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PG&E eyes 195-MW battery storage unit in bid to replace Calpine gas plants

Pacific Gas and Electric Co. is continuing its search for new energy storage resources to "obviate the need" to renew contracts with Calpine Corp. for the output of three natural gas-fired power plants in Northern California, a move state regulators ordered in January, despite recent settlements that lowered the prices of those contracts.

Among the alternatives is a 195-MW battery storage plant the PG&E Corp. subsidiary plans to propose to the California Public Utilities Commission in June.

The Federal Energy Regulatory Commission on April 30 approved settlements between PG&E, the California ISO and two affiliates of Calpine that cut payments PG&E makes under so-called reliability must-run agreements with the three facilities. The plants include Calpine's 596.9-MW combined-cycle Metcalf Energy Center in Santa Clara County and a pair of 45-MW gas peakers in Sutter County, the Feather River Energy Center and Yuba City Energy Center.

The settlement with Metcalf Energy Center LLC slashed annual fixed revenues of $72.5 million to $43 million in 2018 (FERC Docket No. ER18-240), while the settlement with Gilroy Energy Center LLC reduced annual fixed revenues of $4.5 million for Yuba City and $4.4 million for Feather River to $3.5 million each. (FERC Docket No. ER18-230)

Both settlements include additional contract amendments and stipulations should parties extend the agreements beyond their current Dec. 31 expiration dates. PG&E and the PUC had previously opposed the contracts.

Despite the improved conditions for PG&E, the utility is advancing a request for proposals for energy storage resources to help replace the Calpine contracts, a utility official said in an email. Under a solicitation issued in February, PG&E is seeking bids for third-party and utility-owned projects, including a 195-MW, utility-owned battery energy storage system with four hours of storage at its Moss Landing substation. Other offers for utility-owned storage projects must be at least 10 MW in size. Third-party offers must be at least 1 MW but can include smaller aggregated systems.

"The energy storage resources are intended to provide reliability services in the form of local capacity and voltage support in the [affected] local sub-areas," PG&E spokesman Paul Doherty said, and would also help integrate renewable generation. The request seeks storage resources that can come online between 2019 and 2021. The utility also is working with the ISO "to implement cost-effective transmission infrastructure solutions which may eliminate or mitigate the local constraints" identified by regulators, the spokesman said.

PG&E plans to submit the proposed energy storage contracts to the PUC for approval by June 28.