PG&E’s Recording-Breaking Battery Proposal Wins Approval From Regulators

California utility regulators approved PG&E’s proposal to
build the two largest battery systems in the world.

The four-to-one vote marks a landmark development in
California’s quest to decarbonize its electrical system by shifting
from natural gas to non-emitting sources for flexible power.

“Not only will this help California integrate solar and reduce
the need to ramp up polluting gas plants in the late afternoon, but
it will also provide local reliability needs in an area that is
currently highly reliant on gas-fired generation,” said Matt Vespa,
staff attorney at Earthjustic, in an email Thursday. “We are
getting multiple benefits, pushing gas off the system, and moving a
step closer to a decarbonized grid.”

The vote followed from the California Public Utilities
Commission’s January decision to
reject out-of-market payments
to three aging Calpine gas plants
for their grid reliability services. Instead, the CPUC asked
PG&E to procure new energy storage, believing that would
provide a better deal for ratepayers.

PG&E came back in July with an
ambitious proposal
: four projects, totaling 567.5
megawatts/2,270 megawatt-hours, to go into the
transmission-constrained Moss Landing area south of the San
Francisco Bay.

The portfolio includes a 300-megawatt/1,200-megawatt-hour
system that Vistra Energy would build in an existing power plant
owned by its subsidiary Dynegy, and a
182.5-megawatt/730-megawatt-hour Tesla system that PG&E would
own at a substation nearby.

For the clean energy industry, these projects would be the
largest proof of concept yet that a grid can abandon existing gas
infrastructure and meet its needs with renewables and flexible
energy storage. But no major grid investment is quite so
simple.

This proposal drew opposition from an unusual coalition (which I
covered in detail for GTM Squared subscirbers
here
): the ratepayer advocate, gas generator Calpine (whose
request for payment launched the whole saga), and the California
Direct Access Customer Coalition and California Community Choice
Association.

They argued the investment is a bad use of ratepayer funds. A
crucial development buoyed their case: grid operator CAISO approved
a $14 million transmission upgrade that will alleviate the local
capacity stress for 2019. With that option, paying for the hugest
battery procurement in history became a heavier lift.

The ratepayer advocate’s job is to keep utility bills low for
the public. Not so long ago, that meant taking aim at utility
requests to build big new gas plants at expense to ratepayers.
These days, California utilities’ big projects have become clean
energy projects, and they have environmentalists on their side.

At issue is how to weigh the socialized costs of new grid
infrastructure against the benefits of cleaner air, reduced carbon
emissions and progress toward the legislative goals of a carbon
free electricity system and societal emissions reductions.

This tension played out earlier this year when the ratepayer
advocate
almost scuttled the second Preferred Resources Pilot
, awarded
two years ago to try out new distributed grid innovations.
Regulators overrode those objections and approved ratepayer funding
for the pilot, as they did Thursday with the Moss Landing
batteries.

With approval secured, it is now up to PG&E and the
participating companies to deliver on their projects. Then real
work sets in: proving that these massive battery plants can balance
the local grid, clearing the way for more gas gas plant
retirements. Gas plants can run as long as the gas keeps flowing;
batteries run out of charge, which could be a problem in a
prolonged heatwave. 

The experience at Moss Landing will provide vital data about how
the gas-to-storage transition works in practice.

Source: FS – GreenTech Media
PG&E’s Recording-Breaking Battery Proposal Wins Approval From Regulators