An eight-hour duration lithium-ion battery project was recently selected as a long-duration energy storage resource by a group of energy suppliers in California. Girish Balachandran, CEO of Silicon Valley Clean Energy, tells us about the deal and what it signifies.
Regular readers of Energy-Storage.news will likely be aware of the increasing role played in California’s energy landscape — and more specifically its clean energy landscape — by Community Choice Aggregators (CCAs).
Non-profit electricity suppliers allowing their member-customers to choose which sources their power comes from, CCAs are signing ever-greater volumes of contracts for solar, wind, renewables-plus-storage and standalone energy storage resources.
According to CAlCCA, an organisation which works to support numerous CCAs at legislative and regulatory level, as of November last year power purchase agreements (PPAs) had been signed for more than 2.6GW/9.2GWh of battery storage with average contract length being 17 years, by California’s CCAs.
But it isn’t just the sheer scale of resources being contracted for. The fact that many CCAs and their customers are opting for greener sources of energy is leading to innovation in contract structures too.
For instance, yesterday Energy-Storage.news reported on a solar-plus-storage PPA between CCA San Jose Clean Energy and renewable energy developer Terra-Gen which will see 62MWac of clean energy delivered seven days a week, for 16 hours a day, including the critical 6pm to 10pm peak.
A group of CCAs also proactively moved towards procuring long-duration energy storage resources as early as 2020. When the regulator, the California Public Utilities Commission (CPUC), put out a historic requirement for California’s energy providers to procure a portion of long-duration storage in its Mid-Term Reliability ruling last year — ensuring lights stay on as the state retires gas and nuclear facilities in the coming years — the CCAs were ready.
Power system planning is not what it used to be
In January, the first 69MW/552MWh long-duration storage procurement was announced by seven member CCAs in CC Power, a Joint Powers Agency formed to collectively represent a total of 10 CCAs.
What surprised many about the contract with developer REV Renewables for its Tumbleweed battery project is that Tumbleweed is a lithium-ion battery energy storage system (BESS). There had been an expectation from some industry commentators — although admittedly not others — that flow batteries, or some form of thermal or mechanical energy storage might have been the frontrunner in a long-duration procurement.
Energy-Storage.news spoke with Girish Balachandran, CEO of Silicon Valley Clean Energy (SVCE). SVCE serves 270,000 residential and business customers across 13 communities in California’s Silicon Valley. It was one of the seven groups to have signed that contract with LS Power subsidiary REV Renewables.
The contracts await approval from the elected boards of SVCE and the other CCAs, but Balachandran was able to offer both a background to the role of CCAs today, how that fits with California’s SB100 clean energy by 2045 mandate and the long-duration procurement, which as the CEO says, is ongoing.
California passed a law in 2002 allowing communities to purchase power on behalf of residents and business, leading to the launch eight years later of MCE, California’s first Community Choice Aggregator. After the formation of MCE in 2010, a wave of other new CCAs sprung up between 2016 and 2018.
“Community Choice agencies are essentially governments coming together to buy electricity in bulk,” SVCE’s Girish Balachandran says.
“We’re called load-serving entities and our basic span of influence is early on the supply side. Transmission and distribution still stay with the investor-owned utilities (IOUs) and so all customers are opted in to our service and they can opt out if they want.”
While different CCAs have different missions in terms of how to serve customers, from lowering costs or perhaps increasing reliability of local supply, on average CCAs provide greener power than California’s three main IOUs, PG&E, SDG&E and SCE.
SVCE is providing carbon-free electricity to all of its customers and since its inception in 2017 has been doing this at a discount to the supply rates of PG&E, the service area’s IOU. With its power 50% from wind and solar, SVCE realises that going further will require more and more energy storage.
“We all recognise in California — load serving entities, regulators — that all the solar coming in during the day has resulted in a Duck Curve and so now we no longer have a peak in the middle of the day, which used to be what utilities planned for for 100 years.”
Having planned the entire power system around an afternoon peak, including the planning of reserve margins, California’s profile has shifted to a ‘net peak,’ during the nighttime hours.
“So that gets to energy storage, where it is essential to have energy storage to meet the net peak, because you’d have excess renewables from solar dumping into the grid during daylight hours. And now the peak has moved to nighttime hours,” Balachandran says.
“So we need dinnertime power, we already have excess lunchtime power. That’s where energy storage comes in.”
Are your resources… adequate?
CPUC has mandated that all load-serving entities procure a certain amount of energy storage, from four and five-hour duration storage to longer durations. This includes California’s Resource Adequacy contracting, which means ensuring electricity supplies can be maintained over four and eight-hour periods.
It’s effectively a long-term contracted capacity payment for availability and is largely what has led to the boom in four-hour duration lithium-ion battery projects in the state.
Since 2017, SVCE has put out three requests for proposals (RfPs) including contracting for nearly 200MWh of battery storage. Its first facility is coming online soon, and the group hopes to be able to cost-effectively utilise battery storage by combining revenue streams from RA, from arbitrage and ancillary services.
However going into the future, eight-hour energy storage is going to become increasingly important, and it’s likely much longer, perhaps seasonal storage will be needed for a 100% carbon-free grid, Balachandran says. CPUC’s Mid-Term Reliability ruling also mandated for at least 1,000MW of eight-hour storage out of a total 11.5GW resources procurement.
SVCE and several other CCAs have been “leaning into” the growing need for energy storage, having recognised that the net peak needed to be met.
Collectively, they put out their request for information (RFI) for long-duration storage in June 2020, before the Mid-Term Reliability ruling, “just to get a sense of what was out there in the market”.
“The kind of information we got was very encouraging,” the CEO says.
“Both in terms of the diversity of technologies, [and] the duration, it was just very positive to us. There was enough out there in terms of interest that basically confirmed to us, we needed to put the request for offers (RFO) out as soon as possible. When we put it out in October 2020, there was a very positive response.”
From this “diversity of technologies,” it was lithium-ion, presumably the most established energy storage option — albeit at shorter durations — that was selected. So what convinced SVCE and the six other participating members of the CC Power agency this was the right choice?
“It’s a little nuanced. I don’t think the question ought to be about how lithium-ion won over emerging technologies. That’s not it — there is so much [storage] that we need.”
The requirements of the final request for proposal that the CCAs put out was for an eight-hour minimum discharge duration resource of at least 50MW. Contracts would have a minimum delivery term of 10 years for resources to come online by 1 June 2026, while the CCAs would need full deliverability to be eligible for Resource Adequacy credit. Projects had to connect to the CAISO grid, or if not, to ensure full transfer rights for power delivered for SVCE and the other aggregators.
“We did this before the Mid-Term Reliability requirements were put out, but this kind of aligned [with that].”
Balachandran is at pains to point out that the contract with REV Renewables for its Tumbleweed BESS is only the first procurement step of a likely many to come. Tumbleweed meets 55% of the Mid-Term Reliability procurement SVCE has been ordered to make. The remaining 45% is to be determined and as he says, there will be more energy storage required between now and 2045.
The CCAs needed to find an immediately compliant solution to their mandated procurement needs, but really did want to dig into the different options out there in terms of technologies. In the end, three projects have been short-listed through the RFO: two lithium-ion and the other an emerging technology which Balachandran isn’t able to disclose at this stage.
Undisclosed, but certainly short-listed. Referring to a recent 226MWh vanadium flow battery storage announcement by Central Coast Community Energy, another CCA, Balachandran says that over the next couple of years, we can expect to see a big mix of technologies contracted for in California’s energy storage sector.
Lithium-ion, with its scalability, will likely take the lion’s share, but flow batteries and other emerging technologies could be a part of that too.
The RFO was responded to by 51 different entities, representing more than 9,000MW of projects.
There were aqueous air batteries, iron redox and vanadium flow batteries, zinc and of course lithium-ion batteries. Competing with those were compressed air, hydrogen fuel cells, gravity storage, pumped hydro and then a variety of thermal energy storage technologies like molten salt and liquid air.
It’s very likely some or all of those will have a role to play in future, Balachandran said, they just weren’t the first to be contracted for.
The CCAs had a scoring rubric which assessed bids on a number of factors. Cost-effectiveness was the primary factor in this instance and the metric on which lithium-ion got the highest score, but also a major factor was REV Renewables and its parent company’s strong track record in the sector.
So much is changing in California — and the world’s — energy system. Keeping the lights on affordably while decarbonising rapidly is going to be a tricky balancing act, Balachandran says, and while the state is broadly on the right track in his opinion, it needs to be careful how it moves forwards.
“We need to move fast — but let’s not move so fast that we make things unaffordable and the lights go out. We are in a climate crisis, so we really need to be really pushing the envelope, which is what CCAs are doing — but we have had blackouts [in California]. So I think we really need to be very thoughtful about that, and it’s a tough problem, because, we have a [power] shortage.
“I think there are market structure issues, there are regulatory structure issues that need to be solved.”
Nonetheless, Girish Balachandran says energy storage will be one of the main tools in the toolkit to solve those challenges and is “very optimistic that there are going to be a variety of technologies, from one-hour storage to multiple days, seasonal storage. We need all of it,” he says.
“I feel very optimistic about the energy storage business just transforming, and also from a size standpoint. From very large, pumped storage projects, compressed air energy storage projects, to storage in people’s garages, for resiliency purposes and affordability purposes. So it really is an ‘all of the above’ that we’re looking at.
“CCAs are really leaning into getting a lot of carbon-free energy, and trying to make it be as 24/7 as possible.”