Southern California Edison Inks Another Massive Round of Utility-Scale Battery Contracts

Six months after inking California’s largest single energy storage procurement, utility Southern California Edison has added another three massive utility-scale battery projects to its portfolio—plus a behind-the-meter battery project with Sunrun.

Monday’s new contracts include 585 megawatts of lithium-ion batteries: NextEra Energy’s 325-MW Desert Peak project, Recurrent Energy’s 200-MW Crimson project, and 174 Power Global / Hanwha Group’s 60-MW Eldorado Valley project.

It also adds a 5-MW behind-the-meter battery aggregation from Sunrun, expanding on a pilot project with the solar-storage provider earlier this year to add a full-scale deployment for delivery in 2023.

The four-hour duration 2.63 gigawatt-hours to an SCE battery portfolio that’s already topping the U.S. utility record books. In May, SCE announced contracts for 770 megawatts of large-scale battery contracts with vendors including NextEra, TerraGen Power, LS Power and Southern Power, equating to more than 3 gigawatt-hours of storage capacity set to come online by August 2021.

The new contracts bring SCE’s energy storage total to just more than 2 GW installed and procured to date. If approved by the California Public Utilities Commission, the NextEra contract is set for delivery in 2023, while the other two utility-scale projects are scheduled to come online in 2022.

Meeting short-term grid reliability needs

The new projects will help meet both short- and long-term goals for California’s only electric-only investor-owned utility. In the short term, the new procurement meets last year’s California Public Utilities Commission order to deliver a combined 3.3 gigawatts of resources by 2023 to help the state manage grid reliability.

Bill Walsh, SCE vice president of energy procurement and management, declined to disclose the price of the contracts in a Monday interview.

“We had a lot of competition in the solicitation, and we were fortunate to pick up the most cost-effective ones for our customers,” he said.

SCE has taken the lead in securing battery storage to meet those targets, but others are following suit. Pacific Gas & Electric is contracting seven battery projects totaling 423 megawatts, or nearly 1.7 gigawatt-hours of energy storage capacity, for August 2021 delivery. Municipal utility Los Angeles Department of Water and Power has contracted for up to 300 megawatts/1.2 gigawatt-hours of storage being built alongside 400 megawatts of solar power being built by 8Minute Energy.

CCAs, the city and county entities that serve about one-quarter of the state’s electricity customers, have added 1,700 MW of renewable energy and more than 1,000 MW of battery energy storage over the past year, bringing total capacity to more than 6,000 MW.

August’s rolling blackouts during a regionwide heatwave highlighted the state’s need for grid resources that can store and shift its growing share of generation to serve demand peaks coming later in the day, as the sun goes down and solar power fades.

Last month the CPUC launched a proceeding considering emergency steps to relieve the possibility of another grid emergency next summer, with options ranging from bolstering supply-side resources like natural gas-fired power plants or utility-scale batteries to increasing demand-side resources like behind-the-meter batteries and demand response.

The CPUC and state grid operator CAISO are in the midst of reforming the resource adequacy (RA) regime that guides grid capacity procurement for the state, including the rules for how utility-scale and behind-the-meter batteries can securely serve the state’s new evening peaks.

“We’re moving from about 200 megawatts of storage on the system, essentially, to thousands of megawatts on the system this coming summer,” Walsh said. “We’re working closely with CAISO and other stakeholders to assure these resources are available during this crucial net peak.”

Moving toward California’s 2045 zero-carbon goal

SCE has already contracted for hundreds of megawatts of front-of-meter storage under the state’s 2013 energy storage mandate, and to boost reliability after the closure of the Aliso Canyon natural gas storage facility.

It’s also contracted for 180 MW of behind-the-meter batteries under a 2014 plan to replace the capacity lost from the closure of the San Onofre nuclear power plant. Its new contract with Sunrun is meant to expand that capacity through a combination of existing Sunrun solar-battery customers, and installing new systems in low-income and disadvantaged communities, Walsh said.

But SCE sees more grid reliability needs arising by mid-decade, as the state’s last nuclear power plant, Diablo Canyon, closes down. “We’ve said in our public filings that we see an additional capacity need from 2024 and beyond” of up to 5,400 MW between 2024 and 2026, he said.

“This is the first step, in our mind, toward moving toward the clean energy future,” he added. California has set a goal of 100 percent carbon-free energy by 2045, which will require a massive amount of energy storage to shift solar power and other renewable energy from the hours it’s produced to the hours it’s needed.

SCE’s “Pathway 2045” roadmap estimates the state needs to add 30 GW of utility-scale storage and 10 GW of distributed storage to meet the state’s decarbonization goals. The utility forecasts it will need to invest about $170 billion in clean energy generation and energy storage by 2045 to meet that goal, along with up to $75 billion more for grid upgrades to help electrify transportation, heating and other sectors served by fossil fuels.

The state’s three investor-owned utilities are set to invest $1 billion on grid infrastructure and incentives, part of a big boost in EV charging funds accelerated by Gov. Gavin Newsom’s September decision to ban sales of new gasoline-fueled cars by 2035 in response to this year’s destructive and climate change-exacerbated wildfires.

On the building electrification front, the California Energy Commission is now weighing changes to building codes that could make all-electric new buildings far more cost-effective than those using natural gas. More than 30 city and county ordinances banning or restricting natural gas in new buildings have been passed in the state since Berkeley became the first to do so last year.

The renewable and storage capacity SCE is targeting is “the backbone that’s eventually going to provide the clean energy needed, not only to charge electric vehicles, but any sort of building energy needs as we move toward electrification,” Walsh said.