William H. Holmes
Bill Holmes concentrates his practice in the area of energy law, with a special emphasis on wind, geothermal, biomass, tidal and ocean power, and other forms of renewable energy. Bill is the Energy and Telecommunications (ENTEL) practice group leader at Stoel Rives.
California Legislature Fails to Pass 33% Renewable Portfolio Standard
An alert written by Stoel Rives partner Seth Hilton:
Last night, the California legislature failed to pass Senate Bill 722—the 33% Renewable Portfolio Standard (RPS) legislation—by the close of the legislative session. The bill would have increased California’s RPS to 33% for both investor-owned and publicly owned utilities. It would also have placed limits on the use of renewable resources located out-of-state to meet California’s RPS—utilities would have been required to meet a certain percentage of their RPS obligations through resources whose first point of interconnection was a California balancing authority, or whose power is transmitted to California through a dynamic transfer arrangement or scheduled hourly or inter-hourly into California. The proposed legislation also would have authorized the use of renewable energy credits (RECs)—the environmental attributes of renewable power separated from the power itself—for RPS compliance, but would have imposed limits on the amount of RECs that could be used to meet the utilities’ RPS obligation.
Continue Reading...Energy Law Alert: CPUC Proposes to End Moratorium on TREC Transactions; Increase Cap to 40%
On August 25, the California Public Utilities Commission (“CPUC”) issued a proposed decision (“PD”) that would end the CPUC’s moratorium on approval of tradable renewable energy credit (“TREC”) transactions and increase the cap on such transactions for large investor-owned utilities to 40%.
Previously at its March 11, 2010 meeting, the CPUC authorized the use of TRECs for compliance with California’s Renewable Portfolio Standard (RPS), subject to certain limitations. CPUC Dec. 10-03-021 (Mar. 15, 2010)(“March Decision”). Among the limitations that the March Decision imposed was a cap limiting the use of TRECs for RPS compliance for the largest investor-owned utilities (Pacific Gas and Electric, Southern California Edison, and San Diego Gas and Electric) to 25% of their annual RPS compliance obligations. That cap was to remain in place until December 31, 2011, when the CPUC would consider modifying or removing that limitation. The March Decision also imposed a price cap of $50 per TREC. The price cap also expires on December 31, 2011.
Continue Reading...THIS WEEK IN BIOFUELS, A PATENT PERSPECTIVE
By our colleague Edna Vassilovski:
The US and PCT patent organizations published the following patents and applications during the week of August 15, 2010:
- WO2010093835 (Xyleco) relates to a utilizing existing manufacturing facilities, such as those used for the production of starch-, sucrose-, or lactose-based ethanol, to produce non-starch, non-sucrose, and non-lactose based products. The disclosure contemplates using the facility as-is, adding or removing equipment from the facility, as well as adapting the facility to include additional functionalities such as including a recalcitrance reducing system, and/or an enzymatic hydrolysis system.
- WO2010093832 (Xyleco) relates to methods for converting cellulosic and lignocellulosic feedstocks to a concentrated form which can be easily transported and utilized. The disclosed method involves mixing a cellulosic or lignocellulosic feedstock with a solvent such as water and a saccharifying enzyme and transporting the resulting mixture.
- WO2010093829 (Xyleco) relates to methods for processing biomass, for example in the context of producing biofuels. The method involves measuring the lignin content of the biomass and adjusting process parameters based in empirically determined relationships between lignin content and recalcitrance. According to the specification, the disclosed process enables manufacturing plants to utilize different types of feedstock and compensate for variations within the feedstocks.
- WO2010093765 (Arch Chemicals) relates to an antimicrobial composition for use during the fermentation step in the conversion of sugarcane to ethanol. The composition comprises an antimicrobial agent of the guanidine family, e.g. poly(hexamethyl biguandine) (PHMB), an antibiotic agent, and a surfactant in amounts sufficient to control wild yeast, Lactobacilli and bacteria microbiota contamination.
- WO2010093399/U.S. Patent Pub. No. 20100209548 (ENE003) relates to a portable apparatus for ethanol production and extraction from organic feedstock such as corn mash. According to the specification, the apparatus is designed to be mechanically simple and affordable so that it is suitable for use by farmers in small farms, yet can be upscaled for larger facilities.
- WO2010093365 (Helio Biotechnology Corporation) relates to cyanobacteria nucleic acid sequences, vectors and host cells useful in the production of ethanol, and methods of producing ethanol from solar energy and CO2 using cyanobacteria. For example, the specification discloses a genetically engineered cyanobacteria comprising a polynucleotide construct having a polynucleotide sequence encoding pyruvate decarboxylase enzyme (which can be obtained from Acetobacter pasteurianus plasmid pGADL201) and a copper ion inducible promoter (such as the pPetE promoter). According to the specification, in contrast to biomass ethanol production, the disclosed help reduce greenhouse gas by utilizing large quantities of CO2 as a carbon source for fuel production.
- WO2010093310 (Boson Energy) relates to a process for pelletization of biomass to increase its bulk density and reduce its storage and transportation costs. The process, which can be continuous, involves distinct heating, defibration and pelletization steps, which are all carried out in an substantially oxygen-free atmosphere. The heating and pelletization steps are carried out at a temperature within the glass transition or softening temperature interval of the lignin contained in the raw material.
- WO2010092924 (University of Miyazaki), which is published in Japanese, appears to relate to pentose-assimilating recombinant E. coli, useful in the production of ethanol. According to the abstract, the specification discloses E. coli obtained by destroying or eliminating the ptsG gene of the K011 strain of E. coli and that consequently improve or resolve the diauxy problems of the K011 strain of recombinant ethanol-producing E. coli.
- WO2010091507 (Natural Energy Systems) relates to a process for converting organic material to a methane-rich fuel gas. The process involves forming a first mixture by vaporizing the organic material in a substantially oxygen-free, enclosed chamber, and then mixing the vaporized organic material with an excess amount of hydrogen gas, and optionally superheated steam, at temperature ranging from 450 C to 650 C; forming a gaseous mixture containing methane, hydrogen and acid by heating the first mixture to a temperature ranging from 600 C to 900 C in the presence of an excess amount of hydrogen gas and superheated steam; and, neutralizing the gaseous mixture with a base.
- US Patent Pub. No. 20100210741 (Range Fuels) relates to catalyst compositions for converting syngas to alcohols such as ethanol. The catalyst compositions comprise cobalt-molybdenum-sulfide powders in which sulfur is present in a total amount of at least 40% by weight of the catalyst composition, for example in a total amount of 42% to 44% by weight. The amount of elemental sulfur present in the composition is preferably low, for example between 100 ppm – 5000 ppm calculated on a total catalyst weight basis. According to the specification, the molar ratio of sulfur to cobalt, given and initial assignment of sulfur to molybdenum to yield MoS.sub.2 is an important parameter, and is preferably between 0.1 to 4.
- US Patent Pub. No. 20100205857 relates to a eukaryotic cell capable of producing butanol and ethanol at a ratio of butanol:ethanol of between 1:2 to 1:100. The eukaryotic cell is preferably a Saccharomyces cerevisiae, which comprises at least one inactivated nucleotide sequence encoding an enzyme required for the production of ethanol, for example an alcohol dehydrogenase. The eukaryotic cell can comprise a nucleotide sequence encoding a butyryl-CoA dehydrogenase and at least one nucleotide sequence encoding a heterologus electron transfer flavoprotein. The eukaryotic cell can further comprise a nucleotide sequence encoding a heterologous enzyme having enzymatic activity for converting pyruvate, acetaldehyde or acetate into acetyl-CoA in the cytosol. According to the specification, it was surprisingly found that such a eukaryotic cell can be used in a large-scale ethanol fermentation process with minor to no adaptations in fermentation and distillation equipment.
- US Patent Pub. No. 20100205854 (Chevron U.S.A.) relates to low melting point triglycerides made esterification of Fischer-Tropsch acid by-products and the glycerol by-product from biodiesel generation. According to the specification, the low melting point triglycerides are useful as a fuel or fuel blending additive component for cold climates.
DOE Issues Waiver Under Section 1605 of ARRA for Solar PV Equipment Projects
From our colleagues Jere Webb and Jason Davis:
On August 6, 2010, the Assistant Secretary for Energy Efficiency and Renewable Energy (“EERE”), through delegated authority by the Department of Energy, issued a nationwide limited public interest waiver under Section 1605 (the “Buy American Provisions”) of the American Recovery and Reinvestment Act of 2009 (the “Recovery Act”) for EERE-funded projects for incidental and/or ancillary solar Photovoltaic (“PV”) equipment when such equipment is used in solar installations containing either domestically manufactured PV cells or panels.
After recognizing that the Buy American Provisions do not contain a requirement with regard to the origin of components in manufactured goods used in a project, but rather that the focus of the Buy American Provisions is on whether the solar panels are manufactured in the United States, the EERE granted a public interest waiver to the Buy American Provisions for six months (ending February 6, 2011) for the purchase of the following solar PV equipment: (1) domestically-manufactured panels containing foreign-manufactured PV cells; (2) foreign-manufactured panels comprised of 100 percent domestically-manufactured PV cells; and (3) any ancillary items and equipment (including without limitation charge controllers, combiners and disconnect boxes, breakers and fuses, racks, trackers, lugs, wires, cables, and all other incidental equipment with the exception of inverters and batteries) utilized in either #1 or #2, regardless of country of origin. According to the EERE’s research on the domestic solar manufacturing industry, this waiver would allow approximately nine companies to compete for grantees’ solar PV projects (of the nine, four companies produce solar PV panels in the United States). The EERE also states that the waiver does not apply to thin-film solar PV panels.
As noted above, this waiver expires on February 6, 2011, but the waiver is unclear whether the solar PV project must be completed by the expiration date or whether the solar PV equipment (that qualifies under the waiver) simply must be purchased by the expiration date. A review of an EERE waiver, dated March 19, 2010, applying to the purchase of light emitting diode LED lighting and HVAC units (although the waiver circumstances in this instance were quite different from the solar PV equipment waiver), might suggest that the solar PV equipment waiver will apply to those circumstances where the recipient of Recovery Act funds has taken substantial steps to commit funds for the purchase of solar PV equipment, such as placing an order or executing a contract for such equipment prior to the waiver expiration date; however, the absence of similar detail in the solar PV equipment waiver leaves quite a bit of uncertainty. Hopefully the EERE will issue future guidance to clarify the expiration date terms.
The complete solar PV equipment waiver is expected to be posted soon to the EERE’s website at http://www1.eere.energy.gov/recovery/buy_american_provision.html.
USDA Issues Notice of Funding Available for Renewable Energy Feasibility Studies
From our colleague Sarah Johnson Phillips:
Today, the U.S. Department of Agriculture (USDA) released a Notice of Funding Available (NOFA) for up to $3,000,000 in renewable energy feasibility study grants under the Rural Energy for America Program (REAP).
- The grants are available to farmers, ranchers, and rural small businesses for conducting feasibility studies for renewable energy systems.
- The maximum amount for a feasibility grant is $50,000 or 25 percent of the eligible project cost of the study (whichever is less). Eligible costs include, but are not limited to, resource assessment, transmission studies, and environmental studies.
- Applications are due to USDA Rural Development State Offices by October 5, 2010.
The REAP program also provides grants and loan guarantees to support renewable energy systems and energy efficiency improvements as well as energy audit and renewable energy development assistance grants. The REAP program is administered by the Rural Business-Cooperative Service
The full NOFA is available in today’s Federal Register (Federal Register, Vol. 75, No. 151, 47525-47535, August 6, 2010).
CPUC Lifts Hold On CSI Applications
From our colleague Morten Lund:
On July 29, the California Public Utilities Commission (“CPUC”) issued a ruling lifting a prior temporary hold on certain applications under the California Solar Initiative (“CSI”). The CPUC had on July 9 placed a hold on new CSI applications for PBI projects and government/non-profit projects pending comments on certain proposed program changes. Generally, the CPUC and the State of California are concerned over the costs of the program going forward, despite the fact that the program provides ever decreasing incentives as more capacity is installed. But the condition that California finances are in has state regulators in all agencies looking closely at programs that dispense funds to try and find ways to cut such expenditures.
In the July 29 ruling, Commissioner Peevey declared that the temporary hold created an “unacceptable level of market disruption,” and that the temporary hold was therefore lifted. All applications submitted during the hold will be processed, and new applications accepted.
The July 29 ruling can be found on the CPUC’s website here: http://docs.cpuc.ca.gov/efile/RULINGS/121304.pdf
The July 9 ruling can be found on the CPUC’s website here: http://docs.cpuc.ca.gov/efile/RULINGS/120427.pdf
This Week in Biofuels, A Patent Perspective
From our colleague Edna Vassilovski:
On July 29, 2010, the following U.S. patent applications were published relating to biofuels:
U.S. Pat. Pub. No. 20100191022 (Undisclosed assignee) relates to the use of Arundo donax feedstock in a gasification process to produce ethanol. According to the application, ethanol is produced substantially without by-products except for an ash stream of the inorganic plant nutrients.
U.S. Pat. Pub. No. 20100191008 (Energy & Environmental Research Foundation Center) relates to a process for the simultaneous production of chemical feedstocks and fuel blendstocks such as jet fuel from biomass feedstock, and specifically from unsaturated and polyunsaturated vegetable oils and/or algal oils. The process involves integrating metathesis reactions with other processes to produce suitable chain-length fuel components and chemicals.
U.S. Pat. Pub. No. 20100191004 (Sartec) relates to the use of certain metal oxides to catalyze the production of pentose and hexose derivatives from carbohydrates. Embodiments include the use of alumina, hafnia, titania and zirconia to catalyze the production of 5-hydroxymethylfurfural (HMF) or a biofuel from glucose, sucrose, fructose, and cellulolose at a temperature of greater than 100 degrees C.
U.S. Pat. Pub. No. 20100190259 (Undisclosed assignee) relates to a recombinant thermophilic, Gram-positive bacterium, a strain of B. thermoglucosidasius, having an ldh (lactate dehydrogenase) mutation and in which the stability of the ldh mutation has been enhanced. The application also relates to a process for improving the stability of the mutation by specific homologous recombination between a plasmid and the insertion sequence within the ldh gene. According to the specification the strain is useful for producing of ethanol in fermentation.
US Pat. Pub. No. 20100190226 (Iogen Energy Corporation) relates to a process for feedstock pretreatment. The process involves wetting grasses, cereal straws or stover of a particular length, pressing the wet feedstock through one or more roll presses, slurrying the pressed feedstock, and subjecting the slurried feedstock to dilute acid pretreatment to produce pretreated feedstock. According to the specification, the process allows for the crushing and shearing of feedstock and the removal of much of the soluble salts, proteins, sugars, alkaline compounds and organic acids from the feedstock.
U.S. Pat. Pub. No. 20100189076 (Verenium) relates to lignocellulolytic enzymes that hydrolyze sugarcane bagasse. According to the specification, the enzymes hydrolyze soluble cellooligsaccharides and arabinoxylan oligomers into monomer xylose, arabinose and glucose.
U.S. Pat. Pub. Nos. 20100187822 and 20100187818 (Louisville Clean Energy) relate to a combined heat and power production system, which improves the energy efficiency of individual production systems in the combination. Specifically, gasification, combined heat and power/combined-cycle, methane reactor, biodiesel, and ethanol fermentation methods of energy production are combined such that waste heat from one method serves directly as the heat reservoir for a successive method.
U.S. Pat. Pub. Nos. 20100186736 and 20100186735 (SunOpta BioProcess Inc.) relate to a method and apparatus for conveying cellulosic feedstock. The ‘736 application discloses an apparatus comprising a holding tank having an inlet and an outlet, wherein the outlet is at an elevation below the inlet, and at least one screw conveyer having a variable pitch along its length. In operation, the apparatus withdraws cellulosic feedstock from the tank in a direction transverse to the direction of travel of the feedstock through the tank. According to the specification, embodiments of the invention enable actively withdrawing feedstock from different portions of the outlet, preferably evenly from across the outlet, leading to a achieving a generally uniform residence time of feedstock in the tank. The ‘735 application discloses a similar apparatus but which includes two conveyers, the first conveyer delivering a first portion of the feedstock in a first direction, and the second conveyer delivering a second portion of the feedstock in a second direction.
U.S. Pat. Pub. No. 20100186291 (China Fuel (Huabei) Bioenergy Technology Development Co., Ltd.) relates to a process for producing biofuel via co-gasification of cellulosic biomass and coal in the presence of a catlyst. According to the specification, the process is a highly effective method of producing biofuel because the mixed use of cellulosic biomass and coal provides syngas, with a composition approaching the optimal ratio for producing methanol and ethanol, in a one-step gasification. The specification also suggests that co-gasification can reduce the ash fusion temperature of coal.
Illinois Legislation Passed to Encourage Renewable Energy Investment
From our colleague Sarah Johnson Phillips:
Last month, Governor Pat Quinn of Illinois signed two pieces of legislation expanding state policies that encourage investment in the state’s renewable energy sector.
H.B. 4797 extends the Illinois program providing for uniform statewide property-tax assessment of wind energy systems through 2016. Prior to 2007, assessments were made based on a county-by-county basis, which created significant inconsistency across the state. The uniform program allows wind projects to anticipate operating costs.
H.B. 4758 expands Property Assessed Clean Energy (PACE) financing opportunities to unincorporated areas of the state. PACE programs allow local governments to issue bonds to help finance energy improvements on homes and businesses. The PACE funding is then repaid by property owners through a surcharge on their property tax bills. At least 23 states have authorized PACE programs since 2008. Illinois first adopted PACE enabling legislation in August 2009 (SB 583) and now expands access to the program in 2010.
While popular, PACE programs around the country are facing an uncertain future following actions by the Federal Housing Finance Agency (FHFA), Fannie Mae, and Freddie Mac that have effectively shut down many programs. At issue is the fact that under most PACE programs, a lien is placed on the property that has priority over the mortgage. FHFA is characterizing these liens differently from routine tax assessments, arguing that they pose “unusual and difficult management challenges for lenders, servicers, and mortgage securities investors” that justify calling a halt to PACE financing while these concerns are addressed. The State of California has sued Fannie Mae and Freddie Mac for blocking its PACE program.
But despite the near standstill in implementation, Illinois and other states (including Minnesota and Missouri) have continued to authorize and expand PACE programs this year.
Texas Court of Appeals Hands Down Decision in Important Wind Curtailment Case
On July 27, 2010, the Court of Appeals of Texas, Fifth District, Dallas, issued its decision in TXU Portfolio Management Company, L.P., v. FPL Energy, LLC, et al., 2010 Tex. App. Lexis 5905 (2010). The case arose when three FPL wind farms (the "Wind Farms") located in the McCamey area of West Texas experienced ERCOT-imposed generation curtailments imposed by the Electric Reliability Council of Texas ("ERCOT") during 2002-2005. The Wind Farms had each entered into a power purchase agreement (“PPA”) with TXUPM under which they agreed to deliver a minimum quantity of energy and renewable energy credits (RECs) each year. Because of the deficiencies caused by the ERCOT generation curtailments, TXUPM sued the Wind Farms for deficiency damages under the PPAs. The Wind Farms counterclaimed, asserting that TXUPM materially breached each of the PPAs by failing to insure enough "transmission capacity" to allow the three wind farms to generate and deliver all of the electricity they were theoretically able to generate given wind conditions.
Section 2.03 of the PPAs required TXUPM to arrange for "all services, including without limitation Transmission Services . . . necessary to deliver Net Energy." The Texas Court of Appeals concluded that this provision required TXUPM to supply transmission service sufficient to accept delivery of energy actually generated by the project and delivered to the interconnection point. Contrary to the Wind Farms' argument, however, Section 2.03 did not require TXUPM to make sure there was enough transmission capacity in the McCamey area to make sure that the three wind plants could in fact generate every MWh they were theoretically capable of generating given wind conditions.
This outcome is not too surprising--it would have been very unusual had the Court of Appeals concluded that an offtaker's duty to supply transmission services at the delivery point amounted to an implied duty to arrange for the construction of (very expensive) transmission infrastructure sufficient to avoid generation curtailments. Utilities everywhere can breathe a sigh of relief that the Court of Appeals did not read this duty into the PPAs.
The fact that the Wind Farms had failed to deliver enough output to meet the annual minimum quantities specified in the three PPAs was not in dispute. Since the court concluded that TXUPM had not breached the PPAs by failing to supply transmission capacity, the only remaining question was the calculation of damages.
Stepping away from the court’s decision for a moment, though, it’s worth noting that there's a separate provision that is typically included in PPAs for intermittent renewable energy, and it apparently was not included in the three PPAs in dispute here, perhaps because of their 2000-2001 vintage. An annual minimum output guarantee requires a wind developer to take both mechanical availability risk and wind risk--the plant's output can be reduced below the minimum level if the wind doesn't blow as hard or as often as expected, or if the wind turbines and other equipment are not available as often as they should be. However, these risks are to some extent within the developer's control--wind risk can be addressed by thorough wind studies, and mechanical availability can be managed using the developer’s O&M program. Generation and transmission curtailment, on the other hand, are typically outside the developer's control and can be affected by delays in completing transmission infrastructure, additions of other intermittent resources to the grid, routine maintenance of the transmission system, emergencies and other factors.
Recognizing this, renewable energy PPAs usually provide that curtailed energy is counted as if it were generated for purposes of determining whether a plant has achieved its output guarantees. Although the requisite language is often omitted from utility pro forma renewable PPAs, most utilities are willing to agree if pressed that energy that could have been generated but for curtailment(s) should be counted as if it were generated for purposes of testing the project’s output guarantee. There may be a little scuffling over the proper method for calculating the quantity of energy and RECs that would have been generated “but for” the curtailment, but the real fight is usually over whether the PPA is in whole or in part a "take or pay" contract in which the utility is required to pay for some or all of the output that is actually curtailed. Cf. FPL Energy Upton Wind I, L.P., v. City of Austin, 240 SW3d 456 (2007), reh’g denied 2007 Tex App LEXIS 9306 (Tex App Amarillo 2007) (the Texas Court of Appeals ruled that ERCOT-imposed curtailments are not the same as voluntary economic curtailments by the power purchaser under a PPA and thus are not curtailments that the purchaser must pay for).
In any case, the Wind Plants in this case did not receive credit for curtailed energy under the three PPAs, so the court considered the deficiency as a given and turned to calculating the amount of damages. The three PPAs had hard-wired $50/MWh as the liquidated damage payment due for each MWh of deficiency below the annual output guarantee. This number was based on the per MWh penalty the Texas PUC was expected to impose, as of the time the PPA was entered into, on utilities that failed to secure enough renewable energy. The Wind Plants argued that this amount bore no resemblance to TXUPM's cover damages at the time of the alleged breach and had persuaded the trial court to declare the liquidated damages clause to be unenforceable. The Texas Court of Appeals reversed, concluding that the Wind Farms had failed to prove (1) that a measure of damages was ascertainable when the PPAs were entered into, or (2) that the $50/MWh rate was an unreasonable estimate of TXUPM's actual damages.
Using the deficiency rate of $50/MWh and the Wind Farms' total net deficiencies of 580,465 MWh for 2002 through 2005, TXUPM claimed $29,023,250 in deficiency damages. Bear in mind that these are just the deficiency damages, and thus only a part measure of the pain the plants suffered--they also had to forego a sale at the contract price and lost a Production Tax Credit (PTC) on each MWh curtailed. For utilities that are slow to acknowledge that curtailment risk is an important issue for the intermittent energy developer, this case offers a very succinct $29 million dollar explanation of why developers, lenders, and equity care so much about the topic.
CPUC Staff Issues White Paper on Electric Energy Storage (EES)
Energy Electricty Storage (EES) is likely to become more and more important as intermittent solar and wind energy resources penetrate the grid. EES may be a very useful and perhaps essential way to manage the variability of intermittent renewable energy resources to allow developers to continue building wind and solar projects at an accelerating pace.
On July 9, 2010, the Policy and Planning Division of the California Public Utility Commission (CPUC) issued an interesting Staff White Paper entitled "Electric Energy Storage: An Assessment of Potential Barriers and Opportunities." The report is worth reading for those who are interested in the future of renewable energy and the roll that EES can play in enhancing the deployment of intermittent renewables.
The report describes "a promising new set of Electric Energy Storage ("EES") technologies [that] appear to provide an effective means for addressing the growing problems of reliance on an increasing percentage of intermittent renewable generation resources." The report observes that EES can provide several basice services, such as (1) supplying peak electricity demand by using electricity generated during periods of lower demand (e.g., storage of wind energy generated at night for use during daily peak periods), (2) balancing electricity supply and demand fluctuations over a period of minutes, and (3) deferring expansion of electric grid capacity (including generation, transmission and distribution).
Potential storage technologies include pumped hydro, compressed air energy storage ("CAES"), batteries, thermal storage (e.g., solar thermal plants), flywheels, unltracapacitors and superconducting magnetic storage--the report provides short but helpful description of each technology. Storage presents interesting legal and policy issues, because "[r]egulators are uncertain how EES technologies should fit into the electric system, in part because EES services provide multiple services such as generation, transmission and distribution." In addition, "regulators do not yet know how EES costs and benefits should be allocated among these three main elements of the electric system."
The report makes a number of recommendations, including that the CPUC should conduct a rulemaking to develop policies to remove barriers to the deployment of EES technology in California. The report also proposes that the CPUC consider placing EES within California's energy resources loading order, require utilities to incoporate EES into their integrated resource planning processes, encourage CAISO to change ancillary service market rules to allow EES systems to more easily bid into regulation markets, and integrate EES into utility transmission planning.
The report concludes that "the major barrier for deployment of new storage facilities is not necessarily the technology, but the absence of appropriate regulations and market mechanisms that properly recognize the value of the storage resource and financially comepnsate the owners/operators for the services and benefits they provide."
You can find the report here.
