Calif. regulators approve 6 more SCE battery deals, note cost concerns

Southern California Edison Co. has six more battery peaker plants for its growing portfolio of approved energy storage contracts after the California Public Utilities Commission on June 8 authorized 15-year resource adequacy agreements for 624.8 MW/2,499.2 MWh of new capacity.

The PUC now has approved 25 Southern California Edison (SCE) energy storage supply deals resulting from its landmark 2021 procurement order for load-serving entities across the state to add at least 11,500 MW of renewable or other zero-emission resources between 2023 and 2026, measured by net qualifying capacity, according to regulatory filings.

The Edison International utility subsidiary has the state's largest obligation under the order, at 4,052 MW. So far, SCE has secured approvals for 2,439.5 MW to 2,451.5 MW of net qualifying capacity, almost entirely in the form of four-hour lithium-ion battery storage. All of that contracted capacity is scheduled to come online in 2023 and 2024 as part of California's effort to decarbonize power supplies.

The state's targets call for reaching 90% zero-carbon electricity by 2035 and 100% by 2045, up from 59% in 2021. To achieve those ambitions, California must vastly boost its battery fleet of roughly 5,000 MW to 19,000 MW by 2035 and 52,000 MW by 2045, according to a recent energy transition road map released by Gov. Gavin Newsom. In reducing its reliance on natural gas-fired generation, the state needs "increased amounts of energy storage, including batteries, clean hydrogen, and long-duration energy storage, capable of storing large amounts of energy that can provide power back to the electric grid over a consistent and continuous period," said the report, released May 25.

SCE's latest batch of approved contracts includes the fourth phase of Houston-headquartered Calpine Corp.'s Nova Battery Storage Project in Menifee, Calif. Also known as the Nova Power Bank, it is part of mounting fossil fuel-to-battery redevelopments across the US. The 110-MW/440-MWh Nova IV project at the site of General Electric Co.'s demolished natural gas-fired Inland Empire Energy Center follows the PUC's approval in January of contracts for the 230-MW/920-MWh Nova I and 230-MW/920-MWh Nova II phases.

The 50-MW/200-MWh Nova III tranche is under contract with Peninsula Clean Energy, a local government-run retail power supplier based in Redwood City, Calif.

Nova IV gives Calpine 620 MW/2,480 MWh of contracted capacity at the site so far. Scheduled to come online in summer 2024, the project has an approved interconnection agreement for up to 680 MW, according to the California ISO, the state's primary transmission grid operator.

Calpine did not immediately respond to a June 8 request for additional information about its Nova Power Bank.

Cost concerns

Also among the newly approved deals are two AES Corp. projects, including a 150-MW/600-MWh energy storage facility at the McFarland Solar B section of the Ernest W. McFarland Solar Park near Dateland, Ariz., which includes plans for 550 MW of solar and 1,740 MWh of storage, according to the Ernest W. McFarland Foundation.

The PUC in November 2022 approved a contract between SCE and AES for a 100-MW/400-MWh phase at the McFarland Solar A project.

Regulators on June 8 also approved SCE's agreement with AES for the 80-MW/320-MWh Raceway battery array, co-located with the Raceway Solar Project in Lancaster, Calif., as well as a contract with Terra-Gen LLC for 85 MW/340 MWh at the sprawling Edwards & Sanborn solar-plus-storage project in Kern County, building on a 50-MW contract at the site approved in 2020.

The PUC approved contracts with Leeward Renewable Energy Development LLC for its 126-MW/504-MWh AVEP BESS project in Rosamond, Calif., and with an affiliate of MN8 Energy Inc. for 73.8 MW of four-hour storage at its American Kings BESS 1 array in Lemoore, Calif., part of its existing 128-MW American Kings Solar Project.

While prices for SCE's six approved contracts are confidential, California Public Advocates, the PUC's ratepayer advocacy office, expressed concern that they were negotiated at a time when lithium carbonate feedstock prices were rising steeply, and it called for the commission to reject the contract with Calpine's Nova IV "because it is high priced," according to the regulator.

But the PUC approved the deal and agreed with SCE that "a drop in lithium carbonate pricing will not necessarily result in an immediate drop in the pricing of energy storage resources as sellers may already have battery agreements in place and prices are a reflection of a variety of factors including, but not limited to, lithium carbonate prices."

Regulators on June 8 also approved Pacific Gas and Electric Co.'s request to raise the price of its contract with Origis Energy Ltd. for 99.7 MW of capacity from the Caballero Battery Storage Project in Nipomo, Calif. The contract, with confidential pricing, was signed in 2021 and approved in April 2022. But the PG&E Corp. utility subsidiary flagged unprecedented changes in the energy storage market since the deal was signed, including the cost battery metals and increases in interest rates.

The renegotiated price is "reasonable when considering current market conditions in their totality," according to PUC's resolution.

Pacific Gas and Electric obtained permission to raise prices on four other energy storage projects in December 2022, part of a wave of renegotiated US battery deals.

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