Open Access Senior Thesis
Bachelor of Arts
© 2014 Ryan H. Higgins
On October 1st, 2013, a mandate was adopted by the California Public Utilities Commission (CPUC) requiring that 1.325 GW of energy storage capability be installed on the California electricity grid by 2024, through the actions of the state’s three investor-owned utilities. While this is a bold first step towards mandated energy storage in the United States, it may be only the beginning for an energy storage industry in this state. It has been well established that energy storage would prove to be a useful asset on the California electrical grid, but the development of storage capacity past the requirements of the mandate will depend upon whether storage can be made cost-effective. Much of the value that storage creates is a public good: many storage applications allow the grid to operate more efficiently as a whole, but not necessarily in a way that can be monetized by any particular party. As a public good, these systemic benefits of storage capacity will be supplied sub-optimally in the absence of government intervention. The energy storage industry will accordingly be one that is strongly affected by the tides of change in technology, regulation and economics in the California energy market. This report will focus primarily on the intersection of the second two of these factors, largely leaving the technological questions to more well-informed parties while seeking to establish what regulatory and economic considerations might be undertaken to ensure that the road to deployment of appropriate energy storage systems is made as clear as possible so that this technology can reach the socially efficient level on the California electricity grid. It is the aim of this report not to promote a specific technology or even an energy storage industry, but rather to shed some light on the effects that the development of such an industry could have on the California electricity market and the energy use paradigm that governs modern electricity grids worldwide. With the adoption of AB 2514, a grand experiment was set in motion that will benefit the entire world as California tests the uncharted technological, regulatory and economic territories of grid-scale energy storage capacity. It is a time of change in the electricity industry, and energy storage is a potentially transformative technology that could very well enable the shattering of an energy use paradigm that has held the world captive to fossil fuels for over a century.
Higgins, Ryan H., "Energy Storage in the Golden State: An Analysis of the Regulatory and Economic Landscape." (2014). Pomona Senior Theses. 105.