The winners of Southern California Edison’s 250-megawatt energy storage procurement that were announced Wednesday are mostly well-known companies with a long track record of projects in the ground. That includes giants like AES Energy Storage and NRG Energy, as well as startups like Stem and Ice Energy that already have megawatts deployed.

And then there’s Advanced Microgrid Solutions (AMS), a San Francisco-based startup, which emerged from stealth mode this week with a 50-megawatt contract to provide utility-scale, behind-the-meter battery storage across the west Los Angeles basin. That’s a huge win for a company with no deployments, little public information about its financing, and a yet-to-be-determined mix of battery, power electronics and energy management software.

But CEO and founder Susan Kennedy, a former California Public Utilities Commissioner and chief of staff to former Governor Schwarzenegger, says that the startup has brought a unique product to the energy storage market. Kennedy and AMS's executive team, certainly have the background and expertise to line up project financing at the utility scale. And the company's vision -- a series of battery stacks at big commercial and industrial centers, linked into a distributed fleet of “hybrid-electric buildings” -- seems to be resonating with SCE’s procurement staff and planners.

“Edison did a remarkable job learning how to fit these new technologies into this process,” Kennedy said in an interview this week. Even so, “we spent eight months working with Edison on the contract,” which calls for the first project, a 10-megawatt aggregation of batteries and building load in Orange County, to come on-line in late 2016.

“We’re looking for batteries that are stackable in 200-, 400- [and] 600-kilowatt increments, in a dense urban area or Class A office area,” she said. AMS is working with leading lithium-ion battery manufacturers on that front, she said, though she didn’t disclose which ones.

Those batteries will charge mostly at night, so that they’re available to discharge for two- to four-hour blocks during SCE’s demand peaks in the late afternoon, she said. That’s when they can be called upon to lower each location’s load by megawatts at a time, as well as to flatten out whatever peaks in local consumption may be happening behind the meter, she said.

That’s similar to the proposition being offered by Stem, which won an 85-megawatt contract with SCE. But unlike Stem, which has built its existing behind-the-meter battery business on serving each building’s demand charge reduction needs, AMS is utility-facing.

“We look at where the utility needs resources -- where there’s a lot of photovoltaic, where there’s overgeneration potential, wherever the distribution system is stressed," said Kennedy.

In other words, AMS isn’t signing up customers for behind-the-meter batteries and then looking for ways to sell their capabilities to the utility, she said. Instead, it’s working with SCE from the get-go, to identify the optimal amount of load-shifting it could use at local stress points, like the Santiago and Johanna substations in the area where it’s building its first hybrid-electric installation. 

Because each installation is controlled by the utility, it can be put to use for a variety of grid purposes, she noted. “Whether it’s for local capacity, up and down regulation, ramping, where it can help them reduce distribution upgrades -- we design the system for what the utility needs.”

The host customer, in turn, gets a no-hassle, cost-free upgrade to its energy profile, with batteries that are usually discharging during the same afternoon hours that coincide with peaks in commercial building energy use, she noted.

“The building owner can manage his electricity,” said Kennedy. “As long as you have good intel, good analytics, you can tell what the building’s going to do from its past history."

Reducing building peak energy usage can also help lessen the steep rise in energy demand to come in solar-rich areas, known as the “duck curve." SCE is planning to make these newly procured resources available to the resource adequacy (RA) program being created by state grid operator CAISO to manage that challenge.

“Because we’re a hybrid resource, we have energy storage that’s behind the meter, so to the grid operator it looks like demand response -- it drops off the grid,” she said. But with direct, real-time control, the hybrid-electric building is also a “firm and dispatchable load -- they can use us for ramping or for regulation.”

All of these are emerging market opportunities, for now at least. For the current projects, SCE’s contracts will provide steady payments via power-purchase agreements to provide security for financial backers. Kennedy said the company has lined up significant, multi-million-dollar commitments from several backers for its first project.

AMS owns and manages the systems on behalf of the utility, and operates each as an LLC, with “expected ROIs on a per-project basis,” she said. Some of the company’s cost-competitiveness comes from pricing out lithium-ion batteries for a few years from now, she noted -- “the cost of installing batteries is still expensive right now, and we’re hoping to catch the falling cost curve.”

As for future uses, “the market has to be more mature in how to use this as a utility resource,” she said. “The ISOs are just testing this as a wholesale resource right now.”

For more specifics on Kennedy’s prescriptions for state energy regulatory reform, read her comments from last month’s More Than Smart conference in Sacramento, where she spoke on a panel including representatives from SolarCity and Nest Labs.

But with California utilities facing a mandate to procure 1.3 gigawatts of energy storage by decade’s end, “once the resource is seen to be firm and dispatchable and reliable, I think you’re going to see a lot more,” she said. In other words, SCE’s new procurement is the first big one to hit the market, but it won’t be the last.