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California replaces three coal fired power stations with battery systems


Grid scale energy storage is now a viable economic alternative to coal fired power stations designed to top up the grid during peak demands.


Grid scale energy storage is going to get a big boost after California officials, who also recently announced that Los Angeles will be the world’s first city to run on battery power after they vetoed the procurement of new power stations, green lighted plans by utility Pacific Gas and Electric to move forward with over 567 megawatts of battery storage capacity.


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Included in the mix is more than 180 MW of Lithium-Ion battery storage from Tesla which will be owned by PG&E and last for four hours if the grid calls on it. The other projects would be owned by a mix of third parties and operated on behalf of PG&E under long term contracts and they’ll all be in and around Silicon Valley in the South Bay area.

Once online the new system will let California retire three gas fired power plants, namely the 605MW Metcalf Energy Center, the 47MW Feather River Energy Center, and the 47MW Yuba City Energy Center, none of which have any long term energy supply contracts with any utilities.

Even without the contracts though the state’s grid operator identified the new system as crucial to help them maintain a reliable local energy grid. Initially independent power producer Calpine, which owns the plants, asked federal regulators to label the plants as “must run” that would let them generate electricity and be paid for it even without contracts but this rejected immediately by both PG&E and California’s utility regulators after they argued that the must-run designation without firm contracts would distort the state’s power market and lead to unfair prices. After their objection regulators then directed the utility to seek offers to replace them all with energy storage systems instead.


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The utility says its search prompted more than two dozen storage proposals with 100 variations and PG&E narrowed the list to four, which it presented to state regulators this June.

One of the projects, the Vistra Energy Moss Landing storage project, which is described as a transmission-connected stand alone Lithium-Ion battery energy storage system, would be owned by Dynegy Marketing and Trade, a unit of Vistra Energy Corp who already manage more than 40 gigawatts of generating capacity across 12 states. The project, which is a 300MW battery array with a 4 hour duration could enter service in December 2020 under a 20 year contract.

A second project, Hummingbird Energy Storage, a 75MW 4 hour duration battery system, would be owned by a unit of esVolta, a new company that is partnering with Oregon based Powin Energy Corporation and Australia based Blue Sky Alternative Investments could also enter service in December 2020 and would operate under a 15 year contract.

PowerPack Lithium-Ion batteries from Tesla would form the backbone of the third project, a 182MW array with a 4 hour discharge duration, and the batteries would be located at a PG&E substation in Monterrey County. The array could enter service by the end of 2020 and include a 20 year performance guarantee from Tesla.


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Another project, a so called “behind the meter” proposal was also accepted by PG&E. It came from Micronoc and is a 10MW system with 4 hour duration storage. In practice the project would bundle the discharge capacity of other Lithium-Ion batteries from multiple customer sites, something that’s in step with Micronoc’s business model of tying smaller distributed energy storage projects together, most of them so far in South Korea. This 10 year service contract with PG&E could start in October 2019.

The regulatory mandate directing PG&E to seek energy storage proposals isn’t the first time California regulators have intervened to boost energy grid storage systems.

In February 2013, regulators told utility Southern California Edison (SoCalEd)to secure energy storage and other resources to meet an expected shortfall stemming from the closure of the San Onofre nuclear power plant. In that instance, the utility’s energy storage target was 50 MW, and they ultimately bought more than 260 MW of storage capacity, then, in May 2016, regulators again directed SoCalEd to buy more battery storage systems to ease electric supply shortages that were feared as a result of a leak at a natural gas storage facility. As a result, more than 100 MW of grid level energy storage was placed into service.


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In announcing the Silicon Valley projects, PG&E sought to play up storage’s role in helping to integrate increasing amounts of renewable energy onto California’s grid.  It also cited recent decreases in battery prices as enabling energy storage to compete with “traditional solutions” such as fossil-fueled power plants.

No cost details were provided by the utility in making its announcement. And a supporting document justifying the four projects was scrubbed of cost details before being released to the public.

Evidence is growing, however, that battery energy storage can beat natural gas on price when it comes to a specific type of power generation known as “peaking capacity.” Known as peakers, the fast-start power plants typically are called on to generate power on days when consumer demand for electricity is highest. For most places, that’s a hot summer day when air conditioners are cranked up.

One milestone came earlier this year when Arizona Public Service signed a 15 year deal for peaking power from a solar powered battery. The 50MW of storage beat out other forms of peaking generation, including natural gas, and a field of solar panels from FirstSolar will charge the storage array when the sun is high in the sky, allowing electricity to be delivered to customers during times of peak demand.


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Over the next 15 years, Arizona Public Service says it plans to put more than 500 MW of additional battery storage capacity in place representing a seismic shift in policy away from fossil fuels. In January 2018, Arizona utility regulator Andy Tobin proposed that the state’s utilities deploy 3,000 MW of energy storage by 2030.

Efforts to increase the amount of energy storage in places like Arizona and California also received a boost in February when the US Federal Energy Regulatory Commission (FERC) voted 5-0 to remove what it said were nationwide barriers that kept storage sources from taking part in various markets that are run by regional transmission organisations and independent system operators.

In a November 2016 proposal, the Obama-era FERC said that market rules designed for traditional generation resources created barriers to entry for emerging technologies such as electric storage resources, and, as we begin moving towards a world powered by green energy, and not fossil fuels, we look forwards to all those barriers coming down.

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