The energy storage procurement processes are required to be competitive but due to stringent resistance from the commentators, the reverse auction format used in the renewable energy auction mechanism (also known as “RAM”) was rejected by the CPUC. Instead the utilities will collect requests for offers (“RFOs”) and then negotiate specific bilateral contracts with winning bidders. Since energy storage technologies vary considerably in terms of size and the types of grid services they can provide (from grid balancing to renewables integration to back up capacity), the prevailing viewpoint is that RFOs provide a better mechanism for evaluating and valuing energy storage by the service offered.
Akin Gump will be releasing a Client Alert with further details on this order shortly.