Southern California Edison (SCE) set a precedent for California and the U.S. power industry on November 5, awarding local capacity procurement contracts for 2.221 gigawatts (GW) of energy resources across the Los Angeles Basin. For the first time in U.S. power industry history, SCE intends to make strategic use of advanced energy storage systems — both in front of and behind the meter — to meet local long-term electricity needs.

SCE’s contract awards marked at least a few industry firsts. It was the first time a U.S. electric utility evaluated a diverse range of conventional and preferred “green” energy resources — natural gas-fired power plants, solar PV, advanced energy storage, energy efficiency and demand response — in “head-to-head competition.” It was also the first time a U.S. utility solicited proposals from advanced energy storage solution providers to meet projected long-term electric power needs.

SCE awarded more than five-times the 50-megawatts (MW) of energy storage capacity it was required to by state power authorities, California Energy Storage Association (CESA) co-founder and Executive Director Janice Lin pointed out. Contracts to deploy 260.6 MW of advanced energy storage capacity were awarded to AES (100 MW), Stem (85 MW), Advanced Microgrid Solutions (50 MW) and Ice Energy Holdings (25.6 MW).

SCE’s Customer-sited Advanced Energy Storage Contract Awards

In addition to helping meet the energy storage capacity targets set out in California’s historic AB2514 energy storage mandate, SCE’s contract awards make a strong statement about the advantages and benefits it sees in deploying energy storage capacity both on its own and customer sides of the grid.

One of the key reasons supporting that, Advanced Microgrid Solutions’ (AMS) Chief Commercial Office Katherine Ryzhaya explained in an interview, “is that this not only checks the box on [California’s] energy storage mandate, we provide firm, dispatchable local capacity in places where you can’t site a huge generator. I really think this is the key value that we bring.”

“Demand response, energy efficiency, and energy storage are becoming part of contingency plans for closures of existing fossil fuel and nuclear power plants,” Cedric Christensen, Strategen Consulting director of market development, pointed out. “The benefits of running a highly ‘dispatchable’ resource on both sides of the electric meter are currently being tested throughout the country.”

Though it may take as much as 12 months until California’s Public Utilities Commission (PUC) approves them, the impact of this initial crop of advanced energy storage contract awards is going to ripple across California’s and the entire U.S. power sector as the state’s investor-owned utilities (IoUs) over the course of the decade acquire the 1.325 gigawatts (GW) of energy storage capacity stipulated in AB2514.

Grid Storage: A ‘Eureka’ Moment

Years of empirical research and investigation has revealed that intelligent, distributed energy storage systems can enable grid operators and utilities to strengthen and enhance the reliability and resiliency of the power grid more efficiently and cost-effectively than conventional grid assets, Lin told REW.

Following 1-1/2 years of research and analysis, California’s PUC found that advanced energy storage solutions are highly efficient, cost-effective multipurpose grid assets. They can provide flexible capacity in the from of spinning or non-spinning reserves, fast ramping (up and down), peak load shaving and demand shifting, frequency regulation and voltage support, black start, renewable energy integration and capture to avoid curtailment, emergency back-up, EV (electric vehicle) charging, Lin highlighted.

“The really cool thing about storage is that it can do so many things — all from the same asset,” she continued. “That was the real ‘Eureka’ moment. It can be used instead of a ‘peaker’ (typically natural gas-fired power plant), and when it’s not doing that it can be used for frequency regulation, voltage support — it’s an incredibly valuable asset.”

Moreover, Lin added, intelligent, distributed energy storage systems “are modular and easy to install down to the house level. “They can be put anywhere,” avoiding the costs of having to upgrade or build new transmission lines and other supporting grid infrastructure.

California’s power industry regulators are the first to institute policies and restructure market pricing to recognize the value advanced energy storage can provide, and that’s giving innovative, young U.S. power electronics companies a big boost.