1. Workshop: IOU Energy Storage Track 1, R.15-03-011 July 28, 2015 Procurement Best Practices – Lessons Learned Consistent Evaluation Protocol – Identify and Discuss Potential Refinement ED’s Plan on Evaluation Framework Gabriel Petlin/ Manisha Lakhanpal Grid Planning and Reliability, Energy Division, California Public Utilities Commission

2. Safety and Emergency Information In the event of an emergency, please calmly proceed out the exits. In the event that we do need to evacuate the building: Go out of the exits and you will be on Golden Gate Avenue. Proceed west to Franklin Street. Turn north onto Franklin Street. Turn west onto Turk Street and proceed to Gough Street. Our assembly point is Jefferson Square Park on Turk and Gough Streets. 2

3. Other Information Call in information: Conference phone line: 1-866-830-4003 Participant code: 9869619 WebEx : https://van.webex.com/van/j.ph p?MTID=m493c9613060830fa97 5fbe289d7e986d https://van.webex.com/van/j.ph p?MTID=m493c9613060830fa97 5fbe289d7e986d Meeting Number: 744 495 587 Meeting Password: !Energy1 WiFi Access: login: guest password: password Restrooms: out the Hearing Room doors and down the far end of the hallway. Energy Storage Website: http://www.cpuc.ca.gov/PUC/energy/storage.htm All presentations will be posted on the Energy Storage website August 19, 2015 - Public Workshop Notice – Energy Storage Technology and SafetyPublic Workshop Notice – Energy Storage Technology and Safety 3

4. Objectives for today’s workshop 1.Identify best practices, challenges, and lessons learned from the recent energy storage procurement cycle including adjustments to future RFO processes, as needed, 2.Identify and discuss potential refinement of energy storage Consistent Evaluation Protocol (CEP), and 3.Present Energy Division's plan to evaluate the Energy Storage Framework. 4

5. Workshop Agenda July 28, 2015 Hearing Room A Available for Early Arrivals 9:30 AM Introduction- Energy Division9:30 AM – 9:45 AM 1.IOU Presentations Speakers: PG&E, SCE and SDG&E 9:45 AM – 10:45 AM 2.Market Readiness Speakers: Joint IOU representation and CESA 10:45 AM – 11:15 AM 3.Industry Perspectives Speakers from: Clean Coalition, AES and CESA 11:15 AM – 12:00 PM 4.Independent Evaluator – Benchmarking Storage Procurement Speaker: Wayne Oliver (IE) 12:00 PM – 12:30 PM LUNCH12:30 PM – 1:30 PM Refining Consistent Evaluation Protocol (CEP) for Energy Storage 1.EPRI Presentation1:30 PM – 2:00 PM 2.Joint IOU Presentation on CEP2:00 PM – 2:30 PM 3.Industry/ Environmental / Consumer Perspectives - Suggested alterations to the current protocols Speakers: TURN, Sierra Club and GPI 2:30 PM – 3:15 PM BREAK – let’s move!3:15 PM – 3:30 PM Energy Division presentation Plan to evaluate the Energy Storage Framework (see Appendix A) 3:30 PM – 4:45 PM 5

6. Current Proceeding R.15-03-011 Ongoing implementation of legislation Assembly Bill 2514 & refine policies and program details. Track 1 - issues that must be expeditiously resolved prior to the 2016 procurement solicitations & January 1, 2015 required Tier 2 AL filings of ESPs and CCAs Track 2 - additional issues to continue to refine policies and program details 6

7. Track 1 1.Procurement Best Practices 2.Refinement of the Consistent Evaluation Protocol (CEP) 3.Flexibility of Energy Storage Targets Between Grid Domains 4.Eligible Energy Storage Technology (Phase 1) 5.Safety Standards 6.Energy Storage Target Tracking for CCAs and ESPs 7.Cost recovery/Power Charge Indifference Adjustment – departing load 7

8. Track 2 1.Revision of Energy Storage Procurement Targets 2.Eligibility (Phase 2) 3.Multiple Use Applications of Energy Storage 4.Station Power 5.Coordination Across Proceedings 6.Third-Party Owned Energy Storage 7.Measurement and Evaluation (M&E) 8.Deferral/Displacement of Transmission and Distribution Upgrades 8

9. Energy Storage Procurement Best Practices IOU Presentations Speakers: PG&E, SCE and SDG&E 1.Current RFO Process – lessons learned i.Summarize the RFO process – what worked? What didn’t work? 2.Changes to future procurement cycles - process improvement i.What process improvements will the IOUs incorporate prior to 2016-bid cycle? (Release Pro Forma Contract forms, do a RFI, timeline, etc.) ii.Interconnection requirements – should the interconnection study requirement be prescriptive to enable participation in the RFO process? iii.Should IOUs provide more detail on performance use-case specifications for targeted grid domain procurement? 9

10. To be followed by IOU slide deck #1 10

11. Market Readiness Speakers: Joint IOU representation and CESA 1.Identify gaps in market regulation and rules 2.Identify stakeholder initiatives and proceedings to bridge the gaps 11

12. IOU slide deck #2 12

13. CESA slide deck #8 13

14. Industry Speakers: Clean Coalition, AES and CESA 1.Best Practices and lessons learned i.What worked? What didn’t work? ii.Experience with grid domain target use-case specification? 2.Changes to future procurement cycles - process improvement i.What process improvements should the IOUs incorporate prior to future bid cycles? ii.Interconnection requirements – should the interconnection study requirement be prescriptive to enable participation in the RFO process? iii.Performance Specifications – what level of detailed use case specification is desired in future RFO procurement cycles? 3.Transparency – what level of data transparency is desired and how will that information be used without compromising market competitiveness and IOU solicitation process? Energy Storage Procurement – RFO Process 14

15. Independent Evaluator – Benchmarking Storage Procurement Speaker: Wayne Oliver (IE) 1.Was the procurement process robust? Were the requirements clear for market participants? 2.Should some RFO requirements be benchmarked across IOUs? 3.What level of transparency should be allowed to create a competitive market? How can that transparency be achieved without comprising confidentiality? 15

16. LUNCH 16

17. EPRI Presentation EPRI will provide an overview of their efforts to develop publicly available software that assesses costs and benefits and guides the optimization of energy storage projects with respect to use, technology, size, and location. The project is funded by the Energy Commission through PON-13- 302 of the Electric Program Investment Charge (EPIC). Objective: to understand the tool, where and how can the tool be used in the Energy Storage Proceeding 17

18. EPRI slide deck # 3 18

19. Refining Consistent Evaluation Protocol (CEP) for Energy Storage Should we consider refinements to [CEP] and valuation methodologies used by IOUs to support CPUC decisions on storage procurement and make models publicly available? And if so, what and how? 19

20. Joint IOU Presentation on CEP 1.Define qualitative and quantitative requirements/ indices in the protocol 2.Explain how GHG emissions are accounted for in the model 3.Evaluating environmental impacts of recycling energy storage batteries after it has run its useful life 4.Updates on publically available forecasts, such as ancillary services, discount rates, system loss factors, etc. 20

21. IOU slide deck # 4 21

22. Consumer/ Environmental Perspective on CEP Refinement Speakers: TURN, Sierra Club and GPI 22

23. Slides from TURN, Sierra Club, GPI Slide Deck # 5, 6 and 7 23

24. Break 24

25. Evaluation of the Energy Storage Framework 25

26. Background and Purpose Legislative mandate AB 2514 (Skinner, 2010) –Directed CPUC to open a proceeding to: Adopt procurement targets, if appropriate, for each LSE** to procure viable & cost-effective energy storage –To be achieved by EOY 2015 & EOY 2020 –Consider policies to encourage deployment of energy storage –CPUC to re-evaluate its determinations every three years Commission Decision (D.) 13-10-040 directive –Conduct a comprehensive program evaluation of the Energy Storage (ES) Framework by no later than 2016, and every three years thereafter. –$500,000 per year for 6 years, or $3 million, unless modified. 26

27. Goals & Objectives Goal: To begin integrating energy storage into the power grid in support of statewide strategies to reduce carbon emissions –Drive storage market transformation –Eliminate or reduce regulatory, commercial, and financial barriers to storage deployment –Gain development and operational experience Storage projects must address at least one policy objective: –Integration of renewable energy sources –Grid optimization, including Peak reduction Reliability needs, or Deferment of T&D upgrades –Reduction of GHG emission 27

28. CPUC Storage Decision Highlights In October 2013, the CPUC approved D.13-10-040, establishing storage procurement targets: IOU targets: 1,325 MW (cum) of storage by 2020 in 4 biennial solicitations (starting December 2014), as follows: –PG&E 580 MW[Pacific Gas & Electric] –SCE580 MW[Southern California Electric] –SDG&E 165 MW[San Diego Gas & Electric] Above targets divided into three “storage grid domains” –Transmission-connected, –Distribution-level, and –Customer-Side (Behind the Meter) applications; Non-utility LSEs targets ~ 1% of peak load by 2020 28

29. Storage Procurement Targets 29

30. Pursuant to D.13-10-040, evaluation process should asses: 1.Whether the energy storage procured meets the stated purposes of optimizing the grid, integrating renewables, and/or reducing greenhouse gas emissions; 2.Progress toward market transformation; 3.Learnings from collection, analysis, and reporting of energy storage operational data; and 4.Learnings from collection, analysis, and reporting of the cost- effectiveness of the energy storage systems procured, with attention to data confidentiality; 5.Best practices for the safe operation of energy storage technologies. 30

31. Planning the Evaluation Framework and Roadmap Energy Division Staff will issue an RFP soliciting written proposals to: a)design an evaluation framework, b)evaluate the overall storage framework based on results to date, and c)develop an Energy Storage evaluation roadmap. 31

32. Evaluation Framework and Evaluation Plan 1.Categorizing energy storage procurement process into phases to facilitate design & breakdown activities; 2.Identifying scope, objectives and priorities; 3.Choosing the type of evaluations to be undertaken and data to be collected; 4.Setting research questions and evaluation metrics; 5.Designing an evaluation and a schedule or roadmap for future evaluation cycles; 6.Conducting the evaluation and data analysis, and 7.Reporting the results. 32

33. Energy Storage Procurement Schedule DatesEvents March 2014IOUs filed Storage Applications November 2014Decision on Procurement Applications December 2014Solicitations Q1, Q2 and Q3 2015Offer submittal, IOU Modeling and Evaluation and Shortlisting & Negotiations December 2015IOUs submit Application for Commission approval of contracts – publically available 2016/2019/2022Program Evaluation Four Biennial Procurement cycles – 2014/2016/2018/2020

34. Estimated Timeline RFP Q4 2015 Contractor on board Q1 2016 Framework Q1-Q2 2016 Analyze and Report Q3- Q4 2016 34

35. Stakeholder Engagement Contractor will engage with parties in the energy storage proceeding at several key junctures, Contractor may solicit written feed-back and/or organize a public workshop on draft evaluation framework prior to it being finalized. Energy Division Staff and the evaluation contractor may solicit written feed-back and/or hold a public workshop on a draft version of the evaluation results report. 35

36. Thank You! Formal proceeding documents are found using the Rulemaking number R.15-03-011 Other documents, including workshop presentations, staff reports, cost-effectiveness analysis, and other background papers are on the CPUC web site: http://www.cpuc.ca.gov/PUC/energy/storage.htm Gabe Petlin - gabriel.petlin@cpuc.ca.gov or 415-703-1677 gabriel.petlin@cpuc.ca.gov Manisha Lakhanpal – manisha.lakhanpal@cpuc.ca.gov or 415-703-5905 manisha.lakhanpal@cpuc.ca.gov CPUC www.cpuc.ca.gov 36