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California Energy Commission – Tracking Progress

Energy Storage 1 Last updated November 2017

Energy Storage Energy storage technologies capture electricity or heat for use later in the electric power sector. Examples include pumped hydropower, thermal energy (such as molten salt), batteries, flywheels, and compressed air. Energy storage can be particularly helpful when there is too much electricity or not enough to meet demand. Energy storage can be located at the transmission-system level, the distribution-system level, or behind the customer meter. As California transforms its energy system to reduce greenhouse gases, it has been increasingly using greater amounts of solar and wind energy, and use of these resources will grow. The increase in variable generation, coupled with efforts to electrify the transportation system to reduce greenhouse gases, has led to an increased need for flexible resources to help maintain grid reliability. (For more information, see the Tracking Progress page on Resource Flexibility.1) Storage is one of several tools that is becoming increasingly important to help manage the grid as California works to transform its energy system to meet its climate goals. (For more information on California’s climate goals, see the Tracking Progress page on Greenhouse Gas Emission Reductions.2)

Key Legislation and Milestones

California has the largest energy storage market in the United States. Investor-owned electric utilities (IOUs) must procure more than 1.3 gigawatts (GW) of energy storage by 2020, with specific targets for transmission, distribution, and customer-side energy storage systems. As of February 2017, California utilities have procured more than 475 megawatts (MW) of energy storage.3

Further, community choice aggregators and electric service providers must procure energy storage equivalent to 1 percent of their load. Publicly owned electric utilities (POUs) are also working to advance energy storage.4 Table 1 summarizes key milestones advancing energy storage in California.

1 http://www.energy.ca.gov/renewables/tracking_progress/#resource_flexibility.

2 http://www.energy.ca.gov/renewables/tracking_progress/#ghg.

3 California Public Utilities Commission Decision 17-04-039, p. 17.

4 A summary of publicly owned electric utility energy storage actions is available online at http://www.energy.ca.gov/assessments/ab2514_other_docs/Joint_POU%20_Energy_Storage_Letter_2017.pdf. Also, see http://www.energy.ca.gov/assessments/ab2514_energy_storage.html.

http://www.energy.ca.gov/renewables/tracking_progress/#resource_flexibility

http://www.energy.ca.gov/renewables/tracking_progress/#ghg

http://www.energy.ca.gov/assessments/ab2514_other_docs/Joint_POU%20_Energy_Storage_Letter_2017.pdf

http://www.energy.ca.gov/assessments/ab2514_energy_storage.html



Table 1: California Energy Storage Legislation and Milestones

2008 CPUC approved energy storage systems coupled with eligible Self-Generation Incentive Program (SGIP) technologies to receive incentives.

2009 Senate Bill (SB) 412 (Kehoe, Chapter 182) modified the SGIP to include stand-alone advanced energy storage technologies to receive financial incentives.

2010 Partnering with the Department of Energy’s American Recovery and Reinvestment Act (ARRA) program, the Energy Commission began making investments in demonstration projects that provide a foundation for energy storage technology and market development. Results for more than a dozen projects are showcased online at http://www.energy.ca.gov/research/energystorage/tour/. The Energy Commission continues to advance energy storage technologies through energy research, development, demonstration, and deployment programs.

2010 AB 2514 (Skinner, Chapter 469) directed the California Public Utilities Commission (CPUC) to set targets for utilities to procure grid-connected energy storage systems and directed POUs to adopt appropriate energy storage targets.

2013 CPUC ordered Southern California Edison (SCE) to procure 50 MW of energy storage to meet its local capacity requirements (LCR) in the Los Angeles metropolitan area.

2013 CPUC set an energy storage procurement framework with a 1.3 GW storage target. 2014 The CPUC, California Energy Commission, and the California Independent System Operator

(California ISO) jointly published the California Energy Storage Roadmap. The roadmap focuses on actions to expand energy storage revenue opportunities, reduce energy storage integration and connection costs, and reduce uncertainty for energy storage project development timelines.

2015 The Los Angeles Department of Water and Power (LADWP) board approved plans to accelerate procurement of 178 MW of battery storage to address potential reliability impacts of reduced availability of natural gas stored at Aliso Canyon.

2016 CPUC directed SCE and San Diego Gas & Electric (SDG&E) to expedite procurement for electricity storage to address potential electricity reliability concerns related to the reduced availability of natural gas stored at Aliso Canyon. In response, SCE expedited procurement of 43 MW of energy storage, and SDG&E accelerated 56.5 MW of energy storage.5

2016 AB 2868 (Gatto, Chapter 681) requires the CPUC to direct the IOUs to implement programs and investments to accelerate deployment of distributed energy storage. The energy storage capacity installed under this bill shall not exceed 500 MW divided equally among the state’s three largest electrical corporations, and no more than 25 percent of the capacity can be for behind-the-meter systems. This capacity is in addition to the targets set under AB 2514.

2016 AB 33 (Quirk, Chapter 680) requires the CPUC, in coordination with the Energy Commission, to analyze the potential for long-duration bulk energy storage to help integrate renewable energy resources.

2017 The CPUC allocated about 80 percent of SGIP funding to energy storage, making the program a significant driver for energy storage projects in California. Initial 2017 incentive levels for energy storage range from 36 cents/watt-hour to 50 cents/watt-hour; however, if the demand for the program is high enough, the incentive levels will be decreased.

5 CPUC. Aliso Canyon Demand-Side Resource Impact Report (May 2017 Update) http://www.cpuc.ca.gov/uploadedFiles/CPUC_Public_Website/Content/News_Room/News_and_Updates/AlisoDSM_ImpactsReport20170510.pdf.

http://www.energy.ca.gov/research/energystorage/tour/

http://www.cpuc.ca.gov/uploadedFiles/CPUC_Public_Website/Content/News_Room/News_and_Updates/AlisoDSM_ImpactsReport20170510.pdf

http://www.cpuc.ca.gov/uploadedFiles/CPUC_Public_Website/Content/News_Room/News_and_Updates/AlisoDSM_ImpactsReport20170510.pdf



2017 SB 801 (Stern, Chapter 814) requires SCE to deploy 20 MW of cost-effective energy storage to

the extent that the deployment is cost-effective and needed to meet energy reliability requirements. It also requires LADWP to identify options for procuring storage and to coordinate with the Los Angeles City Council to determine cost-effective, feasible options for deploying 100 MW of energy storage to address electrical system needs in the greater Los Angeles area associated with the Aliso Canyon Natural Gas Storage Facility.

Source: Energy Commission staff

Status of Energy Storage in California Energy storage technologies vary greatly in discharge time (from minutes to days) and power output (from watts to gigawatts). The power (in megawatts [MW]) and energy (in gigawatt-hours [GWh]) are important attributes in determining the best applications for each energy storage technology (Figure 1). For example, a 10 kilowatt (kW) lithium-ion battery can be used to help manage peak demand at a location for several hours. In contrast, pumped hydropower systems are typically much larger (1 GW or more and are termed “bulk energy storage,” along with compressed air energy storage systems, which are discussed below.6) Pumped hydropower is regularly used to help balance daily swings in load, such as evening ramps in net energy demand as the sun sets and solar energy production drops.7 Pumped hydropower can also help manage seasonal differences in load and may be used to help address the variation in hydropower availability from year to year. Some technologies are well established, while others are in various stages of research and development.

6 In 2015, the Energy Commission and the CPUC jointly held a workshop exploring how to advance bulk energy storage. For a summary of the workshop, see Mathias, John, Collin Doughty, and Linda Kelly. 2016. Bulk Energy Storage in California. California Energy Commission. Publication Number: CEC-200-2016-006.

7 “Net energy demand” is energy demand net of wind and solar energy generation. The ramps associated with net energy demand are most pronounced in the spring months and are approaching 13,000 MW over three hours.



Figure 1: Energy Storage Technologies by Discharge Time, Size, and Use

Source: Electric Power Research Institute Commercially deployed since the 1890s, pumped hydroelectric (pumped hydro) energy is the dominant utility-scale electricity storage technology in California and worldwide. A typical pumped hydro facility uses pumps and generators to move water between an upper and lower reservoir. Pumped hydro facilities can provide energy for long periods, but they require specific site requirements that limit where they can be built and require large capital investments. The round-trip efficiency of pumped storage facilities varies significantly, from lower than 60 percent for some older systems to more than 80 percent for newer state-of-the-art systems. Round-trip efficiency refers to the percentage of electricity used to charge an energy storage system that can later be discharged to provide electricity. As of 2017, more than 4,500 MW of pumped hydro energy storage systems were operational in California, representing more than 3,400 GWh of energy storage (Table 2).



Table 2: Pumped Hydroelectric Power Plants in California (2016)

Plant Name Location (County)

Capacity (MW)

Gross Energy (GWh)

2016 Capacity

Factor (%)

Year Operational

Edward Hyatt Power plant Butte 644 1,716.8 30 1967

Thermalito Pumping-Generating Plant*

Butte 120 0.0 0 1968

W.R. Gianelli Pumped Storage Plant Merced 424 135.1 4 1968

O’Neill Pumping-Generating Plant Merced 28 9.8 4 1968

Castaic Pumped Storage Plant Los Angeles 1,682 448.7 3 1978

Helms Pumped Storage Plant Fresno 1,212 860.7 8 1984

Balsam Meadows/Big Creek (Eastwood) Pumped Storage

Fresno 200 238.7 14 1987

Olivenhain-Hodges Storage Project San Diego 40 31.5 9 2012

Total 4,517 3,441

Source: Energy Commission, http://www.energy.ca.gov/almanac/renewables_data/hydro/ * Note: The Thermalito Pumping-Generating Plant closed in November 2012. Thermal energy storage encompasses a variety of technologies in which thermal energy is stored for later use. Through December 2016, 178 MW installed/1,371 MWh, of thermal energy systems were installed in California, up from 24 MW/150 MWh in 2014 (Figure 2). One of the most commonly employed thermal storage technologies in California is Ice Energy’s Ice Bear system. Ice Bear systems are used to provide building cooling and can provide 20 kilowatts (kW) to 30 kW of energy storage for six hours. Stanford University has used chilled water to cool campus buildings for many years. Recently, Stanford installed a new district heating and cooling system. The system includes three water towers for cooling.8 Another type of thermal energy storage is molten salt used to store heat for later use at concentrating solar plants. For example, the molten salt thermal energy storage at the Abengoa Solar’s Solana Generating Station in Arizona can store enough energy to generate electricity for six hours.9 Also, SolarReserve’s Crescent Dunes Solar Energy Facility in Nevada uses molten salt (110 MW/1,100 MWh) in a power tower, the first of its type worldwide.10

8 http://sustainable.stanford.edu/campus-action/stanford-energy-system-innovations-sesi.

9 http://www.abengoasolar.com/export/sites/abengoasolar/resources/pdf/Solana_factsheet_09092013.pdf. 10 http://www.solarreserve.com/en/global-projects/csp/crescent-dunes.

http://www.energy.ca.gov/almanac/renewables_data/hydro/



Electrochemical energy storage technologies include lead acid batteries, lithium-ion batteries, and flow batteries, as well as other chemical batteries. Lead acid batteries are the most mature technology in this category, but lithium-ion batteries have become a popular choice in the last decade, due partially to greater energy density. Lithium-ion batteries became widespread through the associated use in consumer electronics, including cell phones, portable computers, and cordless power tools. Lithium-ion batteries are the dominant battery technology in U.S. electric vehicles (Figure 2) and one of the primary battery technology types employed for stationary energy storage applications. Iron phosphate batteries developed by BYD are widely used in transportation applications, especially in China.11 Other chemistries, such as those suitable for flow batteries, hold promise as well.

Figure 2: Observed and Forecast EV Lithium-Ion Battery Prices 2010–2030 ($/kWh)

Source: A. Zamorano with Bloomberg New Energy Finance, per April 18, 2017, IEPR workshop

Through December 2016, stationary battery energy storage systems totaled 147 MW/401 MWh in California, up from 41 MW/117 MWh in 2014 (Figure 3).

11 http://www.byd.com/usa/about/.



Figure 3 Growth in California Thermal and Battery Energy Storage Systems

Source: Energy Commission staff using U.S. Department of Energy, Energy Storage Database data

Flywheel energy storage systems are mechanical energy storage systems that work by converting electricity to kinetic energy in a spinning rotor. A flywheel system can last more than 25 years and can be manufactured from 100 percent recyclable, nonhazardous materials. As of June 2017, flywheels are not widely deployed for energy storage, but a few small flywheel systems have been installed in California in recent years, and improved flywheel technology is under development. For example, a 60 kW (120 kWh) Quantum Energy Storage flywheel system was tested at Camp Pendleton in San Diego County with Energy Commission funding awarded in 2013.12 In April 2017, a 6.25 kW (25 kWh) Amber Kinetics flywheel was tested and recommended for eligibility for the CPUC’s Self-Generation Incentive Program, which provides incentives for small-scale energy storage and other customer-side energy systems.13 This success builds on lessons learned from American Recovery and Reinvestment Act (ARRA)-funded research on earlier generations of the Amber Kinetics flywheel system.14

Compressed air energy storage (CAES) is a bulk energy storage alternative to pumped hydro. In CAES systems, air is compressed and stored under pressure in an underground cavern. When electricity is needed, the pressurized air is heated and expanded to drive a generator for power production. CAES systems have not been widely developed, with only two systems operational worldwide, a 290 MW project in Germany that began operations in 1978 and a 110 MW project in Alabama that opened in 1991.

12 Villanueva, Art; Victor Fung; Jennifer Worrall; Jeff Trueblood. (CleanSpark LLC and Harper Construction). 2014. Camp Pendleton FractalGrid Demonstration. California Energy Commission. Publication Number: CEC-500-2016-013. http://www.energy.ca.gov/2016publications/CEC-500-2016-013/CEC-500-2016-013.pdf.

13 http://amberkinetics.com/amber-kinetics-flywheels-pass-utilities-group-test/.

14 Bender, Donald, Raymond Byrne, and Daniel Borneo. June 2015. ARRA Energy Storage Demonstration Projects: Lessons Learned and Recommendations. A Study for the DOE Energy Storage Systems Program. Prepared by Sandia National Laboratories. SAND2015-5242. http://www.sandia.gov/ess/publications/SAND2015-5242.pdf.

California thermal energy storage systems

California battery energy storage systems

http://www.energy.ca.gov/2016publications/CEC-500-2016-013/CEC-500-2016-013.pdf

http://amberkinetics.com/amber-kinetics-flywheels-pass-utilities-group-test/

http://www.sandia.gov/ess/publications/SAND2015-5242.pdf



With a grant from ARRA, PG&E explored the feasibility of developing a CAES system in San Joaquin County capable of providing 300 MW of electricity for up to 10 hours.15 Pathfinder, a Wyoming-based development company, has proposed a CAES project near Delta, Utah, adjacent to the coal-fired Intermountain Power Plant (IPP). This CAES project would be capable of providing 1,200 MW for a two-day period. The 1,900 MW IPP plant is scheduled for decommissioning by 2024, and the CAES project is proposed as a partial replacement for the IPP.

Pathfinder anticipates this CAES will be used to store wind and solar energy for later use. A high-voltage, direct current transmission line runs from IPP to Adelanto, California, and Duke American Transmission Company proposes to repurpose the line for the proposed project.16

Figure 4 shows the geographic diversity of California’s energy storage facilities. Many energy storage systems are in SCE, SDG&E, and LADWP’s service territories.

15 PG&E. October 3, 2016. Smart Grid Annual Report – 2016. Smart Grid Technologies Order Instituting Rulemaking 08-12-009, California Public Utilities Commission. https://www.pge.com/pge_global/common/pdfs/safety/how-the-system-works/electric-systems/smart-grid/AnnualReport2016.pdf. Also see U.S. Department of Energy National Energy Technology Laboratory. May 2014. Final Environmental Assessment for the Pacific Gas and Electric Company Compressed Air Energy Storage Compression Testing Phase Project, San Joaquin County, California. DOE/EA-1752. http://www.netl.doe.gov/File%20Library/Library/Environmental%20Assessments/PG-E_CAES_Concurrence_Final-EA_04-30-2014.pdf.

16 Bill Hosie. September 1, 2016. http://docketpublic.energy.ca.gov/PublicDocuments/15-RETI-02/TN213500_20160906T113108_Panel_3_Presentation__Bill_Hosie.pdf. Also see Pathfinder, March 4, 2016. http://docketpublic.energy.ca.gov/PublicDocuments/16-IEPR-01/TN210616_20160304T151927_Pathfinder_CAES_I_LLC_Comments_Pathfinder_Comments_on_Scoping_O.pdf.

https://www.pge.com/pge_global/common/pdfs/safety/how-the-system-works/electric-systems/smart-grid/AnnualReport2016.pdf

https://www.pge.com/pge_global/common/pdfs/safety/how-the-system-works/electric-systems/smart-grid/AnnualReport2016.pdf

http://www.netl.doe.gov/File%20Library/Library/Environmental%20Assessments/PG-E_CAES_Concurrence_Final-EA_04-30-2014.pdf

http://www.netl.doe.gov/File%20Library/Library/Environmental%20Assessments/PG-E_CAES_Concurrence_Final-EA_04-30-2014.pdf

http://docketpublic.energy.ca.gov/PublicDocuments/15-RETI-02/TN213500_20160906T113108_Panel_3_Presentation__Bill_Hosie.pdf

http://docketpublic.energy.ca.gov/PublicDocuments/15-RETI-02/TN213500_20160906T113108_Panel_3_Presentation__Bill_Hosie.pdf

http://docketpublic.energy.ca.gov/PublicDocuments/16-IEPR-01/TN210616_20160304T151927_Pathfinder_CAES_I_LLC_Comments_Pathfinder_Comments_on_Scoping_O.pdf

http://docketpublic.energy.ca.gov/PublicDocuments/16-IEPR-01/TN210616_20160304T151927_Pathfinder_CAES_I_LLC_Comments_Pathfinder_Comments_on_Scoping_O.pdf



Figure 4: Operational Energy Storage Projects in California (2017)

Source: California Energy Commission staff



Foundational Energy Storage Demonstration Projects The Energy Commission funded several foundational energy storage demonstration projects, including projects that leveraged ARRA funding.17 These energy storage projects demonstrated different grid applications by capturing different value streams based on location, size, technology type, and real-world grid scenarios. The experience gained and the information acquired with this broad umbrella of technologies has presented the opportunity to make better procurement decisions for California’s evolving energy system. Examples of these foundational projects include:18

• PG&E grid-scale molten salt (sodium-sulfur) energy storage systems (near San Jose). These two energy storage systems demonstrated energy storage use cases for reliability, renewable integration, and ancillary services.19

• SDG&E Borrego Springs Microgrid Demonstration Project. This project demonstrated the value of lithium-ion battery storage to provide reliability, renewable integration, ancillary services, and better customer utility service.20

• Primus Power Corporation’s flow cell (zinc bromine) Wind Firming EnergyFarm™ (ARRA) demonstration project in the Modesto Irrigation District in the Central Valley working with Sandia National Laboratory and PG&E. This project demonstrated the value of energy storage to provide reliability, renewable integration, and ancillary services.21

Improving Southern California Energy Reliability With Energy Storage

The deployment of energy storage technologies in Southern California to help maintain energy reliability in the area is an example of the critical role energy storage can play in California’s energy system. The catastrophic leak at the Aliso Canyon natural gas storage facility led to dramatic changes in how electricity and natural gas are managed in the area. As part of 2016 Aliso Canyon mitigation measures, SCE and SDG&E accelerated procurement of about 100 MW

17 Bender, Donald, Raymond Byrne, and Daniel Borneo. June 2015. ARRA Energy Storage Demonstration Projects: Lessons Learned and Recommendations. A Study for the DOE Energy Storage Systems Program. Prepared by Sandia National Laboratories. SAND2015-5242. http://www.sandia.gov/ess/publications/SAND2015-5242.pdf. 18 For additional information on foundational Energy Commission energy storage demonstration projects, see the California Energy Storage Roadmap Companion Document: Relevant CPUC, Energy Commission, and ISO Proceedings and Initiatives. December 2014. http://www.caiso.com/Documents/CompanionDocument_CaliforniaEnergyStorageRoadmap.pdf.

19 PG&E. 2015. Advanced Energy Storage Systems for Enabling California’s Smart Grid. California Energy Commission. Publication Number: CEC-500-2015-060.

20 Bialek, Thomas. (SDG&E). 2014. Borrego Springs Microgrid Demonstration Project. California Energy Commission. Publication Number: CEC‐500‐2014‐067.

21 California Energy Commission. 2015. “California Energy Storage Showcase: Rechargeable Electrolytes.” http://www.energy.ca.gov/research/energystorage/tour/zinc/. Also see, U.S. Department of Energy October 2012. “American Recovery and Reinvestment Act (ARRA): Wind Firming EnergyFarm. Using Energy Storage to Integrate Wind Energy in California’s Modesto Irrigation District.” https://energy.gov/sites/prod/files/Primus.pdf.

http://www.sandia.gov/ess/publications/SAND2015-5242.pdf

http://www.caiso.com/Documents/CompanionDocument_CaliforniaEnergyStorageRoadmap.pdf

http://www.energy.ca.gov/research/energystorage/tour/zinc/



of electricity storage (Figure 5).22 As part of this effort, working with Wellhead Electric Company, Inc. and General Electric, SCE converted its Center Peaker power plant to a low-emission hybrid battery storage, gas turbine peaker system, the first in the world.23 SCE converted its Grapeland Peaker power plant to this system and may convert three additional peaker plants.24 Also, LADWP accelerated procurement of 20 MW of battery storage for its 250 MW Beacon Solar Project and wind turbines in the Mojave Desert and launched a fire station resiliency solar and battery project near Aliso Canyon in Porter Ranch.25 AES is planning to reduce the size of the natural gas power plant it is building in Long Beach, the AES Alamitos Energy Center, and add the largest battery in the world (300 MW/1,200 MWh).26

22 Based on information presented at May 22, 2017, IEPR workshop on Energy Reliability in Southern California. See TN217638. http://docketpublic.energy.ca.gov/PublicDocuments/17-IEPR-11/TN217638_20170519T104759_Joint_Staff_Presentation_on_Aliso_Canyon_Status_of_Action_Plans.pdf. And TN217648: http://docketpublic.energy.ca.gov/PublicDocuments/17-IEPR-11/TN217648_20170519T114358_Southern_California_Edison’s_Electric_System_Reliability_Activi.pdf.

23 Aoyagi-Stom, Caroline. April 18, 2017. “SCE Unveils World’s First Low-Emission Hybrid Battery Storage, Gas Turbine Peaker System.” Press Release. http://insideedison.com/stories/sce-unveils-worlds-first-low-emission-hybrid-battery-storage-gas-turbine-peaker-system.

24 Mr. Aaron Renfro, SCE, August 1, 2017, IEPR workshop on Senate Bill 350 Low-Income Barriers Study Implementation, http://docketpublic.energy.ca.gov/PublicDocuments/17-IEPR-08/TN220847_20170822T082055_Transcript_of_the_08012017_Joint_Agency_Workshop_on_Senate_Bill.pdf, p.81.

25 LADWP. January 31, 2017. LADWP Steps up Utility-Scale Battery Storage to Ensure a More Reliable Power Grid. Press Release. http://www.myladwp.com/ladwp_steps_up_utility_scale_battery_storage_to_ensure_a_more_reliable_power_grid.

26 http://www.renewaesalamitos.com/moreInfo.php.

http://docketpublic.energy.ca.gov/PublicDocuments/17-IEPR-11/TN217638_20170519T104759_Joint_Staff_Presentation_on_Aliso_Canyon_Status_of_Action_Plans.pdf

http://docketpublic.energy.ca.gov/PublicDocuments/17-IEPR-11/TN217638_20170519T104759_Joint_Staff_Presentation_on_Aliso_Canyon_Status_of_Action_Plans.pdf

http://docketpublic.energy.ca.gov/PublicDocuments/17-IEPR-11/TN217648_20170519T114358_Southern_California_Edison's_Electric_System_Reliability_Activi.pdf

http://docketpublic.energy.ca.gov/PublicDocuments/17-IEPR-11/TN217648_20170519T114358_Southern_California_Edison's_Electric_System_Reliability_Activi.pdf

http://insideedison.com/stories/sce-unveils-worlds-first-low-emission-hybrid-battery-storage-gas-turbine-peaker-system

http://insideedison.com/stories/sce-unveils-worlds-first-low-emission-hybrid-battery-storage-gas-turbine-peaker-system

http://www.myladwp.com/ladwp_steps_up_utility_scale_battery_storage_to_ensure_a_more_reliable_power_grid

http://www.renewaesalamitos.com/moreInfo.php



Figure 5: Accelerated Procurement of Energy Storage in Southern California

Source: Southern California Edison and San Diego Gas & Electric

Energy Storage Research and Development

Building on previous energy storage research and demonstration projects, the Energy Commission’s Electric Program Investment Charge (EPIC) Program continues to support development and demonstration of energy storage technologies. By supporting technology demonstrations and bringing energy storage innovators and investors together, the Energy Commission has funded more than a dozen energy storage projects since 2010. These projects provide data and real-world experience to help reduce investment costs and prove which solutions work best in specific applications.27 They also drive energy storage innovation and help achieve California’s 1.3 MW energy storage goal. Examples are listed below.

Amber Kinetics, Inc.: Long-Duration Mechanical Battery (Flywheel) This project aims to demonstrate the commercial readiness of flywheel systems using the most advanced design and manufacturing techniques available to drive the cost of flywheel energy storage systems, inclusive of power electronics, to a manufacturing cost below $150 per kWh (Figure 6). Due to Amber Kinetics’ advances in rotor geometries and manufacturing technology, these flywheels can achieve four hours of energy discharge. Flywheels generally have energy discharge times on the order of seconds or minutes.

27 As noted in Table 1, more information on the projects is available at http://www.energy.ca.gov/research/energystorage/tour/.




Figure 6: Amber Kinetics 10,000 Pound, 2 Cubic Meter Flywheel (8 kW, 32 KWh)

Source: Amber Kinetics. Left: Chief Operating Officer Wei-Tai Kwok and Chief Scientist Seth Sanders with an all-steel Amber Kinetics flywheel rotor (Nature, May 17, 2017).28 Right: 8 kW, 32 kWh flywheel.

28 Savage, Neil and Katherine Bourzac. “Energy: Powering Change.” Nature 545, online: May 17, 2017.

Solid-Steel Long Lifecycle

Rotor



Flow Battery Energy Storage Projects (Chemical Battery)

In May 2015, with funding from the Energy Commission, Eos Energy Storage launched a research project to pilot test a 125 kW/375 kWh AC-integrated energy storage system consisting of roughly 140 Eos Znyth™ battery modules (Figure 7). The system will be installed at PG&E's Advanced Technology Services Lab and at the San Ramon Technology Center’s grid simulation testing yard (Contra Costa County). System performance will be characterized for a variety of use cases, including peak shaving, ancillary services, load following, and frequency regulation. Eos will conduct dynamic testing of the battery before deployment to the electricity grid.

Figure 7: Utility Demonstration of 125 kW/375 kWh AC-Integrated Battery Energy Storage System

Source: Eos Energy Storage, LLC. In March 2017, SDG&E announced a research demonstration project with Sumitomo Electric Industries, Ltd. for a 2 MW/8 MWh vanadium redox flow battery energy storage system (Figure 8). The project was developed through a partnership between the California Governor’s Office of Business and Economic Development and Japan’s New Energy and Industrial Development Organization.29, 30

29 SDG&E. March 16, 2017. Press release: “SDG&E Spurs Energy Storage Innovation With Flow Battery Technology.” http://sdgenews.com/battery-storage-clean-innovative-reliable/sdge-spurs-energy-storage-innovation-flow-battery.

30 Sumitomo Electric Industries, Ltd., March 17, 2017. Press Release: “Sumitomo Electric Starts Demonstration of Storage Battery System for Power Grid in California.” http://global-sei.com/company/press/2017/03/prs025.html.

http://sdgenews.com/battery-storage-clean-innovative-reliable/sdge-spurs-energy-storage-innovation-flow-battery

http://global-sei.com/company/press/2017/03/prs025.html



Figure 8: Utility Demonstration of 2 MW/8 MWh Redox Flow Battery Energy Storage System

Source: Sumitomo Electric Industries, Ltd.

Low-Cost Thermal Energy Storage for Dispatchable Concentrating Solar Power (Thermal Battery) This project funds research at the University of California, Los Angeles, to develop and demonstrate a robust and low-cost energy thermal storage fluid, elemental sulfur, which enables overall low system costs, long lifetime, and scalability for concentrating solar power applications (Figure 9). This project aims to lower thermal energy storage costs to $15 per kWh, which could decrease the levelized cost of energy from 3 cents per kWh to 0.4 cents per kWh, providing $0.66 billion to $1.32 billion in annual savings depending on concentrated solar power (CSP) penetration.

Figure 9: EPIC-Funded UCLAProject to Develop and Demonstrate a Low-Cost Thermal Energy Storage System for Dispatchable Concentrating Solar Power

Source: University of California, Los Angeles



Los Angeles Air Force Base Vehicle-to-Grid (V2G) Demonstration A team from Lawrence Berkeley National Lab, along with other project partners at Los Angeles Air Force Base, has successfully completed the engineering, integration, and certifications necessary to earn revenue by bidding a fleet of 42 electric vehicles into the California ISO wholesale frequency regulation market (Figure 10).31 The U.S. Department of Defense and the Energy Commission scoped and funded this project, which is the largest V2G demonstration in the world. This project will provide the marketplace with information on revenue potential from electricity markets and the impacts of V2G services on the battery life and warranty. This groundbreaking project will also help provide business cases for civilian fleets to benefit from future V2G operations.

Figure 10: Los Angeles Air Force Base Vehicle-to-Grid Demonstration Project

Source: U.S. Air Force

31 Douglas Black and Jason MacDonald, Energy Technologies Area, Lawrence Berkeley National Laboratory, Los Angeles Air Force Base Vehicle-to-Grid Demonstration 500-11-025 Final Project Meeting Presentation, September 20, 2017.



Energy Storage Powers Price-Responsive Demand Response

At the August 8, 2017, IEPR workshop, stakeholders highlighted new opportunities for demand response created by the availability of lower-cost battery storage.32 For example, Susan Kennedy, founder and CEO of Advanced Microgrid Solutions, said that batteries combined with energy efficiency and state-of-the-art demand control make it possible for customers to earn energy savings and participate in demand response programs without reducing comfort.33 Also on August 8, 2017, Stem, Inc. and CPower announced a partnership to offer energy management services that combine demand response and intelligent energy storage to reduce load automatically when prices peak.34, 35

Energy Storage Benefits Energy storage technologies can play an important role in achieving California’s clean energy goals by helping to:

• Reduce emissions of greenhouse gases. Energy storage can be used to capture excess renewable energy generation for use later. This can reduce or avoid the curtailment of renewable energy and displace the use of fossil fuels to generate electricity. Moreover, energy storage in vehicles reduces the use of gasoline in the transportation sector.

• Reduce demand for peak electrical generation. In California, natural gas-fired peaking plants are not used very often; they are used when peak demand for electricity is too high to be met by other resources alone. Energy storage can be used to inject energy into the grid during peak demand to reduce the need for peaker plants.

• Defer or substitute for an investment in generation, transmission, or distribution. By absorbing and compensating for fluctuations in energy from solar and wind energy, energy storage can prolong and expand the ability of existing infrastructure to meet energy system needs. The CPUC is developing approaches to better capture locational system and many-use application benefits of energy storage.36

32 Also see http://docketpublic.energy.ca.gov/PublicDocuments/17-IEPR-12/TN220857_20170822T173619_Damon_Franz_Comments_Tesla_Comments_on_Barriers_to_DR_Workshop.pdf.

33 August 8, 2017 workshop transcript, pp. 237-238.

34 Stem, Inc. August 8, 2017. Press Release: “Stem and CPower Announce Energy Management Partnership.” http://www.stem.com/stem-and-cpower-announce-energy-management-partnership/. 35 CPower Energy Management. August 2017. “Intelligent Energy Storage and Demand Response.” https://cpowerenergymanagement.com/wp-content/uploads/2017/08/Intelligent-Energy-Storage-and-Demand-Response-1.pdf.

36 California Public Utilities Commission. March 2017. “Energy Storage Overview.”

http://docketpublic.energy.ca.gov/PublicDocuments/17-IEPR-12/TN220857_20170822T173619_Damon_Franz_Comments_Tesla_Comments_on_Barriers_to_DR_Workshop.pdf

http://docketpublic.energy.ca.gov/PublicDocuments/17-IEPR-12/TN220857_20170822T173619_Damon_Franz_Comments_Tesla_Comments_on_Barriers_to_DR_Workshop.pdf

http://www.stem.com/stem-and-cpower-announce-energy-management-partnership/

https://cpowerenergymanagement.com/wp-content/uploads/2017/08/Intelligent-Energy-Storage-and-Demand-Response-1.pdf

https://cpowerenergymanagement.com/wp-content/uploads/2017/08/Intelligent-Energy-Storage-and-Demand-Response-1.pdf



• Improve the reliable operation of the electrical transmission or distribution grid.

Energy storage technologies can provide several services to the electric grid, including energy arbitrage, frequency regulation, voltage support, resource adequacy, time-of-use bill management, and demand charge reduction. Long-duration bulk energy storage, such as pumped hydroelectric energy storage systems, can help meet California ISO requirements for resource flexibility.37

The Energy Commission, CPUC, and California ISO are working together to capture the benefits energy storage can provide.

Energy Storage Challenges As described below, California agencies have made substantial progress38 toward improving the planning process, opening the procurement process, developing new rates, simplifying grid interconnection requirements, and opening market participation to more energy storage systems.

Several issues warrant further attention to accelerate electricity storage investment opportunities in California. Based on information from the June 29, 2017, and August 8, 2017, IEPR workshops, an updated roadmap is needed with next steps to accelerate development of energy storage. Actions to consider advancing through the roadmap include:

• Developing and approving the rules by which electricity storage systems can provide multiple services from the same system and ensure the ratepayer is not paying more than once for the same service. Furthermore, ensuring that the system can provide these services and meet their overall requirements.

• Addressing how the state should deal with the end-of-life behind-the-meter, utility-scale, and electric vehicle battery systems.

• Developing consumer protection and standardized testing/certification for behind-the-meter electricity storage to ensure batteries meet the expected lifetime anticipated when installed.

Roadmap to Address Energy Storage Challenges

The Energy Commission, in coordination with the CPUC and California ISO, held public workshops on June 13, 2017, and June 29, 2017, to discuss updating California’s Energy Storage Roadmap.39 Stakeholders agreed that the roadmap should reflect California’s recent energy storage policy and 37 For more information on requirements for electricity resource flexibility, see http://www.energy.ca.gov/renewables/tracking_progress/documents/resource_flexibility.pdf.

38 CPUC staff. June 29, 2017. Energy Storage Roadmap Workshop Overview. http://docketpublic.energy.ca.gov/PublicDocuments/17-IEPR-12/TN219951_20170628T085456_Energy_Storage_Roadmap_Workshop_Overview.pdf.

39 https://eta.lbl.gov/news/article/58888/los-angeles-air-force-base-demo.

http://www.energy.ca.gov/renewables/tracking_progress/documents/resource_flexibility.pdf

http://docketpublic.energy.ca.gov/PublicDocuments/17-IEPR-12/TN219951_20170628T085456_Energy_Storage_Roadmap_Workshop_Overview.pdf

http://docketpublic.energy.ca.gov/PublicDocuments/17-IEPR-12/TN219951_20170628T085456_Energy_Storage_Roadmap_Workshop_Overview.pdf

https://eta.lbl.gov/news/article/58888/los-angeles-air-force-base-demo



industry innovation. The workshops provided an update on roadmap implementation actions addressing planning, procurement, rate treatment, interconnection, and market participation. Evaluating processes that streamline the interconnection of energy storage continues to be a high priority, as well as actions to drive down the cost of electricity storage, to increase market participation, and to provide additional system benefits.

Streamlining Interconnection Processes for Energy Storage

California’s energy agencies are working to clarify interconnection costs and requirements, and streamline interconnection processes. The Los Angeles Air Force Base V2G research demonstration project40 brought forward the need to revise energy storage interconnection processes with the IOUs and at the California ISO. Because energy storage is an electricity load and generation resource, it did not fit well with the interconnection processes available at the time for either the utilities or California ISO. The Los Angeles Air Force Base team spent more than three years revising its interconnection process at both the IOUs and California ISO to simplify energy storage interconnection to participate in V2G.41 In addition, California ISO reviewed its procedures for testing and certifying resources for ancillary services. Because of this review, an ancillary services testing method was developed that includes electricity storage. Starting in 2015, the CPUC has made progress addressing the same issue. For example:

• In 2015, the CPUC convened two working groups to review existing fire protection codes and materials handling guidelines for various energy storage technologies and applications and identify best practices.

• In March 2017, the CPUC approved a fee structure to interconnect non-exporting energy storage resources.

• In July 2017, the CPUC launched an expedited distribution interconnection process for storage resources that meet certain use-case criteria.

In addition, California ISO has completed several activities to incorporate distributed energy resources (DER) into its markets. For example:42

• California ISO revised its rules for virtual aggregated resources to allow a single point of communication (telemetry), promoting market participation.

40 https://eta.lbl.gov/news/article/58888/los-angeles-air-force-base-demo.

41 https://www.caiso.com/participate/Pages/NewResourceImplementation/Default.aspx.

Note – The New Resource Implementation Process accessed by the link above has changed significantly from the process followed for the V2G effort at Los Angeles Air Force Base.

42 California Energy Commission staff. 2017. 2017 Integrated Energy Policy Report. California Energy Commission. Publication Number: CEC-100-2017-001-CMD.

https://eta.lbl.gov/news/article/58888/los-angeles-air-force-base-demo

https://www.caiso.com/participate/Pages/NewResourceImplementation/Default.aspx



• In 2014, California ISO received Federal Energy Regulatory Commission approval of the

Reliability Demand Response Resource Participation Model. This model helped enable integration of emergency-triggered utility demand response programs into the California ISO market, which started in 2015.

• By the summer of 2015, SCE had integrated about 1,000 MW of demand response into the California ISO markets, well ahead of the 2018 deadline set by the CPUC for demand response to receive resource adequacy credit.43

• California ISO made changes to allow demand response to participate in nonspinning and spinning reserve markets and the flexible resource adequacy must-offer obligation market.

Remaining tasks to streamline energy storage interconnection include the following:

• Evaluate common telemetry framework and recommend actions to standardize resource telemetry requirements.

• Initiate and administer a working group to review and determine applicability, scope, and consistency of Underwriter Laboratories (UL) and other certification requirements for energy storage systems.

Continue to Drive Down the Cost of Energy Storage

The cost of lithium-ion batteries, widely used in electric vehicles, has dropped substantially in recent years. Together with drops in other clean energy technologies (Figure 11), lower-cost lithium-ion batteries are helping accelerate market growth in clean energy.

43 Kaneshiro, Bruce. CPUC. August 8, 2017. Transcript of the August 8, 2017, IEPR workshop. http://docketpublic.energy.ca.gov/PublicDocuments/17-IEPR-12/TN221097_20170908T094338_Transcript_of_08082017_IEPR_Commissioner_Workshop_on_Demand_Res.pdf. pp. 25-26.



Figure 11: Cost Reductions in Five Clean Energy Technologies (2008-2015)

Source: U.S. Department of Energy. September 2016. Revolution … Now: The Future Arrives for Five Clean Energy Technologies – 2016 Update.

Launched in 2010, the Advanced Research Projects Agency – Energy (ARPA-e) Grid-Scale Rampable Intermittent Dispatchable Storage (GRIDS) program aims to have a transformative impact on the energy system by reducing the investment cost of flexible, large-scale battery technologies to $100/kWh (Figure 12).44

Figure 12: Capital Costs of Energy Storage Technologies (2010)

Source: ARPA-E. 2010. GRIDS Program Overview

44 ARPA-E. GRIDS Program Overview. https://arpa-e.energy.gov/?q=arpa-e-programs/grids and https://arpa-e.energy.gov/sites/default/files/documents/files/GRIDS_ProgramOverview.pdf.

https://arpa-e.energy.gov/?q=arpa-e-programs/grids

https://arpa-e.energy.gov/sites/default/files/documents/files/GRIDS_ProgramOverview.pdf

https://arpa-e.energy.gov/sites/default/files/documents/files/GRIDS_ProgramOverview.pdf



Battery gigafactories under development in the United States, China, and elsewhere are expected to reduce costs through economies of scale. A primary market for these batteries is plug-in electric vehicles (Figure 13). In Beijing, for example, people can easily buy an electric vehicle but must wait to purchase an internal combustion engine vehicle allocated through a lottery. China is considering a timeline to phase out fossil-fueled vehicles. A recently adopted regulation requires automakers to attain credits for “new-energy vehicles,” including plug-in and hybrid electric vehicles, that are equivalent to 10 percent of sales in 2019, increasing to 12 percent in 2020.45 The regulations include allowances for automakers to trade credits, and a vehicle can generate multiple credits, depending on performance. A representative from the Natural Resources Defense Council estimated that the regulation could result in the production of more than 1 million electric vehicles per year.46

Figure 13: China and United States Lead Growth in Electric Vehicles (2010–2016)

Source: International Energy Agency, Global EV Outlook 2017

To continue to drive down the cost of electricity storage, California is working to expand electricity storage markets. Opportunities for energy storage revenue and incentive streams include:

• SGIP. California’s SGIP was established in 2001 to provide incentives for distributed energy systems installed behind the customer meter. In 2008, the CPUC approved energy storage systems coupled with eligible SGIP technologies to receive incentives. In 2009, Senate Bill

45 The State Council, The People’s Republic of China, “Rules Set New Targets for NEVs,” September 29, 2017, http://english.gov.cn/state_council/ministries/2017/09/29/content_281475892901486.htm.

46 Reuters, “China Sets 2019 Deadline for Automakers to Meet Green-Car Sales Targets,” September 28, 2017, https://www.reuters.com/article/us-autos-china-electric/china-sets-2019-deadline-for-automakers-to-meet-green-car-sales-targets-idUSKCN1C30ZL.

http://english.gov.cn/state_council/ministries/2017/09/29/content_281475892901486.htm

https://www.reuters.com/article/us-autos-china-electric/china-sets-2019-deadline-for-automakers-to-meet-green-car-sales-targets-idUSKCN1C30ZL

https://www.reuters.com/article/us-autos-china-electric/china-sets-2019-deadline-for-automakers-to-meet-green-car-sales-targets-idUSKCN1C30ZL



412 modified the SGIP to allow stand-alone advanced energy storage technologies to receive SGIP incentives. As of 2017, nearly 80 percent of SGIP funding is allocated to energy storage, making the program a significant driver for energy storage projects in California. Initial 2017 incentive levels for energy storage are from 36 cents per watt-hour to 50 cents per watt-hour; however, if the demand for the program is high enough, the incentive levels will be decreased.

• Time-of-use rates. With time-of-use rates, the rate customers pay to use electricity changes depending on the time of year or time of day. Customers can save money if they reduce electricity use during peak periods. Energy storage can help customers schedule use of utility-provided electricity to low-cost periods.

• Demand charges. Energy storage on the customer side of the electricity meter can help reduce the peak demand of the location, thereby avoiding large demand charges. This can help schools, commercial buildings, and industrial facilities save money.

• California ISO distributed energy resources program (aggregation). Energy service companies can group distributed energy resources, including energy storage, from different locations to provide grid stabilizing services for the California ISO wholesale market.

Studies have shown that energy storage is most competitive when it can provide more than one of these services and be compensated appropriately (Figure 14).47 However, market rules and rate treatments in California have made it difficult for energy storage projects to receive revenue for services. California’s energy agencies are considering rule changes to improve the ability of energy storage projects to be compensated for multiple services.48

47 Fitzgerald, Garrett, James Mandel, Jesse Morris, and Hervé Touati. September 2015. The Economics of Battery Energy Storage: How Multi-Use, Customer-Sited Batteries Deliver the Most Services and Value to Customers and the Grid. Rocky Mountain Institute. http://www.rmi.org/electricity_battery_value.

48 For example, see CPUC Rulemaking 15-03-011 and California ISO ESDER 3.

http://www.rmi.org/electricity_battery_value



Figure 14: Multiple Use Applications Improve Economics of Battery Energy Storage49

Source: Rocky Mountain Institute. 2015. The Economics of Battery Energy Storage.

Recent CPUC, California ISO, and Energy Commission actions to ease procurement of energy storage include the following:

• The California ISO clarified rules for hybrid energy storage generating facilities.50

• The CPUC clarified rules for energy storage to qualify for resource adequacy.51

• The Energy Commission funded development of a publicly available storage value estimation tool (StorageVET) for energy storage benefit-cost analysis.52

49 Fitzgerald, Garrett, James Mandel, Jesse Morris, and Hervé Touati. September 2015. The Economics of Battery Energy Storage: How Multi-Use, Customer-Sited Batteries Deliver the Most Services and Value to Customers and the Grid. Rocky Mountain Institute. http://www.rmi.org/electricity_battery_value. Additional note for the primary use case included in this figure: “While RMI does not think this scenario is likely (nor would we advocate for it), we did want to understand the economics of solar and storage under an avoided-fuel-cost compensation model.”

50 California ISO. October 19, 2016. “Technical Bulletin: Implementation of Hybrid Energy Storage Generating Facilities.” https://www.caiso.com/Documents/TechnicalBulletin-ImplementationofHybridEnergyStorageGeneratingFacilities.pdf.

51 For more information, see CPUC Decision 14-06-050 and CPUC Decision 16-06-045 in Rulemaking 14-10-010.

52 Kaun, Ben. 2016. Validated and Transparent Energy Storage Valuation and Optimization Tool, EPC 14-019. California Energy Commission. Publication Number: CEC-500-2017-016. http://www.energy.ca.gov/2017publications/CEC-500-2017-016/CEC-500-2017-016.pdf.

Solar self-consumption in San Francisco. Primary service: solar self-consumption*. Secondary services: time-of-use optimization, a suite of ISO/RTO services, and resource adequacy. * This analysis is based on a hypothetical scenario in which net energy metering is replaced with a value-of-solar tariff at 3.5 cents per kWh.

http://www.rmi.org/electricity_battery_value

https://www.caiso.com/Documents/TechnicalBulletin-ImplementationofHybridEnergyStorageGeneratingFacilities.pdf





Additional References

The following web links provide additional information on various energy storage topics.

• DOE Energy Storage Database o www.energystorageexchange.org/

• Publicly owned utility AB 2514 reports o www.energy.ca.gov/assessments/ab2514_energy_storage.html

• CPUC AB 2514 proceeding information o www.cpuc.ca.gov/General.aspx?id=3462

• Energy Commission energy storage research and development o www.energy.ca.gov/research/integration/storage.html o http://www.energy.ca.gov/research/energystorage/tour/

• EPRI Storage Value Estimation Tool o www.storagevet.com

• Energy Storage Roadmap o www.caiso.com/informed/Pages/CleanGrid/EnergyStorageRoadmap.aspx

Contact: Ostap Loredo-Contreras for research and development, [email protected] John Mathias for procurement, [email protected]

Next Update: October 2018 and annually

http://www.energystorageexchange.org/

http://www.energy.ca.gov/assessments/ab2514_energy_storage.html

http://www.cpuc.ca.gov/General.aspx?id=3462

http://www.energy.ca.gov/research/integration/storage.html


http://www.storagevet.com/

http://www.caiso.com/informed/Pages/CleanGrid/EnergyStorageRoadmap.aspx

mailto:[email protected]

mailto:[email protected]