Energy Storage Projects to Replace Three Natural Gas Power Plants in California

Tesla batteries and behind-the-meter Li-ion batteries could deliver electricity to meet peak Silicon Valley demand

Energy storage could get a big boost if California officials green light plans by utility Pacific Gas and Electric Co. to move forward with some 567 megawatts (MW) of capacity.

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Included in the mix is more than 180 MW of lithium-ion battery storage from Elon Musk’s Tesla Inc. The Tesla-supplied battery array would be owned by PG&E and offer a four-hour discharge duration. The other projects would be owned by third parties and operated on behalf the utility under long-term contracts. All of the projects would be in and around Silicon Valley in the South Bay area.

Once deployed, the storage would sideline three gas-fired power plants: the 605-MW Metcalf Energy Center, the 47-MW Feather River Energy Center, and the 47-MW Yuba City Energy Center that lack long-term energy supply contracts with utilities. Even without the contracts, the state’s grid operator identified the units as needed for local grid reliability. It, and independent power producer Calpine, which owns the plants, asked federal regulators to label the plants as “must run.” That would let them generate electricity and be paid for it even without firm utility contracts.

Both PG&E and California’s utility regulators object to that idea. They argue that the must-run designation without firm contracts would distort the state’s power market and lead to unfair prices. Backing up its objection, regulators earlier this year directed the utility to seek offers to replace the gas-fired power plants with energy storage.

The utility says that its search prompted more than two dozen storage proposals with 100 variations. PG&E narrowed the list to four, which it presented to state regulators in late June.

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