California zoning exemptions expected to ease energy storage development in the state
Future energy storage projects in California got a double dose of aid in recent weeks as the recently-passed Inflation Reduction Act of 2022 (IRA2022) will ease financing for standalone projects, while the late August passing of a state law will ease development requirements.
Assembly Bill (AB) 2625 was signed into law by Governor Gavin Newsom at the end of August in an effort to build grid resiliency and support the state’s energy storage goals.
Grace Pratt, policy and legislative analyst for California Energy Storage Alliance (CESA), told NPM that AB 2625 grants the exemption for energy storage in the state’s Subdivision Map Act. The Map Act generally governs how local governments split parcels or subdivide properties to protect against unregulated development. However, solar, wind, and biogas projects already have an exemption. AB 2625 simply extends it to include standalone storage.
“This means you can lease a portion of a parcel without needing to formally subdivide that parcel,” Pratt said. “When you are going to site your storage system, you might find a piece of land but since storage can be quite small, maybe you’re going to lease just a portion of someone’s industrial lot.”
The new process would still include developers obtaining discretionary conditional use permits or building permits, but no longer being required to apply for a formal subdivision which could take several months to even a few years depending on the city or county processing the request.
Morten Lund, a partner with the Stoel Rives law firm in California, told NPM that the timing of AB 2625 was “very good” because it closely followed the Inflation Reduction Act (IRA). The IRA removed an obstacle for standalone storage by allowing investment tax credits for storage, a move that will result in “a greater push for standalone storage hopefully,” Lund said.
“The Map Act was going to be another obstacle to standalone storage in California specifically, and that has now been removed,” he said. “Arguably standalone storage needs this exemption because of the smaller footprint. I do not think this will spur development but will ease development.”
Lund explained that AB 2625 may change some decisions being made by developers where they will find parcels they want rather than just small ones.
“Instead of only choosing counties where subdivision is easy, I’ll just get the parcel I want,” he said. “That’s particularly important for storage where location is the most important feature.”
CESA has supported the bill for close to a year to accelerate storage deployment to meet California’s energy goals. The California Public Utilities Commission (CPUC) sees the need for 11,500 MW of storage by 2026 and 14,500 MW by 2032. Additionally, the California Independent System Operator (CAISO) expects about 4,000 MW of energy storage to be installed by the end of 2022.
“We need to get a lot of energy storage online quickly,” Pratt said, pointing to increasing heat storms in the West that lean on energy storage to help keep the lights on. “When we think about how to get projects online as quickly as possible, we thought this was a barrier we could remove.”
California is a major market for standalone and co-located development ranging from large-scale utility-scale projects such as Vistra’s Morro Bay standalone project to BayWa r.e. America’s Jacumba Valley Ranch Solar + Storage project being developed specifically for community choice aggregator (CCA) San Diego Community Power under the auspices of a 20-year PPA.
*This story was originally published exclusively for NPM subscribers last month.
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