Battery Storage in California Meets New Regulatory Hurdles: How High Can Storage Jump?
In a study on battery energy storage last year, the California Independent System Operator (“CAISO”) estimated that California is projected to need 50 gigawatts of energy storage by 2045 to meet its greenhouse gas reduction goals. See CAISO Report on Energy Storage. To date, installed storage totals approximately 13 gigawatts. See Energy Storage News. That means California will need to permit a significant number of battery storage projects to meet its goal of transitioning from fossil fuels to zero-emission renewable resources. Battery storage is already urgently needed to address the overproduction (and subsequent curtailment) of large amounts of available solar energy during the middle of the day.
As is often the case with new technologies, the need for more energy storage comes with new challenges and opportunities. The challenges are mounting. In particular, cities and counties faced with community opposition to battery energy storage projects are adopting or considering adopting a raft of new restrictions on storage projects in their jurisdictions. The City of Escondido has critiqued new battery projects and suggested such projects are undesirable within its boundaries. Others, like the City of Moorpark, have adopted difficult-to-meet standards such as requiring that all battery energy storage projects be fully enclosed in a building. Kern County is imposing large setbacks on new battery energy storage projects. Other counties are requiring full Environmental Impact Reports (EIRs) for relatively small battery energy storage projects. Los Angeles County is amending its zoning code to add new development standards for battery energy storage projects, potentially creating a de facto moratorium on new projects until the code update is complete. San Diego County is considering on a case-by-case basis new best practices for battery energy storage projects, including large setbacks from residences and spacing requirements between battery cabinets.
But there are also opportunities. Most jurisdictions, in particular the larger counties, are not saying “no” to battery energy storage. Although progress is slow, these counties are working to develop new regulations that would allow development of new projects. Alameda County has adopted a policy framework and directed its planning department to bring forth zoning code changes that would allow battery energy storage in agricultural zones with a conditional use permit, and specifically declined to adopt a moratorium on new applications for battery energy storage projects in the meantime. Los Angeles County, after approving what it described as the last battery energy storage project under its current regulations, announced it received grant funding and has hired a consultant to begin environmental review to adopt new zoning regulations specific for battery energy storage. Like Alameda County, San Diego County declined to adopt a moratorium on battery storage projects and recently declined to adopt inflexible new policies to guide best practices for regulating battery energy storage, instead allowing the Fire Chief to implement flexible requirements on a case-by-case basis until the state fire code is updated next year.
In addition, several battery developers have filed applications with the California Energy Commission (CEC) for stand-alone battery storage projects under the opt-in provisions of AB 205. Eligible storage projects must be capable of storing 200 megawatt-hours (MWh) or more. An approval by the CEC under AB 205 supersedes and is in-lieu of otherwise required permits from all local and most state agencies. Three stand-alone battery energy storage projects are currently under review by the CEC: the Corby BESS project in Vacaville, the Compass Energy Storage Project in San Juan Capistrano, and the Potentia-Viridi Battery Energy Storage System in Alameda County.
According to the CEC’s website,
Permitting is crucial to deploy renewable energy power plants, which are essential to meet the state’s climate goals. With half a century of permitting experience under the California Environmental Quality Act, Assembly Bill 205 (2022) has broadened the California Energy Commission's (CEC) authority. This expansion allows the CEC to oversee the permitting of clean and renewable energy facilities, including solar photovoltaic, onshore wind, and energy storage systems, and facilities that produce or assemble clean energy technologies or their components. Known as the Opt-In Certification Program, this permitting process offers developers an optional pathway to submit project applications, facilitating faster deployment of renewable technologies.
A cautionary note is that the CEC has yet to approve any opt-in projects. Developers in the CEC’s permitting queue under the opt-in program have also described the process as slow and overly conservative. State law prohibits the CEC from approving projects through the opt-in process unless they are determined to be consistent with local regulations, codes, and ordinances unless certain (and potentially difficult) findings are made. To date, the CEC has demonstrated little appetite to override inconsistent local prohibitions or restrictions on battery energy storage development. Projects that cannot demonstrate consistency with all otherwise applicable local or state regulations may face an uphill battle, making it all the more important that jurisdictions considering new regulations do not prohibit future battery energy storage projects.
Given the importance of battery storage to grid resiliency and integration of renewable energy, the California Legislature may be open to changes in state law to make permitting energy storage projects easier. Legislative amendments under consideration include:
--Amendment of the Warren Alquist Act to mandate less stringent findings for CEC override of inconsistency with otherwise applicable laws.
--Streamlined approval for qualifying battery energy storage projects along the lines of AB 1236 (Chiu, 2015) and AB 970 (McCarty, 2021) addressing electric vehicle (EV) charging stations. These existing streamlining provisions mandate that local jurisdictions adopt expedited, streamlined permitting processes for EV charging stations via a ministerial, administrative review process that is exempt from CEQA and is limited to health and safety review. A similar mandate could be approved for qualifying battery energy storage projects.
--Mandated streamlined permitting of storage projects through only limited CEQA review such as through some kind of tiered checklist approach from an already certified EIR.
Finally, as fire safety concerns associated with lithium-ion technology batteries continue to be addressed, permitting hurdles for battery storage projects should ease. An update to the California Fire Code to address electrical energy storage systems is anticipated in July 2025 (with a draft to fire departments in May 2025). When final, the updated Fire Code will be effective on January 1, 2026.
As noted above, several jurisdictions are willing to approve this key new technology on a case-by-case basis and defer adoption of jurisdiction-specific zoning restrictions until the statewide Fire Code is updated. Nonetheless, even with the Fire Code is updated, some regulatory hurdles likely will remain. If you have questions about your BESS project, you can reach out to any of the authors or member of Cox, Castle & Nicholson’s Land Use Team.