BILL ANALYSIS 1
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SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
DEBRA BOWEN, CHAIRWOMAN
SB 52XX - Chesbro Hearing Date:
July 10, 2001 S
As Amended: June 26, 2001 FISCAL B
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5
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DESCRIPTION
This bill requires the California Energy Commission (CEC) to
establish a program to significantly increase the use of thermal
energy storage in non-residential applications.
This bill requires the CEC to report to the Legislature by November
1, 2001 with a plan to ensure that thermal energy storage becomes a
mainstream means of reducing electric demand by shifting usage to
off-peak periods.
This bill requires the CEC to consider changes in non-residential
building energy efficiency standards to provide offsets or credits
for the use of thermal energy storage and incentives for commercial
buildings to automatically curtail air-conditioning equipment and
shift those loads to thermal energy storage during periods of peak
demand.
This bill finds that:
q thermal energy storage can reduce electrical demand
during peak usage times by shifting electrical usage to
off-peak periods;
q numerous businesses and public institutions have
successfully used thermal energy storage systems in a
variety of applications;
q architectural, engineering, heating, ventilation, and
air-conditioning (HVAC) companies aren't aware of the
benefits of thermal energy storage systems; and,
q increasing the usage of thermal energy storage
technologies will reduce the need for additional peak
generating capacity and will decrease the likelihood of
energy shortages.
This bill states that it is the intent of the Legislature to
increase the use of thermal energy storage in non-residential
applications by establishing state policies to shift
air-conditioning loads from peak to off-peak periods.
BACKGROUND
Thermal energy storage is a process for cooling buildings by using
energy at night to make ice, which is then used to cool buildings
during the day. By using energy at night instead of in the middle
of the day, thermal energy storage takes advantage of much lower
off-peak energy rates and avoids using energy when it's most
expensive and scarce. This is known as load shifting, a much
different concept than energy conservation wherein less energy is
used through the use of more efficient devices or changes in
behavior. In fact, thermal energy storage systems may actually use
more electricity than conventional cooling systems.
In 1996, the CEC staff issued a report on thermal energy storage
entitled "Source Energy and Environmental Impacts of Thermal Energy
Storage" (P500-95-005). That report declared that thermal energy
storage is a technology that offers compelling energy,
environmental, diversity, and economic development benefits to
California. It noted that the technology is "poised for full
commercialization" and cited both environmental and cost benefits.
In the early 1990's, Southern California Edison (SCE) had a number
of programs which subsidized installation of thermal energy storage
systems at a level of $300 - $600 per kilowatt, which is as much as
50% or more of the capital cost of the systems. The last of the
systems deployed under this program was in 1994. Reportedly, the
performance of thermal energy storage systems deployed at that time
was mixed.
AB 970 (Ducheny), Chapter 329, Statutes of 2000, and SB 5X (Sher),
Chapter 7, Statutes of 2001, provided funding for peak demand
reduction activities, for which the technology described in this
bill already qualifies. AB 29X (Kehoe), Chapter 8, Statutes of
2001, established a program for state buildings to reduce peak
demand through the use of thermal energy storage technology.
COMMENTS
1)Conflicting Findings . The measure makes a number of findings
relative to thermal energy storage techniques, two of which
appear to conflict with one another. Page 2, Lines 10-13, states
that a number of California businesses and public institutions
are successfully using thermal energy storage systems in a
variety of applications. However, Page 2, Lines 14-18, states
that architectural, engineering, and HVAC companies aren't aware
of the benefits of thermal energy storage and don't provide for
their use in the design or refurbishment of buildings.
Presumably, if the systems are being successfully used by public
and private entities in California, they must have been put there
by architectural, engineering, and/or HVAC companies.
Furthermore, the California Council of the American Institute of
Architects points out that the new Franchise Tax Board building
is being designed to allow for the installation of a thermal
energy storage system. As such, the author and committee may
wish to consider modifying or deleting the finding on Page 2,
Lines 14-18.
2)Shifting To Off-Peak - Incentives Already Exist . Nearly 30% of
peak electrical demand is caused by residential and commercial
air conditioning, the two largest components of peak demand.
Given the recently enacted tiered rate increases, the incentive
to reduce consumption and shift usage to off-peak periods has
never been greater.
For those customers on time-of-use meters, where usage is
measured and priced differently depending on when it's used,
usage during peak times is easily 100%, and can be 350%, more
expensive than usage during off-peak times. This alone should
provide substantial incentive to adopt peak-shifting technologies
such as the one in this bill.
This bill requires the CEC to create a plan to ensure that
thermal energy storage technologies become a mainstream means of
reducing peak electricity demand. The author and committee may
wish to consider whether it's appropriate to require the CEC to
"ensure" that a specific technology is used to help businesses
shift their electricity usage to off-peak times and whether it's
appropriate to charge the agency with making a specific private
sector technology into a "mainstream means" of reducing peak
electricity demand.
3)Cart Before The Horse? The bill (Page 3, Lines 16-31) requires
the CEC to report a plan to the Legislature by November 1, 2001
to ensure that thermal energy storage technologies become a
mainstream means of reducing peak electricity. However, the bill
also requires (Page 3, Lines 9-16) the CEC to establish a program
to significantly increase the use of thermal energy storage
technologies in the public and private sector (excluding
residential use).
Both of these approaches presume that thermal energy storage
technologies are cost-effective. However, such a presumption may
be premature, given the experience of SCE with the technology in
the early 1990's. If thermal energy storage is indeed
cost-effective and, as the intent language section of the bill
notes, already being successfully used by a number of California
businesses and public institutions, the author and committee may
wish to consider why additional subsidies are warranted.
Other questions arise about thermal energy storage technology and
having the Legislature essentially require the CEC to create a
market for this technology. Shouldn't the new tiered rate
designs provide ample incentive for businesses to use the
technology? What are the lessons to be learned from SCE's
experience with thermal energy storage programs? Since the 1996
CEC report, have other technologies shown more promise at helping
the state meet its energy goals? Until these questions are
answered, it may be premature for the Legislature to require the
CEC to emphasize thermal energy storage programs. The author and
committee may wish to consider amending the bill to simply
require the CEC to update its analysis on thermal energy storage
technology in light of the energy-related developments since the
time of the 1996 report.
POSITIONS
Sponsor:
Author
Support:
Calmac Manufacturing Corporation
Oppose:
None on file
Randy Chinn
SB 52XX Analysis
Hearing Date: July 10, 2001