Our state\u2019s groundbreaking energy storage mandate has spawned a vibrant new market. So much so that a session on the Golden State\u2019s energy storage policy dubbed \u201cCalifornia Dreamin\u2019?\u201d generated one of the few overflowing crowds at the annual meeting of the National Association of Regulatory Utility Commissioners this week in San Francisco. California regulators require that investor-owned utilities have at least 1,325 MW of storage in their portfolios by 2020. That includes long-term deals, which are creating bankable revenue streams, and a resulting influx of debt and equity products for storage projects. \u201cWithout the state\u2019s policy and leadership, we wouldn\u2019t be where we are today,\u201d said Janice Lin, California Energy Storage Alliance managing partner. No one knows how this emerging energy storage world will shake out. Rolled up into that are the questions: \u2022\tHow storage is ultimately defined; \u2022\tThe range of services projects provide; \u2022\tWhether storage projects will be installed at the distribution or transmission level; and \u2022\tThe amount of compensation to storage owners, as well as the length of projects\u2019 lives. First and foremost, though, is how much ratepayers will end up paying for systems that take excess power off the grid and later send it back as needed to meet peak demand and cut both greenhouse gases and the need for distribution and transmission upgrades to improve reliability. Although it\u2019s early in the game, there are positive signs on storage costs. A number of technologies are expected to be cost competitive with existing generation technologies in a few years. \u201cI am cautiously optimistic that storage will be cost competitive with other types of procurement in about five years,\u201d said Jim Avery, San Diego Gas & Electric senior vice president of power supply. Currently, SDG&E has about 50 MW of storage, which includes facilities at the two power plants it owns, as well as pumped hydro, and micro turbines that are used to even out the flow of wind and solar power flows. It turns out that some of these storage systems cost less than the installed cost of gas-fired plants. For example, prior to the California Public Utilities Commission\u2019s 2013 storage mandate, SDG&E installed a storage project at its 550 MW Palomar Plant. The storage medium is a reservoir of 5 million gallons of water that is cooled or heated. In a radiator-like fashion, it then is used to warm up or cool down the air surrounding the plant depending on the weather. Keeping the air temperature at the plant within a fairly narrow band width for several hours when demand is high by either circulating warm air when it\u2019s chilly or cold air on roasting summer days keeps it from losing up to 50 MW of capacity. The storage facility \u201chas increased the plant capacity by 10 percent without creating additional greenhouse gas emissions,\u201d Avery said. Even better is that the cost of this system is below the installed cost of a natural gas-fired turbine. The plant\u2019s storage costs are between $600-$800\/kW compared to $1,200-$1,500\/kW for a turbine, according Avery. The utility has a similar storage project at its only other generation facility, which is showing similar results. Other utilities also have a variety of storage projects, including various types and sizes of batteries, electric vehicle-to\u2013grid systems, molten salt banks, and compressed air facilities. Battery storage appears to be growing in popularity, with the utilities launching several pilot projects of various sizes in their territories\u2014from Southern California Edison\u2019s 32 MW project in the Tehachapi Mountains to much smaller ones at Pacific Gas & Electric substations. In addition, earlier this month Edison signed a long-term deal with AES Energy for a 100 MW lithium ion battery project in Long Beach at the Los Alamitos plant. That project has raised eyebrows partly because of the unknown life of lithium ion batteries, which have not been on the market 20 years, which is the term of the Edison contract. Some predict they will last less than two decades, which if true, would substantially raise project costs. Another issue with surging large and small batteries, not just lithium ion, is the environmental impact of disposing used up batteries. \u201cWe must take the disposal issue seriously,\u201d Carla Peterman, California Public Utilities Commission member, told the national organization\u2019s audience Nov. 17. She was an author of the state commission\u2019s storage procurement decision. More battery and other types of storage projects are expected to emerge with each of the three utility\u2019s annual storage solicitations. In addition to Edison\u2019s storage deals announced Nov. 5 as part of a larger procurement, SDG&E and PG&E are to seek battery and other storage projects at the beginning of December. SDG&E\u2019s Avery predicts receiving bids for storage projects \u201cthat we didn\u2019t even envision.\u201d Is that dreamin\u2019? Will it turn into screamin\u2019? That largely hinges on how much ratepayers end up paying, That depends on the cost effectiveness of given storage technologies, but also on rate protections state regulators adopt to prevent consumers from bearing an unfair amount of risk from known and unknown storage technologies as we work our way towards a less carbon-intensive energy system.