California’s mandate to grow energy storage is following its increased use of renewable-based electric generation sources, according to Navigant Research. During a webinar Tuesday Navigant consultants examined increasing renewable power on the U.S. grid.

Last Friday, California energy agencies released a “roadmap” to assess the state’s current market environment and regulatory policies for tying energy storage technology more closely to the state’s grid. The review is posted on the California Independent System Operator’s (CAISO) website.

The still-to-be-defined market for energy storage will build to a $2.1 billion market in 2024, according to Navigant senior research analyst Anissa Dehamna. For wind and solar there are only a few hundred megawatts worth of storage now, but more than 9 GW of it in development, Dehamna said.

Energy storage makes “traditional natural gas-fired generation more appealing, extending the lifetime of existing gas-fired assets,” she said.

The California Public Utilities Commission and the California Energy Commission are promoting “the advancement of energy storage as a grid resource” by identifying actions, priorities and the appropriate venue for implementing them. The initiative ultimately is impacted by the availability and price of natural gas for power generation.

The current commodity price environment may present a challenge.

“However, I do not see sustained low oil prices derailing the solar and wind industries all that much” because of government support, said Dehamna. State and federal officials “are thinking of the long-term gains” from renewables like solar and wind.

Nevertheless, lower oil prices could make it more advantageous to use gas-fired power generation instead of storage in some cases, she said. “That is traditionally how we have done it; it will depend on the power market and how much the country is focused on increasing renewables vs. the status quo.”

In California, investor-owned utilities have energy storage mandates to implement by 2020. Southern California Edison Co., Pacific Gas and Electric Co. and San Diego Gas and Electric Co. collectively are required to develop more than 1,300 MW of storage by 2020.

Navigant associate director Parag Soni thinks the mandates offer an opportunity for compressed air, which he thinks is going to increasingly compete with batteries and pumped storage.

“We hope that compressed air storage is one of the options the utilities will consider in providing energy storage,” said Soni, citing a consortium’s proposal to turn salt caverns around Delta, UT, into compressed storage to support a wind project in southwest Wyoming.

The $8 billion wind/compressed air storage project involves Pathfinder Renewable Wind Energy, Magnum Energy, Dresser-Rand and Duke-American Transmission. Magnum previously had permits and financing to turn some of Utah’s salt caverns into the Rockies first high-deliverability underground gas storage site (see Daily GPI, March 18, 2011).

“We think compressed air storage will begin to compete…and you will see the opportunities and benefits that it brings to the energy storage market,” Soni said. Ultimately the compressed air is used with gas or another fuel to produce electricity.

A replay of the energy storage webinar is available on the Navigant website.