The California Public Utilities Commission has unanimously approved a 1,325 MW energy storage procurement target for the state’s largest utilities in Decision 13-10-040. PG&E, SDG&E, and SCE must collectively procure 1,325 MW of energy storage resources by 2020, for installation no later than 2024. The first of at least four competitive solicitations for energy storage projects will take place on December 1, 2014. While the press has hailed the 1.3 GW procurement target as the first of its kind in the nation, the Commission actually first authorized energy storage procurement in California last February, ordering SCE to procure at least 50 MW of energy storage in Decision 13-02-015. The amount of capacity up for grabs in the biennial RFOs is set by Decision 13-10-040, but storage projects already in the pipeline and contracts for storage approved by the Commission in other proceedings will likely eat into the capacity available. There is also a potential off-ramp, if proposed projects are not reasonable in cost or the utilities do not receive enough bids for operationally viable projects, each can defer up to 80% of its procurement target. As the utilities’ cost and fit evaluation methodologies will be developed over the coming year, what would constitute unreasonable cost has yet to be determined.

For more details about the energy storage procurement framework approved by the Commission, see our previous client alerts, here and here.