PG&E to replace 3 gas plants with world's biggest battery projects

Jul 05, 2018

Peter Maloney  |  UtilityDive  |  July 3, 2018

Dive Brief:

  • Pacific Gas and Electric ( PG&E ) late last week requested approval from the California Public Utilities Commission (CPUC) for four energy storage (battery) projects totaling about 2,270 MWh.
  • The CPUC authorized PG&E to issue a solicitation for energy storage projects to replace three power plants that would otherwise require reliability must-run (RMR) contracts.
  • PG&E selected offers of three energy storage projects from third-party owners, totaling 385.5 MW, 1,540 MWh, and one 182.5 MW, 730 MWh project the utility would own.

Dive Insight:

The energy storage projects are being built to avoid the need to keep three Calpine gas-fired plants running as RMR resources and to shore up congestion issues in the region.

“Storage at this scale is likely now cheaper than the total cost to run the gas plants,” Alex Eller, senior energy research analyst at Navigant, told Utility Dive via email.

The announcement includes what is set to be the largest lithium-ion battery installation of its kind: a 300 MW, 1,200 MWh storage project owned by a subsidiary of Vistra Energy, Dynegy Marketing and Trade. The project would be three times the size of the current world record: Tesla’s 100 MW, 129 MWh battery in Australia.

PG&E’s procurement request is also a “landmark event” because the utility would own the 182.5 MW, 730 MWh project it is building with Tesla. “I imagine this is the largest utility-owned, non-hydro, storage project in the world by far,” Eller said. “Essentially, I see this as one of our largest utilities recognizing that the technology risk of battery storage is minimal and they have full faith that it can deliver the promised benefits at a competitive cost.”

Calpine and the California ISO requested that the Federal Energy Regulatory Commission approve the RMR contracts for the Yuba City, Feather River and Metcalf gas plants. FERC granted those approvals in April.

But the CPUC and PG&E opposed the approvals, claiming the lack of competition involved with RMR contracts can lead to market distortions and unjust rates. The CPUC said there are cleaner, less expensive alternatives, including battery storage and preferred resources.

The RMR contracts last one year. Without alternative procurement, “it is likely that the Calpine plants could need to be RMR’ed year after year,” CPUC spokesman Christopher Chow told Utility Dive via email. “The new procurement would eliminate the shortfalls in the local areas that would result in future RMRs, if not addressed.”

All four energy storage projects will address resource needs in the South Bay-Moss Landing transmission sub-area. The largest of the four is the Vistra Energy Moss Landing Storage transmission connected project, which calls for a 300 MW, four-hour duration lithium-ion battery system located at Moss Landing in Monterey County.

The 75 MW, four-hour duration Hummingbird Energy Storage project will be owned by Hummingbird Energy Storage, a subsidiary of esVolta, a newly formed company that has partnered with Powin Energy and Blue Sky Alternative Investments. The transmission-connected project, a lithium-ion battery system, will be located in Morgan Hill in Santa Clara County and will address resource needs in the South Bay-Moss Landing sub-area.

The 10 MW, four-hour duration project will be owned by mNOC AERS, a subsidiary of Micronoc, a company that has developed projects in the distributed energy storage market, mostly in South Korea. The project is designed as an aggregation of distribution-connected, behind-the-meter lithium-ion batteries at customer sites that are interconnected to one of the substations in the South Bay-Moss Landing sub-area.

The race for the largest lithium-ion battery system is progressing at a fast clip in Australia, where Tesla’s 100 MW battery reduced grid service costs 90%. Several large energy storage projects are in the pipeline there, including Queensland’s SolarQ, which is planning to pair a 350 MW solar facility with a battery system of up to 4,000 MWh.

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