If you’re building a company around battery storage in California, you already know the technology works. The harder question — the one that keeps founders up at night — is how to turn that technology into a sustainable business. At CleanStart’s most recent Perspectives webinar, we tackled exactly that question, sitting down with Seth Hilton, a partner at Stoel Rives and one of the leading energy regulatory attorneys in the country, to cut through the complexity.

What followed was one of the most candid conversations we’ve hosted about the real mechanics of the California energy storage market — from CPUC procurement mandates to behind-the-meter revenue stacking to the hard truths about timelines. Here’s what every battery storage founder needs to know.

Start Where the Money Is: Utility-Scale Procurement

For founders targeting the front-of-meter, utility-scale market, Seth’s guidance was direct: the revenue foundation is capacity, not energy. California’s investor-owned utilities, community choice aggregators (CCAs), and energy service providers are all subject to Resource Adequacy (RA) obligations set by the CPUC — and those obligations require long-term contracts that create predictable, bankable revenue streams for storage projects.

“For utility scale, it’s really figuring out how you can obtain a long-term contract through those utility solicitations. That’s going to be the key. And then stacking the additional revenue associated with energy, ancillary services, and other opportunities — but really, it’s the capacity that’s procured pursuant to these programs that are key.”

— Seth Hilton, Partner, Stoel Rives LLP

The CPUC recently ordered procurement of 6 gigawatts of new storage capacity — a significant mandate that creates real contracting opportunities for companies ready to compete in utility solicitations. Standard RA qualification requires a 4-hour duration minimum, but the Commission’s most recent order took a meaningful step forward by requiring that up to 25% of procured resources be long-duration storage of 8 hours or more.

The Regulatory Reality for Long-Duration Storage

If your technology plays in the long-duration space — anything above 4 hours — there’s both good news and honest complexity to understand. The CPUC has explicitly recognized the need for longer-duration resources, but the valuation frameworks to properly compensate them are still catching up. Seth noted that companies engaging early in the regulatory process, rather than waiting for the rules to be finished, will be best positioned to shape the outcome.

Behind the Meter: Revenue Stacking Is the Strategy

For companies pursuing residential or commercial behind-the-meter deployments — distributed battery networks, virtual power plants, or consumer-owned systems aggregated for grid services — the business model is more complex but the opportunity is growing. Seth’s advice: don’t look for a single revenue stream. Build a stack.

“A lot of the kind of legal and regulatory issues we work with them on are figuring out what incentive programs can be used to reduce the cost of behind-the-meter resources — the Self-Generation Incentive Program, the BUILD program at the Energy Commission — working through those opportunities to reduce costs, and then the reliability aspects: backup power generation is a key aspect for these behind-the-meter resources.”

— Seth Hilton, Partner, Stoel Rives LLP

The conversation got especially concrete when Greg Connolly of Kora Power described a real-world deployment scenario: working with a utility on a 100,000+ battery residential deployment targeting 1.6 gigawatts of distributed storage. His insight — backed by the math — was that distributing batteries within existing residential circuits can actually be cheaper than utility-scale deployment once you factor in the infrastructure upgrades required. Each substation upgrade runs roughly $6 million; each transformer upgrade, around $500,000. At scale, the economics of distributed storage look very different.

The VPP and Demand Response Landscape

Virtual power plants and demand response programs sit at the intersection of behind-the-meter deployment and grid services — and it’s a space evolving quickly, if unevenly. Seth was candid about the pattern he’s seen repeatedly: the CPUC creates a program to incentivize storage or VPP participation, the structure doesn’t quite match market reality, and participation is low. Programs have come and gone at SDG&E and face uncertainty at PG&E.

That’s not a reason to avoid this space. It’s a reason to engage proactively — building the business case, working within existing demand response frameworks, and pursuing targeted tweaks rather than waiting for a new program to be built from scratch.

The Honest Answer on Timelines

Thomas asked Seth the question every investor-backed founder is wrestling with: what are realistic timelines for getting contracts and revenue in the door? The answer was refreshingly direct.

“It’s gonna take way longer than you think, usually. If you’re talking about development in the utility space, front of the meter, where you need to interconnect that resource — interconnection is a real challenge. Takes years to work through that process. If you’re creating a new program, that can take a year, probably more like a year, or it can take many years of working with the PUC.”

— Seth Hilton, Partner, Stoel Rives LLP

Behind-the-meter deployments within existing programs move faster — but creating new programs or regulatory pathways adds years, not months. For founders, this has a direct implication: your regulatory strategy needs to be part of your fundraising story, and your investors need to understand the difference between a hard tech company operating in a regulated market and a software company with a 12-month go-to-market.

The Bigger Picture: California Is Moving, Even if Slowly

It would be easy to walk away from a regulatory deep-dive like this feeling daunted. Seth’s closing perspective was a useful corrective. California has gone from procuring its first 50 megawatts of storage capacity years ago to operating over 13 gigawatts on the CAISO system today. The state is planning for significantly more — and the data center boom, itself driving a significant share of that 6 gigawatt order in PG&E territory, is creating new adjacent opportunities for storage to displace gas backup generation.

“It may not be optimal, but there are a lot of opportunities for utility-scale storage, and for behind-the-meter storage. Some of it is working through the various programs that may apply to your resource, figuring out how you stack the various revenue streams that are available to you, and create something that will actually work. I really do think there’s some significant opportunities here going forward for energy storage under the current structures.”

— Seth Hilton, Partner, Stoel Rives LLP

Regulatory lag is real. So is the opportunity. The companies that will win are those that understand the system well enough to work within it — and to push it forward strategically rather than waiting for a perfect framework that may never arrive.

As Thomas wrapped the session: “Let’s build things towards this 6 gigawatts of power that we need.”