HomeMy WebLinkAboutH-3 Staff Report - Update to Energy Storage System Determination and Plan of Assembly Bill (AB) 2514 Procurement TargetsCONSENT CALENDAR
H-3
TO: HONORABLE CHAIRPERSON AND MEMBERS OF THE AZUSA UTILITY
BOARD
FROM: MANNY ROBLEDO, DIRECTOR OF UTILITIES
DATE: SEPTEMBER 21, 2020
SUBJECT: UPDATE TO ENERGY STORAGE SYSTEM DETERMINATION AND PLAN
OF ASSEMBLY BILL (AB) 2514 PROCUREMENT TARGETS
BACKGROUND:
Assembly Bill 2514 (AB 2514), the Energy Storage Bill, was signed into law by Governor
Schwarzenegger in 2010, which requires all electric load serving entities in California, including
Azusa Light & Water (ALW), to undertake a study of applicable energy storage technologies and, if
cost effective and technologically viable, set goals for procuring or installing such technologies. AB
2514 also requires that the findings of said studies, along with established year 2016 and 2021
targets, if any, be reported to the Utility Board and the California Energy Commission (CEC) by
10/1/2014 and updated every three (3) years. The recommended action approves the 2020 AB 2514
update, which concluded that commercially available energy storage technologies are not available
for ALW’s purposes and no procurement targets shall be established at this time.
RECOMMENDATION:
Staff recommends the Utility Board take the following action:
1) Approve no energy storage procurement targets pursuant to AB 2514 due to the lack
of cost-effectiveness; and
2)Authorize the Director of Utilities to submit Azusa’s AB 2514 Energy Storage
Compliance Report to the California Energy Commission.
ANALYSIS:
In 2014 staff identified an energy storage application at ALW’s Kirkwall Substation which serves
approximately 25% of Azusa’s load. Faced with a possible future upgrade of its existing
transformer bank configuration due to increasing peak demand, staff sought to study the potential of
APPROVED
UTILITY BOARD
9/21/2020
Special Meeting
Update AB2514 Energy Storage Targets
September 21, 2020
Page 2
deferring a transformer upgrade with energy storage. The energy storage device could serve as short
duration back-up power under stressed conditions, but it would not be a reliable substitute for a
utility grade transformer. Under the initial 2014 study and 2017 re-evaluation using a Navigant
Consulting energy storage valuation model, the results proved to be uneconomic. Staff’s
investigation in 2017 compared the cost and useful life of an additional 8.4 MVA transformer at the
Kirkwall substation versus adding a 3-5 MW storage device. It was found that a transformer
upgrade would provide a more useful life (40-50 years) at a prevailing cost of $2 million dollars. In
2017, 3-5 MW Sodium Sulfur and Lithium Ion storage devices with a useful life of 10-15 years
were quoted between $19.9 and $12.9 million dollars, which is not cost-effective. Additionally,
since 2014, ALW’s peak conditions at the Kirkwall substation have been typical without the urgent
need of an additional transformer.
At the power supply portfolio resource level, Azusa signed into a 30 MW wind project, Mesa RP30,
expected online by late 2021. This project will provide local capacity and renewable energy, which
is complementary to solar production and ALW energy demands and thus reduces the need for
energy storage.
In regards to the usefulness of a storage device for capacity purposes, the current California
Independent System Operator structure accepts 4-hour discharge storage devices as eligible for
fulfilling capacity obligations. There is still a high regulatory and technology risk in regards to
capacity markets. It is unknown if the grid operator will require storage devices to discharge for
longer times or if the capacity market known today will remain unchanged potentially rendering
investing in storage devices an imprudent decision.
Pursuant to the above analysis, Staff re-affirms that at this time there are still no available energy
storage technologies that are cost-effective for ALW’s needs. Further staff concludes that no targets
for energy storage shall be established. Staff will continue monitoring and re-evaluating storage
technologies as statutorily required.
FISCAL IMPACT:
There is no fiscal impact associated with recommended actions of this consent item.
Prepared by: Reviewed and Approved:
Richard Torres Manny Robledo
Assistant Director of Utilities - Resource Management Director of Utilities
Reviewed and Approved:
Sergio Gonzalez
City Manager
Attachment:
1) AB 2514 Energy Storage Compliance Report
Azusa Light & Water 729 N. Azusa Avenue Azusa, California 91702
Tel: (626) 812-5225 Fax: (626) 812-0963 www.azusalw.com
City of Azusa
For Quality of Life
September 21, 2020
Mr. John Mathias
California Energy Commission
1516 Ninth Street MS-20
Sacramento, CA 95814
RE: Energy Storage Compliance Reporting pursuant to California Public Utilities Code
Section 9506
Dear Mr. Mathias,
Pursuant to section 2836 (b) (1) of the California Public Utilities Code ("PUCode") the City of
Azusa, through its Light and Water Department, (ALW), has analyzed the viability of energy
storage systems and determined that they are not cost-effective for ALW’s energy portfolio, and
no energy procurement targets are appropriate at this time.
On September 22, 2014 the City of Azusa City Council approved Resolution UB-12-14, and on
September 25, 2017 approved Resolution UB-13-2017, which both concluded that commercially
available energy storage systems were not cost effective and therefore elected not to establish
energy storage procurement targets at that time.
Since 2017, ALW has procured additional long-term renewable power supply complementary to
ALW’s load profile, which added to ALW’s resource portfolio and has reduced the need for
further resource procurements and energy storage. The lack of energy storage cost-effectiveness,
as stated in ALW’s Resolution UB-13-2017 and updated in ALW’s September 21, 2020 staff
report, will remain until a clearly identified need is found.
As ALW did not establish energy storage systems procurement targets, ALW has not procured or
attempted to procure energy storage systems. ALW will continue to evaluate the feasibility of
storage systems and should they become cost effective and fitting they will be procured.
If you have any questions, please contact Richard Torres at rtorres@azusaca.gov.
Manny Robledo
Director of Utilities