How Storage Helped California Reduce the Blackouts – And How It Can Help Avoid Them in the Future

By Ted Ko, Stem VP of Policy and Regulatory Affairs | August 20, 2020

Anyone wondering how climate change affects our daily lives need only skim the headlines. Last weekend, drought-fueled wildfires in California and two other western states prompted evacuation alerts for tens of thousands of residents. Death Valley hit 130 degrees, among the highest global temperatures ever recorded. And with its electricity grid strained by extreme heat, California experienced its first rolling blackouts since 2001.

In places impacted by COVID-19, where access to electricity is a life-or-death matter for greater numbers of people, power outages represent far more than an inconvenience – especially amid extreme heat, which kills more Americans than all other natural disasters combined.

California’s latest blackouts began when the grid operator, the California Independent System Operator (CAISO), declared a Stage 3 Electrical Emergency in the early evening of Friday, August 14, initiating rotating blackouts across the state. The issue: counted-on electricity supplies weren’t available precisely when heat-stricken customers were demanding more power from the grid.

Stem’s California fleet responded quickly, with 300-plus energy storage systems providing more than 50 megawatts (MW) of capacity to our customers and removing an equivalent load from the grid. (To put that in perspective, it’s roughly equivalent to 20,000 homes shutting off all their electricity, all at once.)

Our response to the crisis evolved in parallel with the needs of CAISO, utilities, and our customers. On Saturday, we answered utilities’ calls for load reduction under their Base Interruptible Programs (BIPs), an exceedingly rare request driven by severe curtailment needs that typically occurs about once every three years. On Sunday, we accommodated CAISO’s request to delay charging by reconfiguring our batteries – well over 600 installations across California – with a single software command. And on Monday, we coordinated with customers and utilities to turn on customers’ backup generators along with Stem battery systems, and to make those resources available for a full 6 hours encompassing a 4-hour peak event.

Stem’s customers – hundreds of schools, grocery stores, retailers, real estate companies, manufacturers and other businesses, sprawled across Northern and Southern California – were essential partners in this effort. By trusting us to save them money and optimize their energy assets, they made themselves a resource for California’s electricity grid and all who depend on it. And none faced business interruptions – even BIP-enrolled customers, whose batteries operated in the background to meet site energy needs while avoiding costly penalties.

While we’re proud of Stem’s performance so far, we’re also struck by how much more we could have done. Dozens of megawatts of Stem’s battery capacity sat idle during the blackouts, prohibited from discharging energy into the grid when it was most needed.

This needs to change. Energy storage is exactly what California’s grid needs to avoid similar blackouts, and policy makers should be encouraging as much deployment as possible, in all parts of the grid – especially given the state’s aggressive climate policies and the unwanted greenhouse gas emissions from backup diesel generators.

Gov. Newsom has ordered an investigation into the blackouts “to ensure it simply never happens again,” but achieving that goal won’t happen unless policy makers put in place the necessary solutions. Knowing that energy storage has an important role to play, here’s what policy makers can do to appropriately leverage it:

  1. Allow storage to export energy to the grid during emergencies. Currently, most behind the meter (BTM) energy storage systems are only allowed to serve the specific customers they’re attached to. Consequently, CAISO only uses BTM storage as a demand response tool to shed load from the grid. But it’s capable of much more – namely, supplying energy to the grid when and where it’s most valuable – and has been for years. Experience has also shown that storage can be counted on in emergencies. Allowing BTM storage to export energy to the grid during emergencies is the easiest, fastest, and best near-term solution the California Public Utilities Commission (CPUC) and CAISO can put into place. Communicating this intent and establishing relevant requirements and incentives will allow storage providers to reconfigure systems to operate in this manner.
  2. Allow storage to export energy to the grid, period. California’s recent blackouts weren’t triggered by public safety concerns but rather by a resource shortage that was years in the making. While fully addressing that issue will also likely take years (see next bullet), making better use of all resources currently available on the system, including customer-sited solar and storage, would be a good start. The gains here could be considerable: recent analysis commissioned by Stem and solar developer Sunrun found that customer-sited solar and storage could provide roughly 9 GW of capacity – about one-fifth of CAISO’s current peak load – to help California maintain electric system reliability.
  3. Accelerate statewide efforts to triple battery storage. California has made great strides in installing solar but hasn’t fully kept pace on installing the resources, like storage, that can meet peak energy needs when solar isn’t available. Mindful of this, the CPUC has already proposed tripling battery storage in the state by 2030. If leaders are serious about avoiding blackouts, that investment should be expedited as quickly as possible. This can be done in two ways: by allowing BTM storage to provide its full suite of potential grid services and compensating it appropriately in wholesale markets, which would both realize more value from existing projects and stimulate new ones; and by accelerating the incorporation of front of meter (FTM) storage in planning, procurement and market design for an ultra-high renewables grid.

Investments in energy infrastructure – whether by consumers, independent energy service providers like Stem, or electric utilities – are fundamentally about realizing our shared objectives. California was among the first states to identify resilience as a priority and to invest in grid resilience as a hedge against the economic and human costs of future power outages in a world increasingly impacted by climate change and extreme weather.

That leadership has gotten us where we are today, with battery storage and other flexible assets successfully integrated into the grid and performing as expected. But as recent events show, California still has a ways to go to realize the resilient, sustainable electricity grid its leaders demand – and its citizens deserve.