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AltaGas eyes energy storage possibilities at Calif. power plants

AltaGas Ltd.is looking at the possibility of adding energy storage at a pair of powerplants it owns in California as part of a state-backed push to boost the use ofrenewable energy.

The Calgary, Alberta-based merchant power generator operatestwo natural gas-fired peaking plants in the southern part of the state,Blythe Energy I andPomona, both ofwhich are well-located to offer stored electricity to back up the renewablesplants that California expects to provide 50% of its power, CEO David Harrissaid on a conference call. Storage could help diversify AltaGas's offerings inSouthern California ahead of expiring power purchase agreements and anticipatedrequests for battery banks.

"Nothing would indicate right now that it would be arequirement for recontracting, it's just added optionality and flexibility thatwe can bring to bear with those assets," Harris said on a July 21 call. "Allof our assets in California have a tremendous amount of flexibility withrespect to diversification of product line."

AltaGas, which is a major regional midstream operator in theshale gas fields of northeastern British Columbia, owns gas distributionutilities as well as power plants across Canada and the U.S. The Pomona plantis in the Los Angeles area and Blythe is near the Arizona border, giving bothconnectivity with key portions of the western power grid in an area where newfacilities are difficult to locate, providing the company with a cost advantage.

"As it relates to cost, a battery out of the gate isnot necessarily a significant cost. They're relatively low to moderateinvestments," Harris said. "It's more with going in and being acooperative partner with the market and utilities as they want to contractthose type of opportunities."

California utilities are ramping up renewables production inthe wake of a law passed last year that requires retail power sellers andpublicly owned utilities to get half of their electricity from low-emittingsources by 2030. AltaGas's facilities provide power to back-up regular sourcesin times of peak demand and could be expanded because of the intermittentnature of some renewables even as other fossil fuel sources are dropped. Thecompany plans to repower the 45-MW Pomona plant, which is a cogenerationfacility, with more modern equipment. Talks with , whichbuys the plant's output, are ongoing.

"We've had good conversations with Edison aroundPomona," John O'Brien, president of AltaGas's U.S. operations, said on thecall. "We do have the permitting to put an LMS 100 [generator] in there, amore modern, quicker-start unit."