Sunshine and wind, even in California, are intermittent resources, while the state’s energy needs run twenty-fours hours of every day. As California seeks to expand solar and wind power, storage of that energy for use at any time, day or night, becomes critical. Energy storage performs key functions: it can even out the supply of electricity, ensure the stability and quality of electricity, and also help decrease reliance on power plants called “peakers” – often the dirtiest and most expensive – that exist solely to meet peak energy demand during the hottest hours of the hottest days. Because energy storage can “time-shift” the use of electricity, it can dispatch energy when electricity is needed rather than when it was originally generated, thus enhancing the efficiency of the grid and the value of renewable energy. Finally, energy storage can eliminate some of the need for new transmission lines and power plants and provide more grid security by making blackouts less disruptive.

As California moves towards the goal of generating 33 percent of the state’s power from renewable sources by 2020, it will need significantly greater deployment of energy storage technologies to address the challenges posed by integration of large amounts of renewables into the grid. The key challenges include:

• A regulatory structure and utility processes that disfavor energy storage
• High cost of energy storage technologies due to the small scale of production
• Lack of awareness of the benefits of energy storage among policy-makers and the public
• This paper identifies the actions that policy-makers, energy storage advocates, and agency officials could take to stimulate significant deployment of energy storage technologies:
  Allow utilities to include investments in energy storage in their electricity ratebase
• Launch proceedings and studies at California’s key energy agencies to quantify the full value of energy
• storage and explore policies needed to stimulate its deployment;
• Extend tax credits and loan guarantees to energy storage projects
• Make investments in energy storage a high priority and compile and publicize data on its effectiveness.

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