Upstream Course for Pumped Storage

By Published On: August 26, 2011

State regulators are grappling with the role of energy storage as California moves to a 33 percent renewable mandate. Issues include how to value storage technologies, what funding levels utilities should set, models of ownership--from utility- to customer-owned--and incentives to promote both existing and promising technologies. Energy storage advocates are pushing for increased incentives and utility funding at the California Public Utilities Commission. Some regulators are not convinced of storage technologies’ merits. The viability and cost of some projects are being carefully scrutinized. Two proposed large-scale pumped hydro energy projects are in limbo, partly in response to regulators’ concern. Energy storage today is principally pumped hydro. Storage projects also include battery technologies, compressed air projects, and other emerging technologies. Together they’re considered key to a successful 33 percent renewables energy portfolio mandate because they allow maximum use of alternative resources that operate intermittently. When wind and solar power are overabundant, for example, they can be used to pump water uphill to store energy for later release when the sun is down and the wind peters out. Investor-owned utilities’ spending on energy storage is expected to increase to encourage shifts in energy use away from times of peak demand to times when energy use is lower, insists the California Energy Storage Alliance. In a brief filed with the CPUC Aug. 22, the alliance warned that the pending storage spending plans of Pacific Gas & Electric, Southern California Edison, and San Diego Gas & Electric are insufficient. To ensure utilities’ successful shift to a 33 percent renewables portfolio, they must triple their proposed spending on energy storage--from $32 million to $120 million, insists the energy storage alliance. Bids for existing storage projects also should be handled separately from emerging technologies, and the avoided cost valuation increased, it adds. Utilities’ plans “must be evaluated in the context of California’s urgent need for all applications of energy storage, of which [permanent load shifting] is a strategically vital part. It is not sound public policy for the commission to repeatedly urge the utilities to greatly expand their [load shifting] programs, only to allow the utilities to downplay the value to California of grid-wide deployment” of storage technologies and other load reducing strategies, according to the filing. Meanwhile two major pumped hydro storage projects, like salmon swimming up a steep stream, face considerable hurdles. A proposed CPUC ruling gives the thumbs down to PG&E’s request to use $33 million of ratepayer funds to study developing a pumped storage facility. The funding request for the project was rejected earlier this month as premature because PG&E failed to show the need for the project to support renewable energy growth by 2020, according to the tentative ruling released earlier this month. The CPUC judge pointed to the California Independent System Operator’s 33 percent integration study that showed no demonstrable need for additional resources to integrate alternative energy supplies into the grid. “Since the actual need for pumped storage is unknown at this time, PG&E’s estimate of the size of such a project, along with the potential benefits, varies so much that such a project can only be considered speculative at this time,” administrative law judge Karen Clopton wrote in a proposed decision. PG&E’s tentative plan is to connect two existing reservoirs in the El Dorado National Forest, creating up to 1,200 MW of hydro storage. The potential cost is pegged at $2.5 billion (Current, Aug. 27, 2010). PG&E can resubmit its requests for a ratepayer funded study “when there is a more definitive determination” that pumped storage is needed, she added. Another major storage project, initially pitched 15 years ago, remains stalled. Developers of the beleaguered 500 MW Lake Elsinore pumped storage project in Riverside County recently appealed last month’s permit dismissal by federal regulators. “It’s a very valuable project,” David Kates, spokesperson for developer Nevada Hydro, said. The company asked the Federal Energy Regulatory Commission to reconsider its application for the generation part of the project, which entails pumping water out of Lake Elsinore to a higher elevation reservoir and releasing it to create hydropower during times of peak demand. The firm also seeks state approval for the transmission part of the project. Nevada Hydro awaits a schedule from the California Public Utilities Commission for the 32-mile, 500 KV line that would loop around San Diego, Kates said. The transmission would carry up to 1,500 MW. That would allow it to transport power from other sources as well to improve the project economic viability. The $1 billion project, known as Lake Elsinore Advanced Pumped Storage, or LEAPS, has been mired in controversy. Nevada Hydro planned to jointly develop the project with the Elsinore Valley Municipal Water District but there was a disagreement over the project’s scope. Last month, the water district, which signed a deal with Nevada Hydro on 1997, terminated the agreement (Current, July 22, 2011). The Elsinore Valley water district’s next move on the pumped hydro front depends on whether FERC dismisses or grants Nevada Hydro’s appeal. “We have done nothing. We are waiting to see if FERC will do anything different on the appeal,” said Greg Morrison, water district spokesperson. FERC spokesperson Celeste Miller noted that FERC has 30 days to act on the appeal but if it decides it needs more time to consider the matter, it is not bound by a set time frame.

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