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Lithium-ion takes early lead in Calif. race for longer-lasting energy storage

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Lithium-ion takes early lead in Calif. race for longer-lasting energy storage

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LS Power's Gateway Energy Storage Project in Southern California initially was built with one hour of capacity. A new project in Kern County, Calif., includes eight hours.
Source: LS Power Group

California Community Power on Jan. 19 unanimously approved an agreement with an affiliate of LS Power Corp. to supply an eight-hour energy storage project relying on lithium-ion batteries, highlighting the technology's early lead in the Golden State's search for longer-duration storage assets.

The local government-run agency, formed in 2021 to pool the buying power of 10 community choice aggregators, or CCAs, authorized the 15-year contract for 69 MW/552 MWh of energy storage from LS Power's Tumbleweed project in Kern County, Calif., beginning in 2024. The seven CCAs participating in the project — the first in their joint request for proposals, or RFP, for 500 MW of long-duration energy storage — must still grant individual approvals.

California's recent surge in energy storage capacity has focused largely on four-hour lithium-ion facilities, but longer durations of storage are becoming increasingly needed by the market.

LS Power beat out competing lithium-ion proposals, as well as offers that included flow batteries, compressed air and other emerging technologies. The contract will help the CCAs comply with a statewide requirement to add at least 1,000 MW of energy storage resources capable of at least eight hours of discharge by 2026.

The 10 highest-scoring projects proposed in response to the aggregators' RFP were lithium-ion battery projects, ranked by such factors as contract price, project value, developer experience, technology viability and environmental attributes.

"We were surprised by that," Siobhan Doherty, director of power resources at Peninsula Clean Energy, one of the participating CCAs, said in an interview ahead of the vote. "We were interested in seeing different types of technologies."

Of the 98 primary offers considered in the evaluation process, 56 were for lithium-ion projects. The CCAs conducted deeper analysis of other approaches, including pumped hydroelectric storage, iron flow batteries, compressed air, liquid air, gravity-based storage, hydrogen and second-life electric vehicle batteries.

"That was coming from this interest in having a diversity of resources in our various portfolios," Doherty said.

Other CCAs participating in the procurement include CleanPowerSF, Redwood Coast Energy Authority, San Jose Clean Energy, Silicon Valley Clean Energy, Sonoma Clean Power and Valley Clean Energy.

If fully approved, Tumbleweed would not be the first lithium-ion battery agreement with at least eight hours of duration. AES Corp., for instance, has a contract for an eight-hour project in Hawaii. LS Power is also seeking to build an eight-hour facility at its Ravenswood natural gas- and oil-fired power plant in Queens County, N.Y.

'Immense progress' for other technologies

Despite losing out to lithium-ion in this first round of contracting, "non-lithium-ion options" remain of great interest to Peninsula Clean Energy as part of the California Public Utilities Commission's requirement for long-duration storage and the CCA's 100% renewable energy target, Doherty said. Proposals in response to the 500-MW RFP may now be "stale" because of progress made since it was issued in October 2020, possibly requiring a follow-up request, Doherty added.

Long-duration energy storage companies say they have taken big leaps during the interim period.

"A year-plus ago, we would not have been able to ship a commercial product," said Eric Dresselhuys, CEO of ESS Tech Inc., a developer of an iron-based flow battery systems that listed on the New York Stock Exchange in October through a merger with a special purpose acquisition company. "Fast-forward to today, we're in production and we're shipping commercial product. ... I think there's been immense progress."

The Oregon-based company recently announced separate 3-MWh projects with Portland General Electric Co. and San Diego Gas & Electric Co. to be installed in 2022. The latter project will be part of a solar-powered microgrid in Cameron Corners, Calif., where it will support critical services during precautionary outages to prevent power lines from triggering wildfires.

ESS is targeting opportunities requiring four to 12 hours of storage capacity.

Since the California CCAs launched their search for long-duration storage, private and public investors have given lithium-ion alternatives a considerable boost. That includes committing more than $1 billion in funding to help alternatives to lithium-ion batteries scale up their manufacturing capabilities and launch commercial products.

The governors of California and New York in January proposed new funding and targets, respectively, that could further build momentum for long-duration storage technologies. The U.S. Department of Energy in July 2021 initiated an effort to slash the cost of long-duration energy storage by 90% within the next 10 years.

The exact pricing of LS Power's Tumbleweed contract was not disclosed. A spokesperson for the developer declined to comment on how large the total Tumbleweed storage project will be, or whether it will charge from the grid or a related solar farm. Tumbleweed Energy Storage LLC, an LS Power subsidiary, also has a 15-year contract starting in 2024 with East Bay Community Energy, another CCA, for a 50-MW, four-hour lithium-ion project in Kern County, known as the Tumbleweed Energy Storage facility.

LS Power also owns the 125-MW Tumbleweed Solar Project in the same county, acquired from First Solar Inc. in 2021.