California officials expect that the state needs 1 gigawatt of new long-duration energy storage by 2026 to advance its clean-energy transition.

That figure emerged in the “reference system portfolio” that the California Public Utilities Commission approved on March 26. The grid planning document calls for no new gas plants, although almost all of the existing capacity is expected to remain online throughout the decade. But it adds 11 gigawatts of utility-scale solar by 2030, nearly 3 gigawatts of wind and a groundbreaking amount of energy storage.

The plan anticipates 8,873 megawatts of batteries, the technology that dominates the energy storage market today. That’s many times over the national cumulative installed battery capacity that's now installed. But the CPUC broke new ground in carving out space for the addition of nearly 1 gigawatt of “pumped storage, or other long-duration storage with similar attributes” by 2026.

“This is the first formal mechanism we’ve seen that recognizes that need in the system,” said Mateo Jaramillo, co-founder of seasonal storage technology startup Form Energy. “The state recognizes that it needs to send the right signal to the market now in order to meet the longer-term goals.”

Technologists working on long-duration storage, which proposes to complement wind and solar plants by storing power for many more hours than lithium-ion batteries can handle cost-effectively, have raised hundreds of millions of venture dollars and grant funding and produced an eclectic mix of plausible technologies. But none of them have achieved enduring success in the electricity markets as constituted today.

With the official call for 1 gigawatt of new long-duration capacity, California could become the first clear market for some of these emerging technologies, or perhaps the return of the oldest: pumped hydro storage. Then again, the CPUC planning document alone lacks the power to make that happen.

How big a deal is this?

Long-duration storage is not new to California. The CPUC already oversees 1,600 megawatts of pumped hydro storage. Those decades-old projects play a vital role in the state’s water supply system as well as serving the grid.

The question at hand is what kind of investment the state will make to balance its drastic expansion of intermittent renewables. California already throws away gigawatt-hours' worth of renewable generation monthly when production outstrips demand (and changes in consumption stemming from the coronavirus pandemic only exacerbated that trend). What's more, the state needs to wean itself off of the natural-gas plants that come to the rescue every evening when solar generation disappears and grid demand spikes.

“The reason why they call out long-duration storage is because...without pushing in that direction, they will not be able to replace natural gas in the system,” Jaramillo said.

It’s become commonplace among cleantech aficionados to point out the twin phenomena of solar curtailment and the need for clean dispatchable capacity, and then to propose bridging the gap with long-duration storage. But it’s another thing to formalize this need in electrical planning for the largest state economy.

That decision lets the technologists, entrepreneurs and investors in the long-duration space point to a substantial market that actually wants what they’re making. Crucially, that desire is not delayed until the midcentury mark, as is the case in other markets with 100 percent clean power goals. Getting long-duration storage built by 2026 requires starting the process posthaste.

What power does this decision wield?

The order of operations here holds that, first, the CPUC’s staff creates the reference portfolio, juggling legally mandated greenhouse gas reductions, system reliability and cost to consumers. But this plan is not a mandate; it’s a form of “guidance” for California’s power sector. Next, it’s up to the folks who actually procure power to figure out their own plans.

That is to say, the new decision affirms that the CPUC, based on its model, thinks there will be a role for a gigawatt of pumped hydro or other long-duration storage in the next six years. By approving this plan, the commission is telling the utilities to take a look at resources of that variety and perhaps hinting that regulators will look favorably on proposals that fit that description. But it’s still up to the utilities and the community-choice aggregators that now serve millions of Californians to identify their actual needs, solicit real proposals and find projects that make sense.

“At this stage, while we are not ordering any new resource procurement with this decision, we do strongly encourage the [load-serving entities] to initiate procurement activities and planning activities within their individual [integrated resource plan] portfolios, to bring these resources to market,” the order states.

Who stands to benefit?

Pumped hydro is the only long-duration storage technology operating at scale in California. Typically, a well-respected incumbent would be the prohibitive favorite for any new projects. But it would be a mistake to interpret the reference plan as guaranteed business for the pumped hydro industry, such as it is.

For one thing, that category has opened up to “pumped storage, or other long-duration storage with similar attributes.” This demonstrates an awareness of the menagerie of technologies clamoring to fill the “longer-duration than lithium-ion” role.

There’s a major difference between pumped hydro and the rest of the crowd, which ranges from flow batteries to compressed air to fantastical block-stacking robo-cranes. The latter are emerging technologies with uncertain pricing because they lack scale and still need to prove their reliability for customers; the former was mature 70 years ago.

Pumped hydro needn’t worry about its path to market because it’s already an accepted and respected participant in California’s grid. The lack of movement on new pumped hydro projects points to some other obstacle, such as the cost structure of the technology itself.

NextEra Energy Resources, which signed on as a backer to Joshua Tree-adjacent Eagle Mountain pumped hydro development, implicitly confirmed this in 2018 by going to the legislature in Sacramento in an attempt to force somebody to buy the output of that plant.

Sacramento isn’t Tallahassee, though, and the narrowly tailored handout didn’t fly. A slightly broader long-duration purchase mandate also failed early this year.

If pumped hydro, with its billion-dollar price tag, continues to deter customers, it will leave an opening for the crop of newcomers. Some of them tackle storage through a manufactured product, like the flow battery companies. Others do it through power plant-sized investments, which still don’t require the kind of investment or development timeline pumped hydro needs.

The contest is shaping up to be one between old-school, trusted heavy infrastructure that struggles with finding customers, and newer, tech-savvy options that still need to prove themselves. But both sides gain from having a market that’s officially interested in what they’re selling.