Operational Benefits of Meeting California's Energy Storage Targets

Joshua Eichman, Paul Denholm, Jennie Jorgenson, Udi Helman

Research output: NRELTechnical Report


In October 2013, the California Public Utilities Commission (CPUC) finalized procurement targets and other requirements to its jurisdictional utilities for a minimum of 1,325 MW of 'viable and cost-effective' energy storage systems by 2020. The goal of this study is to explore several aspects of grid operations in California and the Western Interconnection resulting from meeting the CPUC storage targets. We perform this analysis using a set of databases and grid simulation tools developed and implemented by the CPUC, the California Independent System Operator (CAISO), and the California Energy Commission (CEC) for the CPUC's Long-term Procurement Plan (LTPP). The 2014 version of this database contains information about generators, storage, transmission, and electrical demand, for California in the year 2024 for both 33% and 40% renewable energy portfolios. We examine the value of various services provided by energy storage in these scenarios. Sensitivities were performed relating to the services energy storage can provide, the capacity and duration of storage devices, export limitations, and negative price floor variations. Results show that a storage portfolio, as outlined by the CPUC, can reduce curtailment and system-wide production costs for 33% and 40% renewable scenarios. A storage device that can participate in energy and ancillary service markets provides the grid with the greatest benefit; the mandated storage requirement of 1,325 MW was estimated to reduce the total cost of production by about 78 million per year in the 33% scenario and 144 million per year in the 40% scenario. Much of this value is derived from the avoided start and stop costs of thermal generators and provision of ancillary services. A device on the 2024 California grid and participating in only ancillary service markets can provide the system with over 90% of the value as the energy and ancillary service device. The analysis points to the challenge of new storage providing regulation reserve, as the added storage could provide about 75% of the regulation up requirement for all of California, which would likely greatly reduce regulation prices and potential revenue. The addition of storage in California decreases renewable curtailment, particularly in the 40% RPS case. Following previous analysis, storage has a mixed impact on emissions, generally reducing emissions, but also creating additional incentives for increased emissions from out-of-state coal generations. Overall, storage shows significant system cost savings, but analysis also points to additional challenges associated with full valuation of energy storage, including capturing the operational benefits calculated here, but also recovering additional benefits associated avoided generation, transmission, and distribution capacity, and avoided losses.
Original languageAmerican English
Number of pages94
StatePublished - 2015

NREL Publication Number

  • NREL/TP-5400-65061


  • California
  • energy storage
  • high renewable
  • long-term procurement plan
  • LTPP
  • modeling
  • modeling
  • price-taker
  • production costs
  • renewable
  • storage
  • storage mandate
  • valuation


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