Startup inks deal with Tesla to install its industrial batteries in Southern Calif.

Source: Debra Kahn, E&E reporter • Posted: Tuesday, June 9, 2015

A California energy storage startup announced yesterday that it will use Tesla batteries to supply Southern California with electricity.

Advanced Microgrid Solutions has selected Tesla’s new Powerpack system as the first battery it will use in commercial and industrial buildings as part of a contract it won from Southern California Edison last year to replace power from the shuttered San Onofre nuclear plant and other aging gas plants.

The industrial-use batteries, which Tesla unveiled last month along with a home-sized version, come in 100-kilowatt-hour blocks and can be stacked to any scale (EnergyWire, May 8).

AMS said it would use up to 500 megawatt-hours of the batteries in its projects, the first of which is 10 megawatts of storage in commercial and industrial buildings in Irvine, Calif., slated to come online next year. AMS’s business model is to install batteries in a fleet of buildings and then earn money from utilities for switching the buildings to run on battery power during times of peak demand. That would save the utilities from having to buy electricity at high prices and allowing them to postpone upgrading distribution systems to handle higher peak loads.

At 500 MWh and with a battery capacity of roughly four hours, the purchase will more than cover AMS’s contract last year to supply SCE with 50 MW, which it won out of 260 MW total in energy storage contracts that the utility handed out in order to fulfill a statewide target of 1.3 gigawatts of storage by 2022.

AMS was founded in 2013 by two longtime California energy industry veterans: Susan Kennedy, a top adviser to former Gov. Arnold Schwarzenegger (R) and former member of the California Public Utilities Commission, and Jackalyne Pfannenstiel, a former chairwoman of the California Energy Commission and former assistant secretary of the Navy under President Obama overseeing energy and environment (EnergyWire, Nov. 6, 2014).

The company also employs another well-connected former adviser to both Schwarzenegger and Gov. Jerry Brown (D) on renewable energy: Vice President of Policy and Markets Manal Yamout.

Pfannenstiel said the company chose Tesla’s batteries over competitors’ in a request for proposals but didn’t go into detail about why Tesla’s were superior.

“We had said that we’re technology-agnostic,” she said. “We’ll keep looking for other technologies that fit, but for this first go-round, the Tesla battery works for us.”

The batteries can also be coupled with rooftop solar systems to maximize greenhouse gas savings. Tesla and SolarCity are currently preparing to test a combined panel-and-battery system (ClimateWire, May 29).

“I don’t know exactly what buildings in Irvine are going to be our hosts for these batteries, but I would either expect that they have solar or could have solar,” Pfannenstiel said.

She said AMS would be interested in expanding to other states besides California even if they lack storage mandates.

“The concepts behind the company exist even without the PUC investigation of storage because there’s always been demand response,” she said. “It’s a good idea even without the PUC asking for it, and I know it has applicability all across the country no matter what their regulatory scheme.”

It’s an improvement on traditional voluntary demand-response programs, she said, because AMS guarantees the demand will be curtailed.

“Utilities could never really count on it,” she said. “They were never quite assured that even if they paid customers, on the hot summer afternoon, customers would actually do what they needed them to do. This is an assurance to the utility.”