To Avoid Blackouts, California’s Installing More Big Batteries Than All of China

Source: By David R Baker, Bloomberg • Posted: Thursday, April 1, 2021

The state is set to become a global test case in using batteries to back up wind and solar power

AES Corp. in January commissioned a 100-megawatt battery installation in Long Beach, California, using Fluence batteries.

AES Corp. in January commissioned a 100-megawatt battery installation in Long Beach, California, using Fluence batteries. Photographer: Bing Guan/Bloomberg

With summer’s heat approaching, California’s plan for avoiding a repeat of last year’s blackouts hinges on a humble savior – the battery.

Giant versions of the same technology that powers smart phones and cars are being plugged into the state’s electrical grid at breakneck speed, with California set to add more battery capacity this year than all of China, according to BloombergNEF.

It will be the biggest test yet of whether batteries are reliable enough to sustain a grid largely powered by renewables. Last year, when the worst heat wave in a generation taxed California’s power system and plunged millions into darkness in the first rolling blackouts since the Enron crisis, many blamed the state’s aggressive clean-energy push and its reliance on solar power. Should a heat wave strike again this summer, it will be up to batteries save the day.

Their success or failure may even have implications for President Joe Biden’s ambitious plan to achieve a carbon-free electricity system by 2035 – which would require massive battery deployment and the expansion of renewable energy systems across the nation.

“This is going to be the preview summer for batteries in California, and we want to make sure this initial chapter is as successful as possible,’’ said Elliot Mainzer, chief executive officer of the California Independent System Operator, which runs the grid across most of the state.

By this August, the state will have 1,700 megawatts of new battery capacity — enough to power 1.3 million homes and, in theory, avert a grid emergency on the scale of last year’s.

It won’t be easy. The state’s plan to eliminate greenhouse gas emissions by 2045 may require installing 48.8 gigawatts of energy storage, according to a report by three state agencies — more than five times the output of all the grid-scale batteries currently operating worldwide. Other countries are also doubling down on batteries, with China on track to increase capacity to 222 gigawatts by the middle of the century from 1.4 gigawatts in 2019. Australia has a pipeline of grid-scale battery projects totaling more than 11 gigawatts, according to BNEF.

But batteries do have two major limitations – time and cost. Most of the battery packs now available are designed to run for just four hours at a stretch. While that makes them a good fit for California, where electricity supplies can be strained in early summer evenings after solar power shuts  down, batteries would not have prevented the multi-day outage that paralyzed Texas in February. A battery can only operate for so long before it needs to recharge.

“If batteries last four hours, then that’s not really going to do the job,” said Kit Konolige, senior analyst with Bloomberg Intelligence. “It’s still somewhat unproven, using batteries for a large portion of capacity.”

Inside The AES Alamitos Energy Center And Battery Storage Project

The Alamitos battery energy storage system (BESS) at the AES Alamitos Energy Center in Long Beach. Photographer: Bing Guan/Bloomberg

Utility-scale batteries are also more expensive than “peaker” gas plants, commonly used as back-up generation when demand is high. Following last year’s blackouts, critics lambasted the state for retiring so much inexpensive, gas-fired power under its environmental regulations. Including construction and financing, batteries cost about $125 a megawatt-hour versus $109 for gas, according to BloombergNEF data.

Still, California sees batteries as a way to replace those peaker plants. Not only are they a lot faster to permit and build, batteries can generate income by letting owners arbitrage power prices, charging when electricity is cheap and discharging when it’s expensive. They also offer other grid services like stabilizing voltage throughout the day.

“A peaker runs for a few hours in the evening hours, and then it shuts off, and that’s all it can do,’’ said Kiran Kumaraswamy, vice president of market applications at Fluence, an energy storage joint venture of Siemens and AES Corp. “You’ve got to be able to provide that peak capacity but also optimize around how much money you can make at other times.’’

While more battery projects are coming online as the price of lithium-ion cells drops, the rollout has not always been smooth. Sporadic fires have struck grid-scale batteries, particularly in South Korea, one of the first countries to invest heavily in energy storage. But those incidents have become rare as electric utilities and power companies gain experience with the technology.

“There’s been enough deployment around the world and operating history that utilities seem to be comfortable with it,’’ said energy consultant Mike Florio, a former member of the California Public Utilities Commission. “It seems like the performance has been as expected, if not better.’’

Tesla CEO Elon Musk Attends Powerpack Project Event at the Hornsdale Windfarm

Tesla Powerpacks form the 150-megwatt lithium-ion battery at the Hornsdale wind farm, operated by Neoen SAS, near Jamestown, Australia. Photographer: Carla Gottgens/Bloomberg

But will batteries prevent blackouts? So far, they’ve been credited with helping prevent outages elsewhere, most notably in Australia where Tesla and France’s Neoen SA have built a 150-megawatt lithium-ion installation. That bodes well for California, where the buildout in combination with other measures should give the state enough of a cushion to prevent blackouts this summer, according to Konolige.

Just in case, the state has also delayed the planned closure of some gas plants and beefed up “demand response’’ programs that cut power when needed to some customers in exchange for a lower rate or other compensation. Public officials — including Governor Gavin Newsom, facing a likely recall election — have a powerful incentive not to get caught short two years in a row.

“It would be an ugly situation to run into something similar to last summer,” Konolige said. “To me, that’s a strong indicator that it’s unlikely to happen this year.”

— With assistance by David Stringer, and Mark Chediak