New Energy Providers Join Forces Against Entrenched Agency Rules

29 Oct 2020

Bureaucratic red tape at the California Public Utilities Commission prevented East Bay Community Energy from contracting for clean, behind-the-meter electricity last year that could have provided power or lowered demand during the August heat waves. The resources were designated to help meet East Bay’s 2020 resource adequacy obligations. The community aggregator says it also is hitting a wall with regulators who have limited its ability to invest in clean demand response and capitalize on aggregated residential solar-plus-storage resources, Stefanie Tanenhaus, EBCE senior regulatory analyst, told Current.

EBCE has now joined with other community energy organizations and third-party demand response suppliers who share similar frustrations, and together are pushing back.

In a letter to the Chair of the Assembly Utilities & Energy Committee last week, they laid out specific ways California’s clean capacity reserves can be increased, averting blackouts. These range from removing market uncertainties and other hurdles faced by large and small energy storage projects, to doing away with outmoded caps on conservation. The group is urging the grid operator and CPUC to take five steps, or else risk a repeat of the unacceptable mid-August rolling blackouts.

“It’s imperative that we immediately implement these common-sense changes that can not only help stabilize the grid by 2021, but save consumers on their electricity bills, while also having the benefit of reducing air pollution and greenhouse gas emissions from burning more natural gas,” Tanenhaus said.

Assembly Utilities & Energy Committee Chair Chris Holden (D-Pasadena) defended the agencies’ performance. “As we green our grid, and address related climate change issues such as extreme heat, we are going to have to look at many different resources to meet the unique load characteristics we have in this state.” In an Oct. 29 response to a query from Current, he added, “Although many of the resources referenced in the letter are shelf-ready, we are in the very early stages of developing the technologies and grid planning tools to make those customer-based resources dispatchable to meet reliability needs.”

Will storage be derated?

The coalition is concerned that the CPUC’s counting methodology for renewables will lead to an undervaluing of four-hour, front-of-the-meter storage, which can help balance intermittent wind and solar resources. Currently, the CPUC reduces the amount of solar and wind capacity that gets counted over time, including because of weather changes. The new coalition worries that regulators may also ‘derate’ storage assets, reducing how much resource adequacy providers get credit for. It just doesn’t pencil out for them that way, they say. “The CPUC should guarantee the value of existing energy storage resources at the time of development.”

Large energy storage is further dinged by restrictions the California Independent System Operator puts on these resources. These reduce the technologies’ inherent flexibility.

The group also chafes at compensation limits imposed on aggregated home solar-plus-battery systems, which when “intelligently dispatched” can provide hundreds of megawatts during supply shortages. Surplus juice from behind-the-meter batteries sent to the distribution system is not compensated.

The producers say they also want the cap on utility energy efficiency lifted next year. Currently utility investments in conservation are capped at 8.3% of total system capacity requirements. Community energy and other providers help fund utility efficiency programs, and in return receive a share of the utility’s investments. But they can only buy additional ‘negawatts’ up to the 8.3% cap. For example, if 3% of a community energy provider’s resource adequacy requirement is filled by IOU demand response resources, that community provider’s investment in additional conversation is restricted to 5.3%.

Lastly, the coalition points out the CPUC’s complex and costly methodology, known as the Load Impact Protocol, does not fit third party small storage or conservation. It blocks their ability to participate in the resource adequacy market.

Signatories to the letter to Holden include not only community energy, but also Sunrun, Tesla, California Efficiency and Demand Management Council, California Energy Storage Alliance, Enel, OhmConnect and Voltus.

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