California has become the first state to mandate energy storage.

New regulations approved by the California Public Utilities Commission Thursday require the state's three biggest investor-owned utilities -- Pacific Gas and Electric Co., Southern California Edison and San Diego Gas and Electric Co. -- must collectively procure 1,325 megawatts of storage capacity by 2020, with installations to be completed no later than 2024.

The three utilities have until March 2014 to devise their own plans on how they will comply with the mandate.

CPUC said the rationale behind its decision includes optimization of the grid, the integration of renewable energy and attaining the state's target of reducing greenhouse gases to 80 percent below 1990 levels by 2050.

"Energy storage has the potential to be a game changer for our electric grid," said CPUC Commissioner Mark J. Ferron, in a release. "As the utilities procure storage, we should evaluate the projects on whether or not they fulfill a system need at a reasonable cost," Ferron said.

With increased energy storage, an electric grid can better utilize solar and wind power, whose outputs vary throughout the day.

California aims to generate 33 percent of its electricity using renewable sources by 2020.

"Integrating renewables is complex, and the complexity is increasing as more solar and wind comes online," Carla Peterman, also a CPUC commissioner, who previously served on the California Energy Commission, was quoted as saying by the San Jose Mercury News.

"Storage has a lot of potential, but there's no one solution. We need to develop this market to see what the potential is," Peterman said.

California's mandate is expected to spur innovation in emerging storage technologies, from batteries to flywheel energy storage, a technique that accelerates a rotor to high speeds thus creating a kinetic battery.

"This is transformative," Chet Lyons, an energy storage consultant in Boston told the Mercury News. "It's going to have a huge impact on the development of the storage industry, and other state regulators are looking at this as a precedent."

Storage companies were waiting for the commission to finalize the new rules, which took three years to develop, the San Francisco Chronicle reported.

"We applaud the CPUC for unanimously approving an energy storage mandate for California," Tom Leyden, chief executive officer of Solar Grid Storage, a Pennsylvania company that installs solar arrays with matching storage, told the Chronicle.

"People are increasingly aware of the vulnerability of our electrical grid, especially as the first anniversary of Superstorm Sandy approaches."