By Richard Harris

(Photo credit: Wikipedia)

The California Public Utilities Commission has called on utilities and private companies to install about $5 billion worth of batteries and other forms of energy storage to help the state power grid cope with the erratic power supplied by wind and solar energy.

The need to store energy has become urgent because the state is planning to get a third of its electricity from renewable sources by the end of the decade. And the shift in strategy could open up some big opportunities for small startups, including one called .

Stem is housed in an abandoned showroom in Millbrae, Calif., just across the highway from San Francisco International Airport. And the company\’s not just aiming to help the state\’s power grid.

“We make a product that reduces electricity bills for businesses,” says Tad Glauthier, Stem’s vice president for customer development.

In fact, Stem’s first priority is to focus on individual businesses. To explain how this works, Glauthier walks over to a couple of large computer monitors hanging on the wall.

“The monitor on the right is showing the electric load from the carwash across the street,” he says.

The graph is all over the place. There are lulls when the carwash is waiting for business — punctuated with big spikes when blowers, vacuums and other large pieces of equipment switch on.

“If you look at just the range within the last 15 minutes, that’s an incredible amount of volatility,” Glauthier says. “The utility has to serve them that electricity.”

It turns out the car wash has to pay extra on its electric bill for those periods of high demand. All companies in California get billed for their peak use, as well as their total electricity consumption.

So if the carwash can shave off those power peaks, they can also shave this extra charge from their electric bill.

Here’s how Stem does it: When demand spikes, batteries kick in so the company doesn’t have to draw so much from the grid.

The battery packs they install in businesses look like glitzy gym lockers, and are controlled by a small computer, connected to the Internet. The computer’s job is to decide when a company should be pulling energy from its batteries, rather than from the grid. When the company’s energy demand is low, it can recharge the battery.

Read More Could Big Batteries Be Big Business In California? : NPR.