Amended  IN  Senate  March 23, 2017

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Senate Bill No. 700
Introduced by Senator Wiener

February 17, 2017

An act relating to energy. An act to amend Sections 379.6 and 2835 of, to add the heading of Article 1 (commencing with Section 2835) to, and to add Article 2 (commencing with Section 2839.50) to, Chapter 7.7 of Part 2 of Division 1 of, the Public Utilities Code, relating to energy.


LEGISLATIVE COUNSEL'S DIGEST

SB 700, as amended, Wiener. Energy storage. Storage Initiative.
Existing law requires the Public Utilities Commission (PUC) to open a proceeding to determine appropriate targets, if any, for each load-serving entity, as defined, to procure viable and cost-effective energy storage systems to be achieved by December 31, 2015, and December 31, 2020. If determined to be appropriate, the commission is required to adopt the procurement targets, by October 1, 2013, and to reevaluate the determinations not less than once every 3 years. Existing law excludes an electrical corporation that has 60,000 or fewer customer accounts within California from these requirements. Pursuant to these requirements, the commission adopted Decision 13-10-040 (October 17, 2013), Decision Adopting Energy Storage Procurement Framework and Design Program.

This bill would state the intent of the Legislature to enact legislation to foster growth of the energy storage market.

In response to a requirement to adopt initiatives, on or before March 7, 2001, to reduce demand for electricity and reduce load during peak demand periods, including differential incentives for renewable or super clean distributed generation resources, the PUC adopted decisions establishing a self-generation incentive program. Existing law authorizes the PUC to authorize the annual collection of not more than double the amount authorized for the self-generation incentive program in the 2008 calendar year, through December 31, 2019. Existing law requires the PUC to require electrical corporations to administer the program for distributed energy resources established pursuant to the above-described law until January 1, 2020, and to separately administer solar technologies pursuant to the California Solar Initiative. Existing law requires the PUC to provide repayment of all unallocated funds collected for the self-generation incentive program on January 1, 2021, to reduce ratepayer costs.
This bill would require the PUC to establish the Energy Storage Initiative to provide rebates to customers of electrical corporations for the installation of energy storage systems meeting certain requirements. The bill would require the PUC to require the electrical corporations to collect a specified annual amount of moneys from calendar year 2018 through December 31, 2027, to fund the Energy Storage Initiative. The bill would require the governing boards of local publicly owned electric utilities, by December 1, 2018, to establish an Energy Storage Initiative to provide rebates to their customers for the installation of energy storage systems meeting certain requirements. The bill would require each local publicly owned electric utility, on or before December 1, 2018, to establish an Energy Storage Initiative and to submit the budget for the initiative to the State Energy Resources Conservation and Development Commission. Because this bill would increase the duties of local publicly owned electric utilities, this bill would impose a state-mandated local program.
This bill would remove the eligibility under the self-generation incentive program of energy storage systems that are qualified to receive rebates under the Energy Storage Initiative. The bill would reduce the annual amount collected for the self-generation incentive program by the amount that would be authorized for the Energy Storage Initiative.
Under existing law, a violation of the Public Utilities Act or any order, decision, rule, direction, demand, or requirement of the commission is a crime.
Because a violation of an order or decision of the commission implementing the requirements of this bill would be a crime, the bill would impose a state-mandated local program by creating a new crime.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for specified reasons.
Digest Key Vote: MAJORITY   Appropriation: NO   Fiscal Committee: NOYES   Local Program: NOYES  
Bill Text
The people of the State of California do enact as follows:
SECTION 1. Section 379.6 of the Public Utilities Code is amended to read:
379.6. (a) (1) It is the intent of the Legislature that the self-generation incentive program increase deployment of distributed generation and energy storage systems to facilitate the integration of those resources into the electrical grid, improve efficiency and reliability of the distribution and transmission system, and reduce emissions of greenhouse gases, peak demand, and ratepayer costs. It is the further intent of the Legislature that the commission, in future proceedings, provide for an equitable distribution of the costs and benefits of the program.
(2) (A) The commission, in consultation with the Energy Commission, may authorize the annual collection of not more than double the amount authorized for the self-generation incentive program in the 2008 calendar year, through December 31, 2019. The commission shall require the administration of the program for distributed energy resources originally established pursuant to Chapter 329 of the Statutes of 2000 until January 1, 2021. On January 1, 2021, the commission shall provide repayment of all unallocated funds collected pursuant to this section to reduce ratepayer costs.
(B) The annual collection authorized pursuant to subparagraph (A) shall be reduced by the amount authorized to be collected pursuant to Section 2839.52.
(3) The commission shall administer solar technologies separately, pursuant to the California Solar Initiative adopted by the commission in Decisions 05-12-044 and 06-01-024, as modified by Article 1 (commencing with Section 2851) of Chapter 9 of Part 2 of Division 1 of this code and Chapter 8.8 (commencing with Section 25780) of Division 15 of the Public Resources Code.
(b) (1) Eligibility for incentives under the self-generation incentive program shall be limited to distributed energy resources that the commission, in consultation with the State Air Resources Board, determines will achieve reductions in emissions of greenhouse gases pursuant to the California Global Warming Solutions Act of 2006 (Division 25.5 (commencing with Section 38500) of the Health and Safety Code).
(2) On or before July 1, 2015, the commission shall update the factor for avoided greenhouse gas emissions based on the most recent data available to the State Air Resources Board for greenhouse gas emissions from electricity sales in the self-generation incentive program administrators’ service areas as well as current estimates of greenhouse gas emissions over the useful life of the distributed energy resource, including consideration of the effects of the California Renewables Portfolio Standard.
(c) Eligibility for the funding of any combustion-operated distributed generation projects using fossil fuel is subject to all of the following conditions:
(1) An oxides of nitrogen (NOx) emissions rate standard of 0.07 pounds per megawatthour and a minimum efficiency of 60 percent, or any other NOx emissions rate and minimum efficiency standard adopted by the State Air Resources Board. A minimum efficiency of 60 percent shall be measured as useful energy output divided by fuel input. The efficiency determination shall be based on 100 percent load.
(2) Combined heat and power units that meet the 60-percent efficiency standard may take a credit to meet the applicable NOx emissions standard of 0.07 pounds per megawatthour. Credit shall be at the rate of one megawatthour for each 3,400,000 British thermal units (Btus) of heat recovered.
(3) The customer receiving incentives shall adequately maintain and service the combined heat and power units so that during operation the system continues to meet or exceed the efficiency and emissions standards established pursuant to paragraphs (1) and (2).
(4) Notwithstanding paragraph (1), a project that does not meet the applicable NOx emissions standard is eligible if it meets both of the following requirements:
(A) The project operates solely on waste gas. The commission shall require a customer that applies for an incentive pursuant to this paragraph to provide an affidavit or other form of proof that specifies that the project shall be operated solely on waste gas. Incentives awarded pursuant to this paragraph shall be subject to refund and shall be refunded by the recipient to the extent the project does not operate on waste gas. As used in this paragraph, “waste gas” means natural gas that is generated as a byproduct of petroleum production operations and is not eligible for delivery to the utility pipeline system.
(B) The air quality management district or air pollution control district, in issuing a permit to operate the project, determines that operation of the project will produce an onsite net air emissions benefit compared to permitted onsite emissions if the project does not operate. The commission shall require the customer to secure the permit prior to receiving incentives.
(d) In determining the eligibility for the self-generation incentive program, minimum system efficiency shall be determined either by calculating electrical and process heat efficiency as set forth in Section 216.6, or by calculating overall electrical efficiency.
(e) (1) Eligibility for incentives under the program shall be limited to distributed energy resource technologies that the commission determines meet all of the following requirements:

(1)

(A) The distributed energy resource technology shifts onsite energy use to off-peak time periods or reduces demand from the grid by offsetting some or all of the customer’s onsite energy load, including, but not limited to, peak electric load.

(2)

(B) The distributed energy resource technology is commercially available.

(3)

(C) The distributed energy resource technology safely utilizes the existing transmission and distribution system.

(4)

(D) The distributed energy resource technology improves air quality by reducing criteria air pollutants.
(2) For purposes of this subdivision, “distributed energy resource technologies” does not include energy storage systems that are eligible for a rebate pursuant to Article 2 (commencing with Section 2839.50) of Chapter 7.7 of Part 2.
(f) Recipients of the self-generation incentive program funds shall provide relevant data to the commission and the State Air Resources Board, upon request, and shall be subject to onsite inspection to verify equipment operation and performance, including capacity, thermal output, and usage to verify criteria air pollutant and greenhouse gas emissions performance.
(g) In administering the self-generation incentive program, the commission shall determine a capacity factor for each distributed generation system energy resource technology in the program.
(h) (1) In administering the self-generation incentive program, the commission may adjust the amount of rebates and evaluate other public policy interests, including, but not limited to, ratepayers, energy efficiency, peak load reduction, load management, and environmental interests.
(2) The commission shall consider the relative amount and the cost of greenhouse gas emissions reductions, peak demand reductions, system reliability benefits, and other measurable factors when allocating program funds between eligible technologies.
(i) The commission shall ensure that distributed generation resources are made available in the program for all ratepayers.
(j) In administering the self-generation incentive program, the commission shall provide an additional incentive of 20 percent from existing program funds for the installation of eligible distributed generation resources manufactured in California.
(k) The costs of the program adopted and implemented pursuant to this section shall not be recovered from customers participating in the California Alternate Rates for Energy (CARE) program.
(l) The commission shall evaluate the overall success and impact of the self-generation incentive program based on the following performance measures:
(1) The amount of reductions of emissions of greenhouse gases.
(2) The amount of reductions of emissions of criteria air pollutants measured in terms of avoided emissions and reductions of criteria air pollutants represented by emissions credits secured for project approval.
(3) The amount of energy reductions measured in energy value.
(4) The amount of reductions of customer peak demand.
(5) The ratio of the electricity generated by distributed energy resource generation projects receiving incentives from the program to the electricity capable of being produced by those projects, commonly known as a capacity factor.
(6) The value to the electrical transmission and distribution system measured in avoided costs of transmission and distribution upgrades and replacement.
(7) The ability to improve onsite electricity reliability as compared to onsite electricity reliability before the self-generation incentive program technology was placed in service.
SEC. 2. The heading of Article 1 (commencing with Section 2835) is added to Chapter 7.7 of Part 2 of Division 1 of the Public Utilities Code, to read:
Article  1. Procurement of Energy Storage Systems
SEC. 3. Section 2835 of the Public Utilities Code is amended to read:
2835. For purposes of this chapter, article, the following terms have the following meanings:
(a) (1) “Energy storage system” means commercially available technology that is capable of absorbing energy, storing it for a period of time, and thereafter dispatching the energy. An “energy storage system” may have any of the characteristics in paragraph (2), shall accomplish one of the purposes in paragraph (3), and shall meet at least one of the characteristics in paragraph (4).
(2) An “energy storage system” may have any of the following characteristics:
(A) Be either centralized or distributed.
(B) Be either owned by a load-serving entity or local publicly owned electric utility, a customer of a load-serving entity or local publicly owned electric utility, or a third party, or is jointly owned by two or more of the above.
(3) An “energy storage system” shall be cost effective and either reduce emissions of greenhouse gases, reduce demand for peak electrical generation, defer or substitute for an investment in generation, transmission, or distribution assets, or improve the reliable operation of the electrical transmission or distribution grid.
(4) An “energy storage system” shall do one or more of the following:
(A) Use mechanical, chemical, or thermal processes to store energy that was generated at one time for use at a later time.
(B) Store thermal energy for direct use for heating or cooling at a later time in a manner that avoids the need to use electricity at that later time.
(C) Use mechanical, chemical, or thermal processes to store energy generated from renewable resources for use at a later time.
(D) Use mechanical, chemical, or thermal processes to store energy generated from mechanical processes that would otherwise be wasted for delivery at a later time.
(b) “Load-serving entity” has the same meaning as defined in Section 380.
(c) “New” means, in reference to an energy storage system, a system that is installed and first becomes operational after January 1, 2010.
(d) “Offpeak” means, in reference to electrical demand, a period that is not within a peak demand period.
(e) “Peak demand period” means a period of high daily, weekly, or seasonal demand for electricity. For purposes of this chapter, the peak demand period for a load-serving entity shall be determined, or approved, by the commission and shall be determined, or approved, for a local publicly owned electric utility, by its governing body.
(f) “Procure” and “procurement” means, in reference to the procurement of an energy storage system, to acquire by ownership or by a contractual right to use the energy from, or the capacity of, including ancillary services, an energy storage system owned by a load-serving entity, local publicly owned electric utility, customer, or third party. Nothing in this chapter, and no action by the commission, shall discourage or disadvantage development and ownership of an energy storage system by an electrical corporation.
SEC. 4. Article 2 (commencing with Section 2839.50) is added to Chapter 7.7 of Part 2 of Division 1 of the Public Utilities Code, to read:
Article  2. Energy Storage Initiative

2839.50. (a) The Legislature finds and declares all of the following:
(1) The electrical system is evolving from a model dominated by centralized powerplants and long distance transmission of electricity toward a model focused on local energy sources located close to customers of electrical load.
(2) A decentralized electrical system can create greater energy independence and provide opportunities for increase resiliency of the power supply.
(3) Locating power supply equipment near the consumption of electricity reduces losses associated with the long-distance transmission of electricity.
(4) Empowering customers to take more active roles in the state’s electrical system leverages private capital, protects customers from rising energy costs, and promotes customer understanding and engagement.
(5) Installation of energy storage systems on a mass scale will be essential to the integration of renewable energy sufficient to meet the state’s greenhouse gas emissions reduction goals.
(6) A mass market for energy storage systems would create benefits for local economies and the state economy.
(7) California is a worldwide leader in the development of energy storage systems and advanced management of the electrical grid, but the market is so small that this leadership position is not firm.
(b) It is the intent of the Legislature to do all of the following:
(1) Make energy storage systems a mainstream technology that enables utility customers to help reduce variation in electricity consumption in local circuits of the electricity distribution system and the statewide electrical system.
(2) Create a marketplace for energy services that harnesses innovation stimulated by competition and that compensates distributed energy resources for the electrical attributes that those resources can provide to the electrical system.
(3) Achieve market transformation for energy storage systems. Market transformation would enable advanced technology energy companies and associated entities to achieve the scale and experience necessary to offer solutions at prices that are cost effective for customers to adopt to help address time-varying energy needs of the electrical system.
(4) Use customer-sited energy storage systems as a primary strategy to meet the reduction targets for the emissions of greenhouse gases established by the California Global Warming Solutions Act of 2006 (Division 25.5 (commencing with 38500) of the Health and Safety Code).

2839.51. For purposes of this article, the following definitions apply:
(a) “Customer-sited energy storage system” means a device that is capable of storing and dispatching energy, that operates in parallel with a utility distribution system, and that is connected on the customer side of the meter.
(b) “Dispatch capable” means having the communication capabilities for a utility or an authorized third party to cause a customer sited energy storage system to discharge the stored electricity.
(c) “Qualified census tract” means a census tract or equivalent geographic area defined by the United States Census Bureau in which at least 50 percent of households have an income less than 60 percent of the area median gross income.

2839.52. (a) To achieve the intent specified in subdivision (b) of Section 2839.50, the commission, on or before December 1, 2018, shall establish the Energy Storage Initiative to provide rebates to customers of electrical corporations for the installation customer-sited energy storage systems that are dispatch capable.
(b) The commission shall authorize electrical corporations to collect an annual amount for the Energy Storage Initiative in the 2018 calendar year, through December 31, 2027, that is equivalent to the annual amount allocated for energy storage systems pursuant to commission’s Decision 16-06-055 implementing Section 379.6 or any subsequent decision modifying that decision.
(c) (1) Not less than 20 percent of the amount collected shall be reserved for customers residing in any of the following:
(A) Low-income residential housing, as defined in Section 2852.
(B) Economically disadvantaged communities, including qualified census tracts.
(C) Disadvantaged communities, as identified pursuant to Section 39711 of the Health and Safety Code.
(2) Of the amount reserved pursuant to paragraph (1), 20 percent shall be expended to provide job training and employment opportunities for customers specified in paragraph (1) in the energy storage sector.

2839.53. (a) On or before December 1, 2018, the governing board of a local publicly owned electric utility shall collect an annual amount, through December 31, 2027, for an Energy Storage Initiative to provide rebates to customers of that utility for the installation of customer-sited energy storage systems that are dispatch capable.
(b) By December 1, 2018, a local publicly owned electric utility shall report the budget for its Energy Storage Initiative to the Energy Commission.
(c) The local publicly owned electric utility shall make available publicly data regarding participation in its Energy Storage Initiative.
SEC. 5. No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because a local agency or school district has the authority to levy service charges, fees, or assessments sufficient to pay for the program or level of service mandated by this act or because costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.
SECTION 1.

It is the intent of the Legislature to enact legislation to foster growth of the energy storage market.