BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA Application of San Diego Gas & Electric Company (U902M) for Approval of its Energy Storage Procurement Framework and Program as Required by Decision 13-10-040. And Related Matters. Application 14-02-006 (Filed February 28, 2014) Application 14-02-007 Application 14-02-009 REPLY COMMENTS ON PROPOSED DECISION OF IMERGY POWER SYSTEMS, INC., UNIENERGY TECHNOLOGIES, LLC, ZBB ENERGY CORPORATION, AND ENERVAULT CORPORATION Tim Hennessy President and COO Imergy Power Systems, Inc. 48611 Warm Springs Blvd. Fremont, CA 94539 Telephone: (510) 668-1485 Email: [email protected] Russell Weed VP, Business Development & General Counsel UniEnergy Technologies, LLC 4333 Harbour Pointe Blvd. SW, Suite A Mukilteo, WA 98275 Telephone: (425) 404-3307 Email: [email protected] Eric C. Apfelbach President and CEO ZBB Energy Corporation N93 W14475 Whittaker Way Menomonee Falls, WI 53051 Telephone: (608) 576-7549 Email: [email protected] Craig R. Horne, Ph.D. Chief Strategy Officer & Co-Founder EnerVault Corporation 1244 Reamwood Avenue Sunnyvale, CA 94089 Telephone: (408) 636-7519 Email: [email protected] October 7, 2014 7100505 BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA Application of San Diego Gas & Electric Company (U902M) for Approval of its Energy Storage Procurement Framework and Program as Required by Decision 13-10-040. Application 14-02-006 (Filed February 28, 2014) Application 14-02-007 Application 14-02-009 And Related Matters. REPLY COMMENTS ON PROPOSED DECISION OF IMERGY POWER SYSTEMS, INC., UNIENERGY TECHNOLOGIES, LLC, ZBB ENERGY CORPORATION, AND ENERVAULT CORPORATION Imergy Power Systems, Inc., UniEnergy Technologies, LLC, ZBB Energy Corporation and EnerVault Corporation (the Joint LDES Parties) hereby respectfully submit these reply comments on the Proposed Decision Approving San Diego Gas & Electric Company, Pacific Gas and Electric Company, and Southern California Edison Company’s Storage Procurement Framework and Program Applications for the 2014 Biennial Procurement Period (Proposed Decision). I. The Commission Should Provide Additional Guidance Regarding Bid Evaluation Methodologies and the CEP The Joint LDES Parties agree with the opening comments on the Proposed Decision filed by the California Energy Storage Alliance (CESA) arguing that the Commission’s decision with respect to the 2014 RFOs should require the utilities to develop a methodology for quantifying factors which at first blush may seem qualitative, but actually can be quantified. For example, we agree with the Sierra Club’s comments to the effect that the ability of a storage project to integrate intermittent renewable energy resources is a benefit that should be quantified, rather than treated in a binary fashion, and that the Consistent Evaluation Protocol (CEP) should account for how a storage -1- resource mitigates intermittency, avoids overgeneration and prevents curtailment.1 The Joint LDES Parties submitted a report by E3 to the record which models the ability of various durations of energy storage resources to address overgeneration and reduce the need for curtailment of renewable resources.2 The record also reflects that other factors that should be quantified include the costs associated with aggregation of multiple smaller or short-duration energy storage resources. 3 This “all-in”, systems-based cost-benefit approach should be used to quantify the ability of a storage resource to achieve the goals of the AB 2514 program, as articulated in D.13-10-040: 1) The optimization of the grid, including peak reduction, contribution to reliability needs, or deferment of transmission and distribution upgrade investments; 2) The integration of renewable energy; and 3) The reduction of greenhouse gas emissions to 80 percent below 1990 levels by 2050, per California’s goals.4 We also point to the Sierra Club’s comments in favor of quantification of greenhouse gas (GHG) impacts of storage projects both directly and in terms of storage per power rating/energy capacity installed. The Sierra Club suggested that GHG reductions will result from: (a) the GHG intensity of the electricity delivered to charge the storage system, (b) the GHG of electricity on the grid that receives the electricity when the storage system is discharged, (c) GHG emissions reductions from improved efficiencies at other power generation resources on the grid that can be attributed to the presence of storage (for example, power output gains from improved responses to renewable energy system intermittency).5 AB 2514 requires the IOUs’ procurement plans to address the acquisition and use of energy storage systems to “[a]llow intermittent generation from eligible renewable energy resources to operate at or near full capacity,...[r]educe the need for new fossil-fuel powered peaking generation facilities by 1 Sierra Club Opening Comments on Scoping Memo and Ruling of Assigned Commissioner and Administrative Law Judge Supplemental Questions in Consolidated 2014 Energy Storage Procurement Plan Application Proceedings (June 12, 2014) (Sierra Club Opening Responses) at 8. 2 Reply to Responses to Scoping Memo Questions of Imergy Power Systems, Inc., Primus Power, ZBB Energy Corporation, EnerVault Corporation, and UniEnergy Technologies, LLC (Joint LDES Parties Reply to Scoping Memo Responses) at 7 (citing Energy + Environmental Economics (E3), Valuing Energy Storage as a Flexible Resource: Final Phase 1 Report for Consideration in CPUC A. 14-02-006 (June 19, 2014) (E3 Report) §§ 4, 5), available at: https://ethree.com/documents/E3_Storage_Valuation_Final_Phase_1.pdf. 3 Joint LDES Parties Opening Responses at 8; E3 Report § 5.3. 4 D.13-10-040, Appendix A at 1 (citing AB 32, Cal. Health & Safety Code § 38500 et seq., Executive Order S-3-05 (Schwarzenegger 2005)). 5 Sierra Club Opening Responses at 7. -2- using stored electricity to meet peak demand,” and “[r]educe purchases of electricity generation sources with higher emissions of greenhouse gases.”6 The Proposed Decision is on the right track in requiring quantification of benefits that were characterized as qualitative in the proposed CEP, but it should go further by providing direction to the IOUs, the Energy Division (ED), the PRG and the IE so that the solicitations will carry out the requirements of AB 2514. The Joint LDES Parties’ comments with respect to refinements to the CEP and bid evaluation methodologies are: (1) that important adjustments can be made in this RFO cycle to improve its effectiveness and success, and (2) this process need not delay issuance of the RFOs on December 1, 2014. If the Commission provides greater direction in its decision now, the IOUs can integrate these changes into their bid evaluation methodologies and the CEP in parallel with the RFO process. Bids will not be due until late February, 2015. This will give the IOUs approximately four months from the issuance of the decision to refine their methodologies and the CEP. And this greater direction will enable the Procurement Review Group (PRG) and the Independent Evaluator (IE) to better review the IOUs’ application of their bid evaluation methodologies to determine whether the IOUs have appropriately taken the full set of quantifiable benefits and costs into account in selecting bids. The Joint LDES Parties also concur in CESA’s opening comments that the Proposed Decision be modified to require the utilities to submit a methodology for evaluation of concurrent benefits. Per our opening comments, we applaud the Proposed Decision for recognizing this issue, and recommend greater direction be given to the IOUs, the ED, and, ultimately, the PRG and the IE in this endeavor. We recommend the Proposed Decision be revised to make clear that benefits, values or use-cases provided simultaneously by a single energy storage resource should not be precluded from counting in either the CEP or the IOUs’ proprietary bid evaluation methodologies. To further reduce ambiguity on this point and provide clearer guidance to the IOUs and the ED for the 2014 RFO, the Commission’s decision should require deletion of the following sentence from page 10 of the CEP: “[i]n many cases, allocating some portion of an energy storage project to one end use limits the ability of that portion of the energy storage project to satisfy another end use.” We point the Commission to Exhibit A of our opening comments on the Proposed Decision for the specific Findings of Fact, Conclusions of Law and Ordering Paragraphs we recommend to provide greater direction and clarity with respect to the bid evaluation methodologies and the CEP. 6 Pub. Util. Code §2837(b)-(d). -3- II. The Proposed Decision Correctly Requires the IOUs to Provide Intended Procurement by Type, Amount, Grid Domain, Use Case and Location. We agree with CESA’s opening comments that the Proposed Decision correctly orders the IOUs to provide a detailed explanation of the types of resources to be included in their bid and selection materials categorized by grid domain, use case, duration, and location. As discussed in our opening comments on the Proposed Decision, the Proposed Decision is well supported by the record with respect to Ordering Paragraph 1(8).7 SDG&E’s opening comments suggest that reference to SDG&E be removed from Ordering Paragraph 1(8). We agree that SDG&E’s Application did a better job of describing the types of energy storage projects it intends to procure in 2014. As argued in our comments on the Scoping Memo, however, it would be helpful for all three IOUs to provide information regarding the approximate locations of energy storage projects they seek to procure. 8 This will provide better direction to project developers and investors, and will result in a portfolio of bids that are more aligned with procurement needs. Thus, the Commission’s order should refer to SDG&E with respect to the provision of information on the locations of storage resources it intends to procure. III. The Proposed Decision Correctly Declines to Extend the Deadline to Execute and Submit Contracts from the 2014 Storage RFO In opening comments, PG&E and SDG&E request that their deadlines to execute and submit contracts for Commission approval be extended beyond the 12-month deadline ordered in D.13-10040. These requests, however, are inconsistent with both D.13-10-040 and the weight of the evidence on the record demonstrating that such a delay would harm the success of the AB 2514 procurement program. Comments on the Scoping Memo filed by the Joint LDES Parties, Green Power Institute (GPI), CESA, Consumer Federation of California, MegaWatt Storage Farms, TAS Energy and TURN all support the Proposed Decision in this regard.9 As discussed in our comments on the Scoping Memo, D.13-10-040 requires the ED to review the 2014 RFO and report results to 7 Comments on Proposed Decision of Imergy Power Systems, Inc., UniEnergy Technologies, LLC, ZBB Energy Corporation, and EnerVault Corporation (Joint LDES Opening Comments) at 2-3. 8 Joint LDES Parties Opening Responses at 4. 9 The Joint LDES Parties and GPI also argued that the deadline should be shortened to six months from the issuance of the RFO. -4- the Commission by 2016. That decision also required the second procurement to occur in 2016. If contracts are not submitted for approval until sometime in 2016, as PG&E and SDG&E propose, the Commission will not have sufficient time to evaluate this cycle in time for the 2016 RFO. The Proposed Decision correctly reflects the record and D.13-10-040 by declining to extend the contracting deadline. IV. CONCLUSION The Joint LDES Parties commend the Commission for its diligent attention to the Applications and the wide-ranging comments filed in this docket. The Proposed Decision correctly reflects the law and facts on the record in the following respects of concern to the Joint LDES Parties:  requiring PG&E and SCE to provide the type and amount (in MWs) of storage resources they intend to procure in 2014, categorized by grid domain and use case;  requiring all three IOUs to provide approximate location information with respect to intended storage procurement;  declining to extend the deadline for the IOUs to execute and submit contracts for approval;  requiring the IOUs to revise the CEP description to clarify evaluation of concurrent benefits. The Joint LDES Parties submit that the Proposed Decision should be improved in the following ways to more accurately reflect the record to this proceeding, AB 2514 and D.13-10-040:  require the IOUs’ bid evaluation methodologies and CEP to include a portfolio-adjustment factor as well as quantitative factors to account for GHG impacts, impacts of energy storage project discharge duration, and costs of aggregation of multiple energy storage projects;  clarify that benefits provided concurrently need not be precluded from being valued in the CEP and require the IOUs to delete the language from Page 10 of the CEP as set forth above;  require the PRG and IE to utilize the CEP to evaluate the IOUs’ bid selections; and  require SCE to revise its testimony to be open to “commercially available technologies,” consistent with the language and purpose of AB 2514 (Pub. Util. Code § 2835(a)(1)). Please see Exhibit A to our opening comments on the Proposed Decision for specific recommended Conclusions of Law and Ordering Paragraphs to effect these modifications. -5- Respectfully submitted, /s/ Tim Hennessy President and COO Imergy Power Systems, Inc. 48611 Warm Springs Blvd. Fremont, CA 94539 Telephone: (510) 668-1485 Email: [email protected] /s/ Eric C. Apfelbach President and CEO ZBB Energy Corporation N93 W14475 Whittaker Way Menomonee Falls, WI 53051 Telephone: (608) 576-7549 Email: [email protected] Date: October 7, 2014 /s/ Russell Weed VP Business Development & General Counsel UniEnergy Technologies, LLC 4333 Harbour Pointe Blvd. SW, Suite A Mukilteo, WA 98275 Telephone: (425) 404-3307 Email: [email protected] /s/ Craig R. Horne, Ph.D. Chief Strategy Officer & Co-Founder EnerVault Corporation 1244 Reamwood Avenue Sunnyvale, CA 94089 Telephone: (408) 636-7519 Email: [email protected]