Energy storage has been given a major boost with Southern California Edison (SCE) offering contracts for 261MW of in-front-of and behind-the-meter resources – exceeding its minimum procurement authorization by more than five times.
The procurement is part of a larger procurement of 2,221MW from diverse new resources to meet local reliability needs due to the closure of the San Onofre nuclear generating station and anticipated retirement of older, natural gas generation plants along the Southern California coastline. This amount will represent roughly 10% of SCE’s current total customer peak usage and is enough to power about 950,000 average homes.
Energy storage procurement
The 261MW energy storage procurement is divided as follows:
● AES – 100MW of in-front-of-meter battery energy storage (1 contract)
● Stem – 85MW of behind-the-meter battery energy storage (2 contracts)
● Advanced Microgrid Solutions – 50MW of behind-the-meter battery energy storage (4 contracts)
● Ice Energy Holdings – 25.6MW of behind-the-meter thermal energy storage (16 contracts)
● NRG Energy – 0.5MW of in-front-of-meter battery energy storage (1 contract)
“This is a monumental decision,” commented Janice Lin, executive director of the California Energy Storage Association (CESA). “The fact that SCE far exceeded the minimum amount of energy storage they were ordered to purchase demonstrates that energy storage can be competitive with other preferred resources on both performance and value, and that it's now an integral part of the utility planning tool kit in California."
Matt Roberts, executive director of the Energy Storage Association (ESA) concurred, commenting that no utility has made this large of a simultaneous investment in grid-tied and customer-owned energy storage before: “This decision by SCE shows that when energy storage is measured competitively against traditional energy assets, it proves to be a critical component and vital tool for resource planners to create a more reliable, flexible grid infrastructure.”
This procurement is also notable in being the first time SCE has contracted with energy storage projects through a competitive solicitation.
Energy efficiency, demand response and renewables
The balance of the procurement is comprised of 136MW of energy efficiency, 75MW of demand response and 1,748MW of renewables and other generation.
Energy efficiency – NRG Energy (102.5MW, 8 contracts), Onsite Energy Corporation (17MW, 17 contracts), Sterling Analytics LLC (16.7MW, 7 contracts).
Demand response – NRG Energy (75MW, 7 contracts).
Generation – SunPower Corp. (50MW behind-the-meter renewables, 6 contracts), AES (1,284MW combined cycle gas fired generation, 2 contracts), Stanton Energy Reliability Center (98MW peaking gas fired generation, 1 contract), NRG Energy (316MW peaking gas fired generation, 2 contracts).
“This solicitation is the first time that such a wide range of new diverse resources were directly competing in the purchasing process,” said Colin Cushnie, SCE vice president, Energy Procurement & Management. “No single energy source can give us everything we need all of the time, particularly with our emphasis to use environmentally clean resources. To provide for flexibility, we need to accommodate a mix of energy resources.”
The new contracts require California Public Utilities Commission approval. Under the PUC ruling on SCE’s reliability plan, SCE was required to procure between 1,400MW and 1,800MW of electrical capacity in the Los Angeles basin and between 215MW and 290MW in the Moorpark area of Big Creek/Ventura.
The solicitation also sought to encourage conservation and develop new technologies and innovative solutions to meet identified local electric reliability needs in Southern California.
Energy storage mandate
The next focus for SCE, and for California’s other IOUs, Pacific Gas and Electric and San Diego Gas & Electric, is the first round of procurement of 200MW in a mandated 1,325MW of energy storage by 2020. [Engerati-California's Energy Storage Mandate-Will Others Follow?]
SCE and PG&E are each required to procure 90MW in the first round, followed by a further 120MW in 2016, 160MW in 2018 and 210MW in 2020 (each totaling 580MW). For SDG&E the amounts are 20MW in 2014, 30MW in 2016, 45MW in 2018 and 70MW in 2020 (total 165MW). To ensure coverage of various storage use cases, there are individual targets for transmission and distribution connected- and behind-the-meter storage (although with some flexibility for adjustment). Installation must be by the end of 2024.
Requests for offers for these procurements will be issued on December 1, 2014.
Energy storage in California
According to CESA, quoting data from the US Department of Energy's Global Energy Storage Database, there are currently 112 operational energy storage projects in California.
Other recent storage activity includes a procurement plan of 178MW of energy storage capacity by 2021 from the Los Angeles Department of Water and Power (LADWP), which was released in October.