SB 1295 adds Section 2837.5 to the California Public Utilities Code and instructs the California Public Utilities Commission (CPUC) to consider procurement strategies aimed at installing up to 40,000 megawatts of energy storage across the state. The CPUC must complete that consideration on or before January 1, 2030, and — as part of those strategies — evaluate whether to set targets for load‑serving entities (LSEs) to procure cost‑effective energy storage to be achieved by December 31, 2040.
If the CPUC imposes LSE procurement targets, the bill allows each LSE to satisfy up to half of its obligation with storage assets it owns, whether those assets connect at the transmission or distribution level or sit on the customer side of the meter. The CPUC must revisit procurement strategies and any targets at least once every three years.
The bill also notes criminal penalties attach to violations of CPUC orders, and the text includes a statement that the act does not require state reimbursement for mandated local costs.
At a Glance
What It Does
Requires the CPUC, by January 1, 2030, to consider statewide procurement strategies for up to 40,000 MW of energy storage and to assess whether to set LSE targets to be met by December 31, 2040. If targets are imposed, LSEs may meet up to 50% with storage they own, including behind‑the‑meter resources.
Who It Affects
Load‑serving entities (including investor‑owned utilities and other entities serving retail customers), energy storage developers and manufacturers, owners of behind‑the‑meter systems, and CPUC staff who will design and enforce the procurement framework.
Why It Matters
The measure escalates California’s planning for large‑scale storage deployment and explicitly authorizes a substantial role for utility‑owned and customer‑sited storage, which could reshape procurement practices, market structure, and the balance between centralized and distributed resources.
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What This Bill Actually Does
SB 1295 directs the CPUC to take a fresh, system‑wide look at how California will acquire energy storage through midcentury‑focused targets. The bill does not itself set a numeric requirement for each utility; instead it requires the commission to examine strategies for installing as much as 40,000 MW statewide and to decide whether to adopt LSE targets that would be due by the end of 2040.
That 2030 deadline gives the CPUC a defined window to evaluate costs, supply chains, grid needs, and integration challenges before any targets are imposed.
When the CPUC assesses procurement options, the bill requires it to consider allowing LSEs to count storage they own toward up to 50% of any target. The ownership carve‑out covers storage interconnected at transmission or distribution voltages as well as storage located on the customer side of the meter, which explicitly recognizes behind‑the‑meter batteries and other customer‑sited resources as eligible.
This alters the usual preference for third‑party, contract‑based procurements by giving LSEs a permitted ownership pathway that could accelerate projects but also raise market‑structure questions.SB 1295 also builds in an iterative review: the commission must revisit procurement strategies and any targets at least every three years. That cadence forces periodic reassessment of costs, technology performance, and grid needs instead of locking in a single long‑term plan.
Finally, because CPUC orders carry criminal penalties for noncompliance under existing law, the bill’s implementation will channel those enforcement mechanisms into the storage procurement context, and the bill states it creates no entitlement to state reimbursement for mandated local costs.
The Five Things You Need to Know
The CPUC must consider statewide procurement strategies for up to 40,000 megawatts of energy storage and complete that work by January 1, 2030.
Any procurement targets the CPUC sets for load‑serving entities must be structured to be achieved on or before December 31, 2040.
Each load‑serving entity may meet up to 50% of its procurement target with storage assets it owns, including systems tied at transmission or distribution level or located on the customer side of the meter.
The CPUC must reconsider procurement strategies and any targets not less frequently than once every three years.
Because the bill operates through CPUC orders, violations remain subject to existing criminal penalties, and the bill declares no state reimbursement is required for local costs the mandate may impose.
Section-by-Section Breakdown
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Requirement to consider statewide procurement strategies by 2030
This subsection directs the CPUC to study and consider procurement strategies for installing a statewide total of up to 40,000 MW of energy storage and sets the administrative deadline of January 1, 2030 for completing that consideration. Practically, that means the CPUC must convene analysis and stakeholder proceedings to define scenarios, cost trajectories, and procurement pathways within the next regulatory cycle rather than leaving storage deployment to ad hoc procurements.
Evaluation of LSE targets for achievement by 2040
As part of the broader procurement assessment, the commission must consider whether to impose targets on individual load‑serving entities to procure viable and cost‑effective storage to be achieved by December 31, 2040. This provision creates the legal authority for the CPUC to translate the statewide ambition into binding LSE obligations, while leaving the determination of whether targets are appropriate and at what levels to the commission’s judgment.
Allowance for LSE‑owned and customer‑sited storage (up to 50%)
If the CPUC imposes an LSE procurement target, this paragraph permits each LSE to satisfy up to 50% of that target with storage assets it owns. The ownership allowance explicitly includes resources interconnected at transmission or distribution voltages and those on the customer side of the meter, which brings utility‑owned and behind‑the‑meter options into the set of eligible compliance tools and affects contracting, valuation, and interconnection practices.
Triennial reconsideration requirement
The CPUC must revisit procurement strategies and any set targets no less frequently than once every three years. That creates a recurring formal review process intended to capture technological change, cost declines, and evolving grid needs, and requires the commission to adjust policy choices on a relatively short regulatory cycle rather than a single long‑term directive.
Enforcement under existing CPUC authority and reimbursement clause
The bill relies on existing enforcement law that makes violations of CPUC orders a crime; therefore, implementation would fall within the CPUC’s current sanctioning framework. The bill also states it does not require the state to reimburse local agencies for mandated costs, signaling that local compliance expenses would be treated as a state‑mandated local program without an associated reimbursement obligation in this act.
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Explore Energy in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Energy storage manufacturers and installers — The bill creates a clear, statewide demand signal that could expand market size and accelerate project pipelines if the CPUC sets ambitious capacity goals.
- Owners of behind‑the‑meter storage (residential and commercial customers) — By making customer‑sited systems eligible toward LSE targets, the law increases the potential value streams and deployment opportunities for distributed batteries.
- Grid operators and planners — A concerted procurement strategy provides a coordinated approach to meet reliability and flexibility needs, reducing ad hoc gaps between generation and storage planning.
Who Bears the Cost
- Load‑serving entities (including investor‑owned utilities) — They will absorb procurement obligations, administrative compliance costs, potential capital expense if they choose to own assets, and integration costs for new storage.
- Ratepayers — Depending on how costs are recovered, customers could face higher bills to fund accelerated storage procurement or utility‑owned capital investments unless the CPUC designs mitigating cost allocation rules.
- CPUC and state agencies — Staff will incur program design, oversight, and enforcement responsibilities, increasing workload without a dedicated funding stream identified in the bill.
Key Issues
The Core Tension
The central dilemma is balancing fast, large‑scale deployment of storage to secure reliability and decarbonization goals against the risks of higher costs, market concentration, and regulatory uncertainty: allowing LSEs to own half of required capacity can accelerate build‑out but may reduce competition and shift risk to ratepayers if not tightly regulated.
The bill frames a large‑scale ambition — up to 40,000 MW — but leaves critical choices to the CPUC: whether to convert that ambition into binding LSE targets, how to allocate targets across entities, and how to count different technologies and configurations. Those implementation choices will determine whether the law primarily drives third‑party project finance, utility capital deployment, or a hybrid approach.
The 50% allowance for LSE‑owned resources risks tilting the market toward utility ownership unless the CPUC imposes guardrails (competitive solicitation, affiliate transaction rules, or cost caps) to protect ratepayers and preserve third‑party competition.
Counting behind‑the‑meter resources toward targets raises measurement, dispatchability, and control questions: the CPUC will need methods to verify that customer‑sited systems reliably deliver services when needed and to settle who pays for grid‑visible controls and telemetry. The triennial reconsideration requirement forces regular updates but could also create regulatory churn: shifting targets every three years complicates long‑lead procurement and financing for multi‑year projects.
Finally, attaching existing criminal penalties to noncompliance heightens enforcement stakes but may be an awkward fit for commercial procurement disputes; the CPUC will need to clarify which compliance failures are subject to criminal enforcement versus administrative remedies.
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