Blackouts looming, California speeds battery deployment after Aliso Canyon gas leak
A new proposal shows how the gas shortage may accelerate storage’s integration into the bulk power system
If there is a silver lining to California’s massive Aliso Canyon methane leak, it could be for energy storage projects.
The leak has led to plans for the fast track authorization of two energy storage projects totaling 37.5 MW (150 MWh) that are being built by AES Corp. for San Diego Gas & Electric (SDG&E).
The projects would be put up in about six months, about a third of the time it would take to build a gas-fired power plant.
“In our world, this is nothing short of incredible,” Alex Morris, director of policy and regulatory affairs at the California Energy Storage Alliance, said.
The project is a demonstration of the “rapid procurement potential” of energy storage, said Matt Roberts, executive director of the Energy Storage Association. It also shows that given the right mix of policies and circumstances, batteries can serve major bulk power system needs typically reserved for traditional power plants.
The Aliso Canyon leak
The leak in natural gas storage facilities owned by Southern California Gas in the Los Angeles basin was discovered last October. Thousands were evacuated from nearby communities due to what has since been recognized as the single worst methane leak in U.S. history.
The repurposed oil field on the northern edge of the San Fernando Valley has 115 wells that store up to 86 billion cubic feet (bcf) of gas for distribution to homes, businesses, and power plants.
After nearly four months, SoCal Gas was able to plug the leak, but the damage was already done. Aliso Canyon was down to 15 bcf of gas and there is a moratorium on further injections. The lack of that stored gas has created reliability concerns for both gas and electric customers.
Realizing that the short supply of stored gas could put the region at risk of blackouts, utilities and regulators mobilized to reduce energy usage. In May the California’s Public Utilities Commission (PUC) issued a directive freeing up utility funds that could be used to increase energy efficiency programs.
In addition to asking electric customers to reduce consumption and expanding demand response programs, the state’s action plan for Aliso Canyon calls for revised tariffs to help enable gas shippers to more tightly match amounts of gas sent with amounts needed, so that gas does not need to be stored.
The action plan also calls for using up the remaining 15 bcf of gas, but state authorities are still concerned that mismatches of supply and demand could result in interruptions of electric supply.
Gas from the Aliso Canyon stage fields supply roughly 10,000 MW of plants in the region. According to the California Energy Commission (CEC), on a peak demand day in the winter electricity generation accounts for about 1 bcf of gas or 20% of peak demand gas. In summer peak electric generation could use 1.9 bcf on a peak day or 60% of peak demand.
The CEC says that using up the remaining gas at Aliso Canyon could reduce but not eliminate the possibility of electric interruptions and noted that if the remaining stored gas is used up in the summer, the state could face a greater risk of electric interruptions.
In addition to asking gas shippers to more tightly match supply and demand, the Los Angeles Water and Power Authority (LADWP), which provide much of the power used in the region, has been authorized to change how it operates.
LADWP will curtail gas hedging, curtail energy and capacity block sales, and stop economic dispatch. All those measures will increase costs for the utility and its customers, but it will also free up LADWP to operate more flexibly, so that it does not use scarce gas supplies unless needed.
Already once this year, LADWP was been cleared by California air regulators to burn diesel fuel in generators that typically burn gas, California Public Utilities Commission Commissioner Catherine Sandoval told a regulatory conference last month. It would be a “miracle,” she said, if the Los Angeles basin got through the whole year without a power interruption due to Aliso Canyon.
While bringing new front-of-meter storage online for this summer’s demand is not feasible, Sandoval said it will likely have a big role to play in the future, as the future of the gas storage facility remains uncertain.
Emergency energy storage
To further shore up the state’s electric grid against the possibility of service interruptions, the state agencies also implemented an expedited plan for energy storage resources.
In May, the PUC began the process for an expedited procurement solicitation for energy storage. The PUC directed Southern California Edison to solicit for a front-of-the-meter storage solution that could be in service Dec. 31, 2016. The leak affected generation in SoCal Ed’s territory, and LADWP, a municipal utility, is under PUC jurisdiction.
It turned out, though, that SDG&E was already far along on a request for offers to fill its 2016 Preferred Resource Local Capacity Requirement (LCR). The utility was looking for both turnkey, utility-owned energy storage projects and third-party-owned projects that could be online between 2018 and 2021.
Bids were due July 1, but respondents bidding on the utility-owned projects had to submit offers before May 16, which turned out to be 10 days before the PUC issued its Aliso Canyon solicitation.
Although SDG&E was not originally mentioned in the PUC resolution regarding the Aliso energy storage solicitation, the resolution was modified based on comments suggesting that SDG&E leverage its ongoing LCR request for offers to find projects that could come online in the same time frame.
“By the date the resolution was issued, SDG&E had essentially completed its pre-evaluation and identified qualified contractors,” Josh Gerber, SDG&E’s manager of advanced technology integration, said. “As a result, SDG&E was able to immediately approach qualified bidders to assess their willingness and ability to execute expedited projects in the 2016 timeframe.”
