USA – CALIFORNIA Law and Practice Contributed by: Nora Sheriff, Gwenneth O’Hara, Samir Hafez, Antonio Carrejo and Timothy Lee, Buchalter LLP
role in advancing the deployment and regulation of energy storage and microgrids at the distribution level: (a) Assembly Bill 2514 (Public Utilities Code Sec- tions 2835 et seq.) established energy stor- age procurement targets for IOUs, catalysing significant deployment of both grid‑connected and distributed battery storage resources. (b) Senate Bill 1339 (Public Utilities Code Section 8370) directed the CPUC to develop regula- tory frameworks, tariffs, and interconnection standards to facilitate microgrid commerciali- sation and deployment, with an emphasis on improving system resilience, particularly during outages and wildfire events. In parallel, California has significantly expanded safety oversight of battery energy storage systems, particularly following high-profile thermal incidents at large‑scale facilities. This evolving framework includes the following. • General Order 167‑C: This extends comprehensive operation and maintenance standards to battery energy storage systems, including requirements for auditable maintenance programmes, logbooks, and mandatory incident reporting. • Senate Bill 38: This requires facility operators to co-ordinate with local emergency response agen- cies and develop site‑specific emergency response and emergency action plans prior to operation. • Local Permitting Requirements: While utility-owned infrastructure is generally subject to CPUC permit- ting authority, independently developed storage facilities and microgrids are typically subject to local land‑use regulation, including zoning approv- als, environmental review under CEQA, and permit requirements imposed by the applicable local authority having jurisdiction.
primary approval authority is typically maintained by local governing boards, though state environmental laws still apply. The California Public Utilities Code requires the IOUs to apply to the CPUC for a CPCN before construct- ing new distribution infrastructure. In a formal CPUC proceeding addressing a CPCN application, the pub- lic is permitted to participate and provide input as an “intervenor”. Construction of most new distribution facilities, including distribution lines, substations, large-scale storage and microgrids, also requires review under CEQA to assess and mitigate potential environmental impacts. This process is overseen by the CPUC for IOU projects, and by local agencies for POU or private development projects. The typical timelines to obtain all necessary approvals vary depending on the nature of the project. 5.3 Terms and Conditions Imposed in Approvals to Construct and Operate Electric Distribution Facilities In California, the terms and conditions included in approvals for the construction and operation of elec- tric distribution facilities will depend on the type of project. However, typical terms and conditions gener- ally fall under the following categories: • environmental – a CEQA review and potential miti- gation requirements; • safety: the CPUC’s GO-95, GO-128 and local codes; • interconnection and integration – pursuant to CPUC Electric Rule 21; • operational – may involve curtailment provisions, export limits, required “islanding” equipment for microgrids, and storage charging/discharging constraints; • reporting and monitoring – the CPUC’s GO 131-E reporting requirements for planned transmission, power line, and substation facilities; • financial – financial guarantees, insurance require- ments, decommissioning plans and cost responsi- bilities; and • local permitting.
5.2 Regulatory Process for Obtaining Approvals to Construct and Operate Electricity Distribution Facilities
The construction and operation of electric distribution facilities in California typically require approval from local and state agencies, though federal agencies can sometimes be involved. For IOUs, regulatory oversight and approval is provided by the CPUC. For POUs,
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