Background

In April, the CPUC approved updates to its Resource Adequacy (RA) program, including implementation guidelines for the 24-hour slice-of-day (SOD) methodology. Under the SOD approach, load serving entities (LSEs) such as California investor-owned utilities and CCAs will need to demonstrate that they have sufficient capacity to satisfy demand for each hour of the day during the “worst day” in the month. The worst day is the day of the month that contains the hour with the forecasted highest coincident peak load. Entities under CPUC jurisdiction will use 2024 as a test year for the SOD approach, with a full implementation following that in 2025.

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How does the SOD approach impact Energy Storage?

The shift from a peak hour focus to a broader 12 month x 24 hour plan presents challenges and opportunities for LSEs and the resources they contract with to meet their RA obligations. Specific to Energy Storage Resources (ESRs), these challenges and opportunities include:

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LSEs must now account for ESR charging requirements 

LSEs must now account for storage charging requirements in their RA plans. For example, if a LSE contracts with an ESR that is 100 MW x 4 hours to cover the 4 hour period from 8pm to 12pm, the LSE would need to demonstrate that there is excess capacity earlier in the day that the ESR could charge from (inclusive of efficiency losses).

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Expands the market for ESRs

Under previous rules, if assigned to the Category 1 bucket (the relevant Maximum Cumulative Capacity (MCC) bucket for some ESRs), 4 hour duration storage would be capped at 17% of the overall RA market. Implementing the SOD framework and corresponding changes to the MCC allow LSEs to leverage ESRs for a greater portion of their overall RA obligations.

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Paves the way for broader adoption of long-duration energy storage (LDES)

Given the flexibility of the SOD scheme, ESRs with >4 hour duration will have a way to monetize additional hours of duration. However, further analysis/investigation is underway to evaluate the adoption of multi-day energy storage through a seasonal charging scheme.

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Allows ESRs to be credited for providing multiple cycles per day

For ESRs that can cycle multiple times per day, LSEs can now count each cycle towards their RA obligations. For example, if an ESR has a 4 hour duration and is contracted with the LSE to cycle two times per day, it could count towards meeting 8 hours of RA obligations assuming a sufficient amount of time between the showing periods to allow for charging.

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Potential to be compensated for operating flexibility 

Given broader LSE generation portfolio and load profile considerations, the flexibility of ESRs allows them to address gaps in RA plans, including varying the delivery window month to month to when it is most valuable for the LSE.

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How can storage developers & operators work with Tyba

Tyba can help you navigate these changes including to:

1. Evaluate alternate must offer windows.
2. Model asset performance and degradation under single-cycle and multi-cycle approaches to understand tradeoffs between the two.
3. Understand impact to existing RA agreements, including risk to TBx settlement/benchmarking.