observations, but said that the power industry doesn’t behave much differently than others in this respect. “No industry likes mandates,” she said, noting that it took three legislative sessions to usher through the state’s previous 33% RPS, which was met with utility pressure behind closed doors.
California’s new RPS, by contrast, was authored and passed in one legislative session, a feat that Skinner said cannot be overstated. Not only does the bill increase the renewables portfolio standard to 50% by 2030, it also specifically calls on utilities to deploy energy storage and combines the renewables goal with an aggressive efficiency standard. So what changed to get such an aggressive bill passed so quickly?
…Clifford Rechtschaffen, a senior advisor to Brown, said the most important thing was that, in the end, “all of the utilities with the tiny exception of some northern California power agencies that had some qualms, they all supported SB 350.” Rechtschaffen said that while the utilities may have shown some resistance as the bill was working its way through the legislature, most of their concerns were operational in nature. “They weren’t quarreling with the notion that we needed to get to 50%,” he said. “They had concerns about how best to do it — some of which we agree with and others which we aren’t completely in line with, but we’re working on those. Storage is a big part of the solution.”
The role of storage in California’s renewable energy economy:
In a keynote panel discussion the California policymakers highlighted energy storage as the technology that can make 50% renewables and beyond possible for California. Once you get to that level of renewables, Rechtschaffen said, “storage is absolutely critical for grid integration. There’s no arguing about that.”
But the situation for storage, especially in the eyes of utilities, wasn’t always so rosy, Rechtschaffen said. Back in 2014, the state’s IOUs were resistant to the PUC’s mandate to deploy over 1,300 MW of storage on the grid by 2020, worried that the technology wasn’t ready and that it would “put storage in a bad light.”
In reality, the opposite happened, and SCE started off the storage procurements by buying 264 MW, when it was only compelled to purchase 50 MW at the time. For the California policymakers, it was a validation of the power of mandates to drive innovation in the power sector.
Read full article from Utility Dive
Related article: Why energy storage is key to a future with ‘no more gas turbines’ (Utility Dive) – Oct. 15, 2015
Solar Power International: Moving into Second Gear?
It’s a challenge to summarize what transpired over four days at an event with 600 exhibits, 70 concurrent sessions (forcing choice between 6 at a time), 15 manufacturer-sponsored hands-on training sessions, 10 workshops, plenary sessions, parties and, oh, did I mention solar-supportive keynote remarks by Vice President Joe Biden to an enthusiastic audience. With participants from over 75 countries, it’s easy to see why Solar Power International (SPI) claims to be the largest and fastest growing solar conference in North America. But let me try to extract a few themes from this mid-September event sprawled across all four Exhibit Halls at the Anaheim Convention Center.
Clearly the industry is growing. In advance of the conference, the Solar Energy Industry Association and GTM Research released their quarterly update. With 1,393 Megawatts of PV capacity installed in the second quarter, the US Solar industry remains on track for an annual forecast total of 7,700 MW. Of this, 840 MW (60%) was installed in California. (A brief reminder that the capacity of a typical nuclear powerplant is 1,000 MW.) The fact that the California Senate and Assembly passed SB350 increasing the state’s current Renewable Energy target of 30% by 2020 to 50% by 2030 days before SPI added to the conference’s buoyancy. Repeatedly cited was the statistic that California has over 55,000 employees working in the industry (more employees than the state’s top 5 utilities combined).
Clearly the industry faces challenges. The major one is the currently scheduled expiration of the 30% residential tax credit and reduction of the commercial investment tax credit (ITC) from 30% to 10% fifteen months from now, the Administration’s request for a permanent extension of the ITC not withstanding. A Bloomberg forecast released at the conference anticipates that without an extension, 2017 will see installation activity dropping to its 2012 level. The loss of the tax credit would hit California’s businesses as hard as elsewhere. In addition, the fact that California’s Public Utility Commission (CPUC) is in the process of redesigning the utility rate structure, including deciding on an appropriate level of compensation for customers who generate their own solar energy, has the industry on edge. Utilities have requested the compensation (or credits) allowed solar customers be reduced by 40%, and that fixed fees be added to solar users’ bills. (If this sounds completely contrary to the legislative action on SB350 cited above, welcome to the world of Government.)
But beneath these Good News / Bad News headlines, several themes emerged that cut across the gazillion specific new product and service announcements.
Energy Storage developments are booming with a variety of technologies and products. Over 50 firms provided products or services related to Storage. Those in California are as diverse as 90-year old Trojan Battery Company of Santa Fe Springs and Milpitas-based JuiceBox Energy, a start-up barely out of the garage. Many clustered together on the exhibit floor in a zone known as the “Energy Storage Pavilion.” The CPUC mandate to the state’s three largest Utilities and other energy service providers to procure 1.3 GW of energy storage by 2020 creates an immediate market in California. And the recognition that commercial electric customers can utilize storage to reduce their bills through reductions in their peak demand charges creates a market rationale for growing storage demand beyond the utility mandate.
Finance is another area experiencing dramatic change. While the discussion only a couple years ago focused on lease or buy, a plethora of new financial instruments and capital sources have emerged. Sessions and exhibits provided information on new approaches to debt financing for non-residential projects (which appears to focus on financial support for Commercial and Industrial (C&I) customers, a growing solar niche), Tax equity markets, and the pooling of solar project cash flows (in what’s become known as a YieldCo). The good news is that investors (not just system owners) are seeing value (!) in PV installations.
And of course there were new panel developments, racking system improvements, Inverter advances and the like.
So what’s the take-away? The Solar industry is growing through its increased cost-competitiveness as a result of new product and service innovation. This dynamic was well captured by Vice President Biden’s comment, “Anyone who thinks it (Solar) is not happening just take a look at the market. It’s a competitive choice for consumers. … Look, this isn’t a government mandate, this is the market working.” Yes, but the uncertain future of tax credits and utility pushback (in California and elsewhere) continue the uphill slog.