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21 September 2022

California pushes storage-heavy community solar in wake of IRA

California’s state legislature has passed AB 2316, a community solar funding scheme whose payments will be tied to the value of the electricity at the time it’s sent into the grid – thus heavily incentivising co-located battery energy storage.

Fully 51% of each community solar project will be “dedicated” to benefit low-income customers and service organisations, with regular reports to lawmakers on low-income participation rates. The time-of-day pricing is coupled with outright energy storage requirements.

This move has been on the cards since April, when the State Assembly approved a community solar framework with recognizable emphasis on energy storage and subsidy for low-income owners. Up till now, California has been one of the weaker-performing states in terms of its community solar efforts, as its old system punished participants with higher energy bills.

Another recent bill passed by the state legislature was the adoption of a 90% renewable electricity target for 2035, up from the 73%-by-2032 adopted by the California Public Utilities Commission in February. There’ve been multiple responses from Californian lawmakers to the federal IRA spending opportunity. That was Senate Bill 1020, while Bills 529 and 1174 should serve to expedite transmission line upgrade approvals and renewable project development respectively.

As for Net Metering, that was kicked into the long grass in August after the latest proposed draft proved unpopular. Now the statutory decision deadline has been pushed back to August 27, 2023.

At present California has around 3.5 GW of battery energy storage installed, and on a typical day there’s a noonday draw from the grid of 1.5 GW to charge them ahead of the evening discharge. That’s still small compared the constant 8 GW of cross-state imports, largely fossil-fuel, which is only dented by midday solar. Likewise, California’s own natural gas production still reaches 12 GW in the evening. The state’s hydropower output is down almost 50% from historical levels as part of the drought threatening the southwestern US, but at least its 2.2 GW of nuclear capacity has had its lifespan extended through to 2030 in yet another recent political decision.

The state’s fossil fuel capacity is not merely polluting but also old, with further pressure added by old transmission infrastructure which sparks wildfires on hot days and sometimes gets disrupted by high winds. That’s just one more factor making distributed power a necessity – we may note that Sunnova applied to become a “microgrid utility” serving a subsection of the state a few weeks ago as a heatwave set in. Sunnova is Texas-based and intends to pursue microgrid developments, of perhaps a few hundred homes apiece, in partnership with real estate developers.

The scale of California’s August 2020 blackout which affected hundreds of thousands of citizens has not been repeated since, but this September’s heatwave has again set off alarm bells with the state messaging homeowners to reduce their electricity consumption to help stave off outages. The rate of power outages has remained historically high since 2019.