Oakland to Swap Jet-Fuel-Burning Peaker Plant for Urban Battery

Source: Green Tech Media

The deal with Vistra will be the largest standalone storage facility contracted for a community-choice aggregator in California.

JULIAN SPECTOR JUNE 26, 2019

When the Oakland Power Plant fires up, jet fuel exhaust emerges into the urban environment.

OAKLAND, Calif. — Jack London Square reminds a visitor of Oakland’s nautical roots. Seagulls squawk, ships bob in the harbor, commuters rush out of cars or wheel their bikes to the ferry terminal to embark across the San Francisco Bay. Up the wharf, shipping cranes tower over the proposed site of the future Oakland A’s baseball stadium.

In the foreground, a combustion turbine peaker plant sits across the street from the ferry launch, behind an immense ochre-colored vat of the jet fuel that it combusts.

“The plant that’s sitting there has been there for a long time, and it’s been the bane of many West Oakland folks because it is a significant contributor to air pollution here,” said State Senator Nancy Skinner, adding that residents there face higher rates of asthma.

Now the residents who want the plant gone have a new ally: East Bay Community Energy, the locally governed entity that buys power for Alameda County. This community choice aggregator launched in 2018 with a mandate to buy cleaner power than utility PG&E while keeping prices affordable and promoting well-paying jobs.

On Monday morning, EBCE staff arrived at the wharf alongside Skinner, Oakland Mayor Libby Schaaf and other local leaders to sign a set of contracts for clean energy. One of those contracts would rip out the old turbines and replace them with a 20-megawatt, 80-megawatt-hour lithium-ion battery system to meet demand in this pocket of the city without releasing local particulate pollution or greenhouse gases (although it will charge from the grid, resulting in emissions elsewhere).

The project blends several cutting-edge grid trends at once.

It shuts down fossil fuel infrastructure in favor of new cleantech alternatives, serving California’s grid decarbonization law. It also fills a grid reliability need that traditionally would have required more invasive and capital intensive infrastructure, offering yet another example of the non-wires alternative philosophy.

Furthermore, it tests the ability of local organizations to fulfill clean energy pledges for their communities, at a time when CCAs have taken millions of customer accounts from California’s larger investor-owned utilities.

“We’re demonstrating that we CCAs are a significant part of that solution, at scale,” said EBCE CEO Nick Chaset in an interview after the signing.

Within one year of launch, he added, EBCE is on pace to exceed its state energy storage procurement mandate by a factor of four or five.

The round, ochre-colored structure stores jet fuel for combustion inside the power plant, just across the street from the commuter ferry terminal. (All photo credits: Julian Spector)

LOCAL POWER PROCUREMENT DRIVES STORAGE BUILDOUT

California’s investor-owned utilities have procured storage for years now, most of it since the state compelled them to do so in 2013.

Community-choice aggregators arrived more recently on the scene. Though the incumbent utilities still operate the wires to deliver power, CCAs have to procure it and ensure there’s enough to keep the lights on in their territories.

“As CCAs are increasingly on the hook for securing their resource adequacy needs, energy storage is emerging as a competitive carbon free option,” said Ravi Manghani, energy storage director at Wood Mackenzie Power & Renewables.

Two Bay Area CCAs, Silicon Valley Clean Energy and Monterey Bay Community Power, signed a joint deal with Recurrent Energy in October for a 150 megawatt solar plant combined with a battery systems rated at 45 megawatts/180 megawatt-hours. Those agencies also signed a deal with EDF Renewables North America for 128 megawatts of solar capacity coupled with a 40-megawatt/160-megawatt-hour battery plant.

Those are significant storage projects relative to the national market — together, they exceed national utility-scale development in all but three quarters to date, according to WoodMac data. That scale is all the more surprising given that the off-takers did not exist a few years ago.

East Bay Community Energy joined the roster of solar-plus-storage customers this summer, contracting with EDP Renewables North America for a 100 megawatt solar plant paired with 30 megawatts/120 megawatt-hours of storage. It also signed power purchase agreements for 57.5 megawatts of wind and 56 megawatts of standalone solar.

But its Oakland Clean Energy Initiative appears to be the largest instance of standalone storage contracted for a CCA. Texas-based independent power producer Vistra Energy will build the 20-megawatt/80megawatt-hour system by Jack London Square for an expected online date of 2022.

Oakland officials, including Skinner (left), Schaaf (second from left) and Chaset (far right), observe the signing of the contract with Vistra.

NEW LIFE FOR OLD PLANTS

Vistra first jumped into the storage game in Texas, adding a battery to its Upton 2 solar plant to capture power production that was getting clipped. Then it won a contract from PG&E to build a record-breaking battery at Moss Landing, which will rejuvenate a decommissioned gas turbine hall already owned by Vistra.

That dynamic played out in Oakland, too: Vistra subsidiary Dynegy owned the peaker, which came online in 1978, and now Vistra wants to put it to new use.

The battery plant will deliver resource adequacy on behalf of EBCE, ensuring that the load pocket of downtown Oakland has sufficient power during moments of stress for the grid system.

It could also serve a transmission obligation for PG&E, which otherwise may have needed to run an expensive new wire from the Moraga substation across the mountain ridge east of the city. PG&E’s involvement with the project has not been finalized, and the company did not participate in the signing ceremony Monday.

Under-utilized peakers like Dynegy’s have emerged as an early target for energy storage.

Operational data from the Energy Information Administration show that in six months of 2018, the plant produced no power whatsoever. In other months, it fired up to produce negligible generation, like 4 megawatt-hours in December or 13 megawatt-hours in November. During the summer months of June and July, production reached the low thousands of megawatt-hours, equating to roughly seven and 12 hours of run-time at peak capacity for the 165 megawatt plant.

With a battery, Vistra will be able to participate in the wholesale markets on a daily basis, provided it delivers power when called on for its capacity obligation. Such activities present merchant risk, but Vistra boasts an energy trading business that specializes in just that sort of transaction.

In theory, market revenue would allow Vistra to offer more favorable pricing on its resource adequacy contract compared to an asset that did nothing else. EBCE declined to disclose the price of its contract, however, so it is not possible to analyze the economics in detail.

Some regulatory approvals remain before the project can become reality.

The shift from fossil fueled to emissions-free assets tracks well with recent decisions by the state’s grid regulators (See Oxnard, Moss Landing), but this is still new territory. Vistra must obtain permission to shut down a thermal plant that receives “reliability must run” payments to keep the lights on in Oakland, and replace it with a non-thermal plant constrained by a finite energy capacity.

Success is not a given, but it promises a range of stakeholder benefits: cleaner air, more flexible grid infrastructure, and a proof point for the efficacy of localized grid planning.