Aliso Canyon shutdown jolts utilities to push energy storage plans

Fewer than four months ago, the still-emerging energy storage industry faced a big challenge.

With the Aliso Canyon natural gas field essentially out of commission after a massive leak, the California Public Utilities Commission called on Southern California Edison and San Diego Gas & Electric to come up with storage solutions to help ward off the risk of power outages for the upcoming winter.

The two investor-owned utilities did not have to come up with a specific amount of storage but they were under a major time constraint: Edison had to find the sources by the end of the calendar year while SDG&E was given roughly the same target deadline.

It seemed like a tall order but in less than three months, SDG&E came back to the PUC saying it had lined up two lithium-ion battery storage facilities totaling 37.5 megawatts that are scheduled to be ready by Jan. 31.

And on Thursday, the PUC is expected to approve Edison contracts for 27 megawatts of energy storage expected to be online by Dec. 31.

“It really is unprecedented to see it happen this quickly,” said Gabriel Petlin, an analyst with the PUC’s energy division.

Colin Cushnie, Edison’s vice president of energy procurement and management, said that the utility plans to add 40 more megawatts of energy storage by the close of 2016, bringing its total to 67 megawatts.

“That was at the high end of our estimate of what might be available in a very short period of time,” Cushnie said.

For supporters of the nascent energy storage market, the quick utility response indicate that the industry is about to live up to the high expectations attached to it.

“What this really shows is how quickly we can add diversity to the fleet in these critical areas,” said Alex Morris, policy and regulatory affairs director at the California Energy Storage Alliance.

The Aliso Canyon facility is the second-largest natural gas storage field in the western United States, and its absence has created worries that grid vulnerabilities may lead to power outages.

Gov. Jerry Brown had ordered state agencies to ensure power system reliability while Aliso Canyon’s 114 wells were inspected.

The latest figures from Southern California Gas — the utility that operates Aliso Canyon — show 20 of the wells at the site have received approval by the state Division of Oil, Gas and Geothermal Resources, but injections won’t begin until that agency completes a safety review and the PUC deems the field is safe.

Edison’s submissions consist of a 20-megawatt/80-megawatt-hour project that will use battery management software, a 2-megawatt lithium-ion battery array and a 5-megawatt lithium-ion system. The extra 40-megawatt projects will come from energy storage devices that will be owned by Edison.

SDG&E signed its agreement with AES Energy Storage for facilities in Escondido and El Cajon.

The cost of energy storage contracts are paid by ratepayers. However, the financial details remain confidential, per PUC rules.

“What I can tell you is we were able to demonstrate … this was a cost-effective deal for our customers,” said Josh Gerber, SDG&E’s manager of advanced technology integration.

The generally accepted figure for chemical, or battery, storage is $500 per kilowatt-hour, although some projects can run a bit higher depending on their complexity, while some academic papers have listed the break-even capital cost for large-scale storage systems at $100 per kilowatt-hour.

“It does have a cost,” Petlin said. “The objective was to avoid some of the other greater costs that are unknown — the cost of power outages, the cost of reliability issues. We can’t put a dollar figure on what the net cost figure is because we don’t know what we’re avoiding.”

As a matter of policy, storage will be part of the California energy mix for years to come if the state is going to meet its ambitious climate goals.

Three years ago, the PUC approved a mandate requiring the state’s three investor-owned utilities to procure 1,325 megawatts of energy storage — roughly the equivalent of two to three combined-cycle natural gas power plants — by 2020. Utility customers will pick up the tab, with estimates for meeting the 2020 targets running from $1 billion to $3 billion.

Renewables such as solar and wind have problems with intermittency — that is, when the sun is not shining and the wind is not blowing. The plan calls for energy storage to fill the gaps.

“To do renewables we’ve got to have storage because solar is having its peak output at 1 p.m. and our peak demands for electricity don’t happen until 8 p.m.,” Gerber said. “We need a way to time-shift that generation to when our customers need it.”

rob.nikolewski@sduniontribune.com