SECTION 1. The legislature finds that grid-connected energy storage systems improve and maintain the reliability of the electrical grid. The use of grid-connected energy storage systems enables an increase in the interconnection rate of residential solar systems because peak daytime generation can shift to meet evening peak demand. Further, grid-connected energy storage systems lower ratepayer costs by deferring network distribution and transmission upgrades and by mitigating the need for new fossil fuel generation. Finally, expanding grid-connected energy storage systems provides for an increase in the utilization of intermittent wind and solar resources.

However, the legislature also finds that there are barriers to the deployment of grid-connected energy storage systems. For example, it is difficult to adequately quantify the benefits associated with integrating storage with renewable distributed generation resources. The legislature further finds that there is also inadequate regulatory impetus to require the adoption of grid-connected energy storage technologies.

The purpose of this Act is to create a storage compliance mandate and implement the use of independent distribution system operators to maintain the reliability of the electrical grid, assist in achieving the State's renewable portfolio standards, ensure consumers have the ability to generate on-site solar energy, and interconnect to the distribution system.

SECTION 2. No later than December 31, 2015, the public utilities commission shall commence a proceeding to determine appropriate targets for grid-connected energy storage systems, resulting in:

(1) No less than megawatts of energy storage capacity to be procured by electric utilities;

(2) A four-year schedule for procurement of grid-connected energy storage devices by utilities beginning no later than December 31, 2016; and

(3) Solicitation parameters to be used by electric utilities in short-listing and procuring energy storage devices that includes a least-cost and best-fit valuation framework that takes into consideration the following factors:

(A) The value of energy and capacity;

(B) Network upgrade costs;

(D) The value of ancillary services such as voltage and frequency regulation;

(E) The value of demand response and aggregated demand response; and

(F) Power purchase agreement prices.

SECTION 3. No later than December 31, 2015, the public utilities commission shall commence a proceeding to implement the use of independent distribution system operators for each populated island of the State, except for the island of Niihau, in order to aggregate, monitor, and control grid-connected energy storage devices. Implementation shall include but not be limited to:

(1) Interconnection of all procured energy storage devices to the independent distribution system operators no later than December 31, 2018;

(2) A requirement that no energy storage device shall export to the electrical grid before December 31, 2018;

(3) The adoption of standards by independent distribution system operators for interconnection and control of energy storage devices that are substantially similar to California Public Utilities Commission Rule 21;

(4) Interoperability framework and parameters to enable coordination between electric utilities and the independent distribution system operators for maintaining grid reliability; and

(5) Markets that provide economic price signals for the sale of ancillary services by the grid-connected energy storage system owners to the independent distribution system operators to maintain distribution level reliability and defer network upgrade costs.

SECTION 4. Beginning on June 30, 2015, the public utilities commission shall submit a biannual progress report of its activities under sections 2 and 3 of this Act to the governor and the legislature.

SECTION 5. (a) No later than June 30, 2015, the public utilities commission shall convene a working group to assist the public utilities commission in the development of an energy storage compliance mandate and standards for independent distribution system operators for each populated island of Hawaii, except for the island of Niihau.

(b) The chairperson of the public utilities commission shall serve as chairperson of the working group. The chairperson shall appoint experts in the fields of energy storage, solicitation design, and market design to serve on the working group.

(c) The working group shall submit a biannual report of its findings and recommendations to the governor and the legislature. The submission of the working group's report shall coincide with the submission of the public utilities commission's biannual report required by section 4 of this Act.

(d) Members of the working group shall not be compensated but shall be reimbursed for expenses, including travel expenses, necessary for the performance of their duties.

(e) The working group shall cease to exist on December 31, 2018.

SECTION 6. As used in this Act:

"Commercially available" includes any controllable energy storage device that meets all certification requirements in Hawaii, and is capable of the following:

(1) The ability to have remotely upgraded control settings to accommodate changes in utilities' dispatch requirements, voltage and frequency parameters, and ramping requirements;

(2) The ability to be aggregated within a local control area, whether on one or multiple distribution feeders, to provide utilities or third party aggregators control over ramping requirements to meet distribution level and system level reliability needs;

(3) The ability to be autonomously disconnected from a co-located solar installation and electricity grid if frequency and voltage tolerance levels or other trip settings are compromised, and to autonomously reconnect after any grid disturbance has passed; and

(4) The ability to be remotely monitored and to collect generation, voltage and frequency data to be used by third party aggregators or utilities in order to maintain grid reliability, accelerate the speed of interconnection studies, forecast the need for distribution upgrades, and account for the saving associated with upgrade deferrals over time.

"Grid-connected energy storage system" means any commercially available technology that has the ability to absorb and store energy and be controlled to dispatch energy into the electrical grid.

"Independent distribution system operator" means an independent, state-regulated entity established to coordinate state-wide distribution of electric power in a non-discriminatory manner and ensure the safety and reliability of the electric system.

SECTION 7. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	1
TWENTY-EIGHTH LEGISLATURE, 2015
STATE OF HAWAII