CPUC Okays Expensive New SCE Battery Project

Investor-owned utilities in California have lobbied hard to reduce payments to people who feed their excess rooftop solar power back into the grid, arguing the compensation costs ratepayers too much. At the same time, Southern California Edison has pushed for permission to recover from customers $1.23 billion for 537 MW of new battery storage. On Thursday, the California Public Utilities Commission gave the utility the go-ahead for the expensive utility project to bolster resources next summer.

SCE signed an agreement with Ameresco for the installation of lithium-ion batteries at three of its substations by Aug. 1, 2022, to meet spiking demand in the late afternoon as solar power fades.

Commissioner Martha Guzman Aceves, who will soon head the U.S. Environmental Protection Agency’s Region 9, said the utility storage project was the kind of “investment that should be prioritized in California.”

She said the utility is being responsive to Gov. Gavin Newsom’s July 30 emergency order and a CPUC emergency procurement decision that calls for an additional 2,000-3,000 MW over the next two summers to meet peak and net peak demand to protect the grid during extremely hot days. The deal also comes on the heels of the CPUC approval of Pacific Gas & Electric installing more diesel generators at its substations to address the same urgency.

Advocates for storage and solar, together with independent energy producers and providers called foul, accusing the utility of exploiting the emergency by investing in costly utility-owned resources and crowding out third-party storage. They said the substation project should not be exempt from a state construction permit and SCE should not be given a big advantage over other businesses.

California Energy Storage Association Policy Director Jim Noh acknowledged Gov. Newsom’s emergency summer proclamation and the importance of reliability during possible extreme weather events but said this is not the remedy. “The process to arrive at this outcome is very problematic and anti-competitive and should never be repeated.” He pointed to potential cost-effective third-party storage solutions “if utilities would focus on quickly completing interconnection studies and building necessary deliverability-related upgrades.”

“The CPUC needs to stop just-in-time procurement that is costly and instead drive competitive procurement for storage and hybrid projects to get the best value for ratepayers,” Ed Smeloff, Vote Solar senior director, told Current.

The Independent Energy Producers, Large Scale Solar Association and others claim SCE is charging 65-75% above market prices to install the systems quickly, even though they will be located its own property. Opponents also raise concerns about the contracting party’s lack of experience in building large projects.

The CPUC rejected stakeholders’ concerns, citing the need for emergency procurement.

The project will install 225 MW of lithium-ion battery storage at SCE’s Springvale Substation in the Big Creek-Ventura local area, 200 MW at Hinson Substation in the LA Basin local area, and 112.5 MW at Etiwanda Substation.

Batteries to feed into the distribution system

The storage project costs will initially be spread among its ratepayers and community energy and other energy providers in the utility territory as part of the distribution costs.

For the first five years, the batteries will serve local distribution needs, which gets around the need for an interconnection agreement with the California grid operator’s market, which would have been under the authority of federal regulation. The batteries will charge on solar power at times of high supply, and respond to local distribution system conditions, SCE said.

After five years, the resource will participate in the wholesale market after submitting an interconnection request to do so pursuant to the Wholesale Distribution Access Tariff, according to SCE.