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San Diego County’s energy grid is in for a major overhaul. A non-utility, 165 megawatt battery project located across nine sites in San Diego County was announced May 24. Upon its completion, it will be the first fully merchant storage project and will be key in optimizing the energy needs of the region’s already stressed power grid.

“This is an extremely positive announcement,” said V. John White, executive director at the Center for Energy Efficiency and Renewable Technologies. “While California is installing more and larger battery storage systems, having the batteries manufactured in California will bring stability to the battery supply chain, and capture the economic value for the state.”

The stored energy in the project’s lithium-ion batteries will be sold into the California grid operator’s market, rather than to a utility under a power purchase agreement. The plan is for the batteries to come online between this July and May 2024 to relieve some of the region’s stressed power grid by providing storage and supply. There are major concerns about the reliability of the grid particularly during the summertime because of likely heatwaves, wildfires and diminished hydropower from the ongoing drought.

The project’s timing also is optimal because it comes only days after California utility regulators approved ratepayer financing of Southern California Edison’s 500 megawatts of lithium-ion batteries.

The new merchant storage deal entails a $78 million loan agreement with the North American Development Bank, a partnership between the U.S. and Mexico, Siemens Financial Services, and EnerSmart Storage OpCo II, supplying 330 MWh to CAISO’s energy and ancillary services market. The batteries will help integrate intermittent renewables and improve grid efficiency by reducing the need for gas plants to ramp up and down, according to the bank. And the project’s numerous battery packs also are estimated to reduce carbon emissions from the electricity sector each year by about 31,000 metric tons, according to the bank’s draft certification document.

The energy stored in 55 lithium-ion batteries at three MW each will be transported to the grid operator over San Diego Gas & Electric transmission lines.

The North American Development Bank and Siemen project financing, “coupled with the backing of our private equity sponsor, Yorktown Partners, will enable the continued growth and expansion of carbon-free, renewable energy to communities throughout the San Diego region” stated Marc La Magna, Co-CEO of EnerSmart Storage Holdings.

The 55 projects are expected annually to charge and discharge approximately 87,650 MWh of energy. They are being sited on private land in Chula Vista, Imperial Beach, Mesa Heights, Murray, Rancho Bernardo, Spring Valley, Chicharito and Border.

This is the second battery storage project the development bank has helped fund. The first one was a 3 MW battery in Riverside and Imperial counties, with the output sold to SCE.

SCE's new grid storage projects also are touted as helping integrate solar and wind energy to support a more reliable power grid by minimizing power disruptions and reducing energy losses caused by mismatches between supply and demand.

Accelerated CPUC for SCE

Approval of the utility’s five, third-party contracts for 497 MW was fast tracked and “will significantly enhance our ability to manage reliability at net peak,” said CPUC Commissioner, Genevieve Shiroma. “These five energy storage projects are essential for our path to being less reliant on fossil fuels.”

The cost of the battery projects was not revealed.

The storage approval was non-controversial, “and represents how energy storage procurement has become routine in supporting near-term, urgent, and incremental capacity needs,” said Jin Noh, policy director for the California Energy Storage Alliance. “Our attention now focuses on delivery, not procurement, since interconnection and supply chains represent the key challenges we need to tackle,” he added.

The SCE agreements are for new and expanded lithium-ion battery projects that are to provide power as needed from 5 PM to 10 PM and as follows:

200 MW from Tenaska/Falcon Energy Condor project in San Bernardino County, which is being sited at the former Highgrove Steam Plant; 100 MW from Tenaska/Falcon Energy Peregrine project; An 82 MW expansion of AES Alamitos battery project; A 75 MW expansion of LS Power’s Gateway project; and A 40 MW expansion of Calpine’s Santa Ana project.

Of the storage deals, 462 MW were selected as part of SCE’s June 2021 solicitation in response to the Commission’s directive calling for 11.5 GW of new resources to be brought online between 2023-2026 in order to meet high electric demand during very hot days as the sun begins to set. Of the unprecedented new procurement under the CPUC’s Integrated Resource Proceeding, 2,500 MW is set to replace the retiring Diablo Nuclear Plant and must be carbon free.

SCE’s share of the 11.5 GW of net quality capacity is 3,948 MW. Of that amount: 687 MW is projected to be online by next August; 2,060 MW by June 1, 2024; 515 MW by June 1, 2025; and 687 MW by 2026. Of the total, at least 858 MW must be carbon free by 2025.

SCE and the other energy provider are to provide a total 2,000 MW by 2023, another 6,000 MW by 2024, an additional 1,500 MW by 2025, and 2,000 MW more by 2026.