Southern California Edison Co. can procure at least 20 MW of energy storage projects to alleviate power supply shortages in the Los Angeles area due to limitations on the Aliso Canyon underground natural gas storage facility, the California Public Utilities Commission decided Aug. 9.
The plan responds to a 2017 state law that required new cost-effective storage projects to mitigate the impact of the well failure at Aliso Canyon. Under the law, the storage projects must be owned by third parties must be capable of providing a four-hour duration resource adequacy service.
This is not the first time the state has sought storage to address Aliso Canyon. In 2016, the PUC required SoCalEd to conduct an expedited procurement and allowed San Diego Gas & Electric Co. to expedite storage from a related solicitation, resulting in almost 100 MW of grid-level storage, the order noted.
The PUC's order approves Edison International subsidiary SoCalEd's plan to conduct a competitive solicitation for energy storage projects targeting locations where they could help both gas and electric system reliability, the order explained.
SoCalEd plans to seek projects with a discharge duration of at least four hours and up to 10 hours, depending on the need at certain locations, the plan said. The projects would come online by June 1, 2021, SoCalEd said in its plan, outlined in an April advice letter.
"Electrical system reliability and performance can be improved when energy storage is located in high load areas, in which case, energy storage can act as local generation by reducing load and maintaining reliable service in constrained areas," SoCalEd said in the advice letter.
The procurement will focus on the Moorpark sub-area of the Big Creek/Ventura local reliability area and the Western LA Basin sub-area of the Los Angeles Basin local reliability area. SoCalEd identified several substations at which storage resources could ease grid constraints, the PUC order explained. In terms of cost-effectiveness, SoCalEd can deviate from the net present value if it can prove that the projects provide higher value, the PUC said.
A combination of reduced gas storage withdrawal capacity and Southern California Gas Co. system outages have contributed to very high gas and energy prices this summer, Morris Greenberg of S&P Global Platts Analytics said. "Battery storage currently plays a limited, but growing role, in the supply mix," Greenberg said. "Its role in alleviating fuel supply risks may diminish once the SoCalGas system recovers from current outages."
"This is the type of solution we think needs to happen more often," said Laura Wisland, senior manager of Western states energy with the Union of Concerned Scientists. In this case, there's a very acute need to deal with a potential grid reliability problem linked to Aliso Canyon, she said. But the state could apply this approach more broadly, she explained.
"We think more of this type of procurement needs to be baked into the larger resource adequacy process," Wisland said. And in the long term, utilities could craft their integrated resource plan filings to strategically locate these resources so they can meet local capacity requirements, she said. Wisland was an author of a recent UCS study that found, in part, that California could retire more gas-fired plants if alternatives like storage are used to meet local capacity requirements.
SDG&E and SoCalGas are subsidiaries of Sempra Energy.
Kate Winston is a reporter for S&P Global Platts which, like S&P Global Market Intelligence, is owned by S&P Global Inc.