Tesla Gives the California Power Grid a Battery Boost
The installation, capable of powering roughly 15,000 homes over four hours, is part of an emergency response to projected energy shortages stemming from a huge leak at a natural gas storage facility.
The project, which officially comes online on Monday, is an important and surprising demonstration of how utilities can use enormous collections of batteries in place of conventional power plants.
It is also an indication of how rapidly Tesla is moving to transform itself from a luxury electric carmaker into a multifaceted clean energy company.
“I had relatively limited expectations for the battery industry in advance of 2020. I thought that it would not really accelerate and begin to penetrate the electric grid or the transportation world for a while to come,” said Michael J. Picker, president of the California Public Utilities Commission. “Once again, technology is clearly moving faster than we can regulate.”
Manufactured, shipped, installed and readied for operation in roughly three months, the batteries are connected to distribution circuits at Southern California Edison’s Mira Loma substation in an industrial section of Ontario, about 40 miles east of Los Angeles.
Tesla has developed or won contracts for similar installations elsewhere in California, as well as in a handful of other American states and overseas. And although the company had been importing some components, it is now making and putting together all of the major parts of each battery assemblage, called the Powerpack, at its Gigafactory outside Sparks, Nev.
“Essentially, we can go and pour a slab and install the basic wiring, but each one of our Powerpacks is quite self-contained,” said JB Straubel, Tesla’s chief technical officer. All of the batteries, cooling and safety systems, and other equipment are inside the casings, ready to load onto delivery trucks. “Our vehicle work lays a lot of the architectural foundation for this,” Mr. Straubel said. “It’s not as if we’re starting from scratch.”
The Mira Loma project was able to come together so quickly in part because the state’s utilities already had several battery storage projects in the works, some involving Tesla. As the state has aggressively pursued the use of renewable energy sources, especially solar, in an effort to combat climate change, the traditional patterns of supply and demand have turned inside out.
California is on track to have an overabundance of energy during the day when its many solar panels are producing energy, but that supply drops sharply as the sun sets, precisely when demand rises as residents come home to use appliances and, increasingly, charge their cars.
At the same time, the state’s aging nuclear plants are either closed or being phased out, putting even more pressure on utilities to find alternative ways to feed the grid. Storage is a natural solution, utility executives say, helping to smooth out variations in the power flow from rooftop customers as well as when solar falls off and conventional plants haven’t yet filled the gap.
Ronald O. Nichols, president of Southern California Edison, said the utility was looking for more ways to use that energy rather than having to curtail solar production, “which makes no greenhouse gas reduction sense.” By 2024, he said, the California system was expected to have far too much energy for at least a few hours each day, “so we want to find a way to use that energy productively, and battery storage is certainly a piece of that.”
The utility’s need for storage was amplified after the sudden closing of the San Onofre nuclear plant in 2013. To fill that gap — and fulfill a state mandate to add storage to its energy portfolio — the utility awarded several contracts for battery storage.
When the scale of the 2015 leak at the Aliso Canyon gas storage facility in the San Fernando Valley became clear, the commission moved to streamline the process for storage projects. That led to the Tesla project at the Mira Loma substation, as well as a power purchase agreement for electricity from a similar battery project that AltaGas had installed at a natural gas generator it owns in Pomona.
Although battery storage is still costly, its price is comparable to the natural gas plants known as peakers, which can ramp up and down quickly to handle spikes in demand, utility executives say. This is particularly important in Southern California, which is constrained by geography and strict environmental regulations in building new power plants.
Given the cost of land and the air quality requirements that limit the number of hours plants can operate, Mr. Nichols said, new natural gas plants can cost a lot to build.
In contrast, batteries are more flexible and do not require the same kinds of infrastructure, including water and fuel supply conduits, as conventional generators, avoiding the need for lengthy environmental reviews and permitting processes.
As a result, energy analysts say, battery installations are likely to become increasingly common, whether to vary the number of power supply options to enhance reliability or as part of a move away from fossil fuels in order to meet climate and other environmental goals.
As an early adopter of renewable technologies, particularly solar, California has been willing to pay high prices, and has in turn helped lower them for other markets, said Swami Venkataraman, a senior vice president at Moody’s Investors Service who analyzes the utility sector. He sees parallels in how the state is approaching storage.
“California is looking to the future where this would start a cycle where storage becomes cheaper all the time,” he said. “In the long run they would have less need — and maybe no need — for new natural-gas generation.”