CCA Energy Storage Opportunities California Energy Storage Alliance

CCA Energy Storage Opportunities California Energy Storage Alliance July 24, 2018 1

About CESA The California Energy Storage Alliance (CESA) is a 501 c(6) membership-based advocacy group committed to advancing the role of energy storage in the electric power sector through policy, education, outreach, and research. CESA was founded in January 2009 by Janice Lin and Don Liddell. CESA’s mission is to make energy storage a mainstream energy resource in helping to advance a more affordable, clean, efficient, and reliable electric power system in California. 2

CESA Members Board Members General and Series A Members Able Grid Amber Kinetics American Honda Motor Axiom Exergy Brenmiller Energy Bright Energy Storage Technologies Brookfield Renewables Centrica Business Solutions Consolidated Edison Development Customized Energy Solutions Dimension Renewable Energy Doosan Grid. Tech Eagle Crest Energy E. ON EDF Renewable Energy Electr. IQ Power e. Motor. Werks Energport es. Volta GAF Greensmith Energy Gridscape Solutions Ingersoll Rand Iteros Johnson Controls Lendlease Energy Development Mercedes-Benz Energy Munich Re Nant. Energy National Grid NEC Energy Solutions NGK Insulators NRG Energy Parker Hannifin Pintail Power Primus Power Range Energy Storage Systems Recurrent Energy RES Americas Sempra Renewables Sharp Electronics Sovereign Energy Stem STOREME Sumitomo Electric Sunrun Swell Energy Viridity Energy Younicos 3

Agenda ▪ Background on key policies and proceedings that impact CCAs ▪ Trends in Procurement needs, approaches, and strategies ▪ Upcoming energy storage procurement and program opportunities ▪ Key takeaways and next steps ▪ Q&A 4

Growth of CCAs ▪ CCAs are fast forming, with projections that by 2020 60% of electric load in California will be served by CCAs, and by 2025 85% of electric load could be served be sources other than IOUs 5

CCA Procurement Goals & Progress CCA 2030 Forecasted Load (GWh) SB 350 50% RPS by 2030 Requirement (GWh) RPS Energy Contracted for 2030 (GWh) 2020 Forecasted Load (MW) 1% Target Progress (MW) (based on CESA’s review of AB 2514 compliance filings) 2018 RA 2018 Requirement Contracted RA (MW) Apple Valley Choice Energy 252 126 N/A 84 0. 84 N/A 96 N/A Clean Power SF 604 302 N/A N/A N/A 6, 301 2, 836 (45% in 2027) N/A 1, 419 14 N/A 956 N/A 634 317 27 N/A 1. 98 (LCE estimate) 0. 04 N/A 5, 950 (for 2027) 2, 672 (45% in 2027) 2, 264 N/A 10 (MCE estimate) 1. 6 1, 040 961 Monterey Bay Community Power 3, 610 1, 621 (45% by 2027) N/A 610 6. 1 N/A N/A Peninsula Clean Energy 3, 868 1, 934 521 N/A 0. 13 N/A 787 393 N/A 132 MW 1. 32 2 179 N/A 3, 812 1906 N/A 691 MW 6. 91 0. 02 792 N/A 369 184 N/A 539 MW N/A 0. 77 463 N/A East Bay Community Energy Lancaster Choice Energy Marin Clean Energy Redwood Coast Energy Authority Silicon Valley Clean Energy Sonoma Clean Power 6

CCA Procurement: Key Legislation & CPUC Proceedings AB 2514: Made CPUC responsible for setting CCA energy storage procurement targets. CPUC Ruling R. 16 -02 -007 (2018): RA CCAs now subject to all of California’s RA reporting requirements (update from SB 790) Set uniform requirements for all load-serving entities (LSEs) to file integrated resource plans (IRPs) - IOUs and CCAs alike. CPUC will now authorize CCA procurement of between one and three years in the future. SB 350 (2015): RPS & IRP Requires that CCAs have at least 65 percent of their RPS compliance procurement under contracts of 10 years or longer beginning in 2021. Allows energy efficiency programs at CCAs to count toward the state’s energy efficiency targets. Required CCAs to submit their IRPs to the CPUC for certification, although the CCAs maintained their independent governing authority. SB 790 (2011): Expansion of CPUC’s Regulatory Authority Created the CPUC’s CCA Code of Conduct CCAs now subject to the same requirements as the IOUs: resource adequacy provisions, renewable portfolio standards, and climate change objectives. 7

CCA Procurement: Key Legislation & CPUC Proceedings AB 2514: Made CPUC responsible for setting CCA energy storage procurement targets. SB 350 (2015): Requires that CCAs have at least 65 percent of their RPS compliance procurement under contracts of 10 years or longer beginning in 2021. Allows energy efficiency programs at CCAs to count toward the state’s energy efficiency targets. Required CCAs to submit their IRPs to the CPUC for certification, although the CCAs maintained their independent governing authority. CPUC Decision: D. 10 -03 -040 (2013) Mandate for CCAs to procure storage equivalent to 1% of predicted peak load in 2020, installations no later than 2024. CPUC Ruling: R. 10 -12 -007 (2010) Set policy for California utilities and load-serving entities (LSEs) to consider the procurement of viable and cost-effective energy storage systems. 8

CCA Procurement: Key Legislation & CPUC Proceedings AB 2514: Made CPUC responsible for setting CCA energy storage procurement targets. CPUC Decision: D. 16 -01 -032 (2016) Credit for SGIP-funded installations should be split 50/50 between the IOU and the CCA/ESP. Distribution Resources Plan: R. 14 -08 -013 (2014) 9

Why CCAs are Seeking Energy Storage Cost Effective RA Capacity Electricity Rate Stability Reducing Congestion Impacts of Integrating Renewables Meeting GHG Goals In order to follow through on promises such as 100% renewable energy or GHG-free energy CCAs need to curtail procurement from peaker plants during high demand. Thinking Locally Growing the local economy by investing in infrastructure, workforce, and energy within the service territory. • For example, MBCP’s “Go Local” RFO contains policies regarding local development: o “…. must be physically located and interconnected within any member jurisdiction of MBCP’s service territory” o Local Hire requirement (50%) 10

Where do CCA’s Stand in Meeting 1% by 2020 Active Procurement Planning Stage No Plans Announced • Marin Clean Energy • East Bay Community Energy • Silicon Valley Clean Energy • Monterey Bay Community Power • Peninsula Clean Energy • Sonoma Clean Power • Lancaster Choice Energy • Clean. Power. SF • Apple Valley Choice Energy 11

Trends in Procurement: Approaches Customer-Cited Projects Residential Projects Several CCAs are currently focused on facilitating BTM, customer-sited battery storage projects. Storage programs supporting DR aggregation and load shifting • Playing the matchmaker between customers with high peak variance to shift load • Sonoma Clean Power and East Bay Community Energy are in the planning stage Procurement efforts are often collaborative to obtain credit enhancement required. Many CCAs are in need of expertise on how to successfully integrate small-scale, distributed energy sources • RFIs and RFPs are often circulated about how to sync local battery storage into CCAs’ DER programs • CCAs like Marin Clean Energy and Sonoma Clean Power are in the process of refining tariff structures in order to include battery storage 12

Trends in Procurement: Project Size CCAs including Marin Clean Energy and East Bay Community Energy are now working toward utility-scale, renewable + storage and even standalone projects. In their most recent RFO’s, size requirements were: 0. 5 – 20 MW 1 – 3 MW 20 -250 MW • Grid Scale & C&I • Renewable + Storage under a PPA structure • • (Renewable + Storage) • Minimum daily dispatch of 4 hr Seller is paid PPA rate ($/MWh) / MWh generated by the PV facility prior to storage Joint RFO with Monterey Bay Community Power Grid-connected or BTM Each CCA looking to secure 10% annual load 13

Trends in Procurement Leveraging Grant Funding This has been a safe bet for many upcoming CCAs that are not yet willing to leverage ratepayer funds. Self-Generation Incentive Program | SGIP The CCA, along with the IOU in its territory each receive 50% of the project’s total capacity. Electric Program Investment Charge | EPIC Currently in Phase II which will support the build-out of an Advanced Energy Community • Participation from Marin Clean Energy, Lancaster Choice Energy Upcoming Funding Streams • Pass-through of distribution grid-related benefits resulting from distributed resource deployment and control o Distributed Resources Plan Rulemaking (R. ) 14 -08 -013 • Payments for participating within CAISO markets to provide transmission grid-related benefits • As Energy Storage and Distributed Energy Resources (ESDER) market develops 14

Opportunities: Demand Response Programs • CCAs are analyzing their residential, commercial, and industrial customers for Demand Response (DR) program opportunities, while facilitating 3 rd party DR programs in their territories • They are looking to shift load away from peak hours • Gaining understanding of existing local resources and programs in their area is crucial CCAs are planning accommodate battery storage in their DR programs through measures such as: • Developing data platforms in order to synchronize DER response to short-term procurement needs • Piloting EV charging stations • Aggregating “smart feature-enabled DERs into a Virtual Power Plant as an energy procurement supplement to provide load shaping and shifting services and advanced risk mitigation capabilities in year” (EBCE Local Development Business Plan). • Deploying time of use rates 15

Opportunities: Electric Vehicles Several CCAs have pilot programs to explore vehicle-grid integration: • Work with IOU’s to facilitate alignment of public funding with companies interested in installing and operating charging stations in their territories. • Integrating energy storage with charging stations 16

Opportunities: Title 24 Mandate Updates to the California Energy Code’s Title 24, parts 1 and 6 on Building Energy Efficiency Standards will provide incentives to add BTM energy storage on commercial and residential buildings. CCA Leadership Behind the Meter storage programs for building efficiency compliance are already in motion: • Sonoma Clean Power has partnered with PG&E & the Bay Area Air Quality Management District to incentivize homeowners to rebuild energy-efficient homes with incentives up to $17, 500. • This Advanced Energy Rebuild Program provides bonuses for adding battery storage. 17

Opportunities: Solicitation Monterey Bay Community Power (MCBP) recently launched a Go Local RFO to procure local renewable generation (PCC 1) with or without energy storage in its service territory. • Issued May 30 th • Seeking terms of 5 to 20 years and installed capacities of 1 to 3 MW for total procurement of 20 MW • Deadline to offer is August 1, 2018 at 5 pm PST Lancaster Choice Energy plans to procure 4 MW of energy storage • It is currently in the completion of the CEC’s EPIC Challenge program Phase I, planning and designing for its Alternative Energy Community. • Open securing funding for Phase II of the program, it will begin its RFP process. 18

Key Policy Factors Going Forward ▪ Power Charge Indifference Adjustment (PCIA) mechanism will affect competitiveness of CCAs and depends on how long they are assessed ▪ AB 1110 and IRP decision established hourly GHG accounting for planning ▪ Each CCA will need to have their IRP filings checked by the CPUC, which provides greater transparency into CCA plans ▪ Competitive Neutrality Cost Causation Principle established by CPUC to allow CCAs to develop their own DR programs (but this does not cover DRAM) 19

What to Do with CCAs? ▪ CCAs vary in terms of their procurement experience/expertise and level of sophistication: - Some have detailed plans while others are just looking 1 year ahead - CCAs are working with electric service providers to provide the balance sheet and credit to procure competitive contracts in the near term - Many view RPS goals as floor, but there are mixed views on energy storage targets as ceiling ▪ CESA will need to conduct outreach and education with CCAs and connect CCAs with members to educate them on energy storage: - There are some limited views of standalone storage as just T&D asset - CCAs will need to develop viable DR and EV programs - Some CCAs like to play ‘matchmaker’ for BTM energy storage ▪ More information will be provided in upcoming August 1 IRP filings 20

Contact Us Jin Noh, Policy Manager jnoh@storagealliance. org 510 -665 -7811 x 109 www. storagealliance. org 21