Governator to utilities: Invest in energy storage … maybe

California Governor Arnold Schwarzenegger signed AB2514 into official law this week, and it may change the face of the entire power industry if the details of that law spread to other regions in the U.S.

What makes this law so unique? It gets very close to mandating that utilities invest in energy storage systems to make connecting renewable power easier.

AB2514 requires that the California Public Utilities Commission (CPUC) “open a proceeding” by March 1, 2012 to discuss potential investor-owned utility (IOU) energy storage targets with a two-fold deadline---one set of targets achieved by December 31, 2015, and the second set by December 31, 2020.

There would be a similar set of requirements for public utilities, along with a plan for significant demand response activity.

"Energy storage improves the overall efficiency of our electric power system which will lower costs for consumers," said Assembly Member Nancy Skinner when the bill passed in June. "The Assembly's passage of AB 2514 is another step that advances California's clean energy economy and represents a great economic opportunity for the State."

"We applaud the Assembly's passage of this essential legislation, as well as Chairman Skinner and Attorney General Brown's leadership and commitment to moving it forward," said Janice Lin, Director of the California Energy Storage Alliance at the time of the bill’s passing. "This landmark bill puts California at the forefront of a growing global market that will spur economic development. Given major advances in energy storage, the industry is now ready to provide affordable, reliable products for California's utilities and consumers."

“California Governor Arnold Schwarzenegger just signed AB2514, an energy storage bill, into law this evening,” wrote Silent Power CEO Todd Headlee on the company’s blog.  “The passage of this bill is a major step forward for reliable, clean and lower cost electric power for all Californians. Electricity storage will enable more clean, local renewable wind and solar power supported by clean storage. With storage, Californians will have clean power when and where they need it and with less need for new transmission lines.” (Silent Power, Inc. manufactures and markets distributed energy storage systems.)

CALMAC Corp., a company that manufactures energy storage equipment, released a statement after the signing by CEO Mark MacCracken.

“Energy storage is an excellent solution for making renewable energy sources more economically viable,” said MacCracken. “Energy storage is critical as we move toward the use of renewable resources and Energy Storage Bill AB 2514 is a step in the right direction for the future of our country’s energy needs. I commend the leaders in California that realized that solving our energy problems is not as simple as just putting solar on roofs and wind turbines on mountains, since solar and wind cannot be counted on to be there when you need them. I hope other states follow California’s lead.”

If the CPUC decides to create extensive energy storage targets, this bill could be a sign of things to come with other states in the area of renewable interconnections, but, of course, there is always the loophole: AB2514 only requires that the CPUC discuss the matter and set targets. There is no guarantee what those targets might be. And, in fact, they may decide that no targets are needed at all, to stick with the status quo.

But, AB2514 is certainly a promising start for the renewables camp to get a stronger foothold in the door of traditional energy. And, they are using the biggest stick they can find: the government.