Facing the threat of rolling blackouts next year, Southern California’s utilities are turning to energy storage developers to get battery projects up and running at a record speed. This week, utilities Southern California Edison and San Diego Gas & Electric officially asked the California Public Utilities Commission to approve contracts for more than 50 megawatts' worth of lithium-ion battery projects. They range in size from 2 megawatts to 20 megawatts, and use lithium-ion batteries, like many other storage projects in the state. But the deadline for getting them up and running -- Dec. 31, 2016 -- is much tighter than we’ve seen for projects of their size in the past.

The rush is driven by the shutdown of the Aliso Canyon natural-gas storage facility, due to a leak that was first detected last fall and has yet to be fixed. Without Aliso Canyon’s reserves, which supply much of the region’s gas-fired power plant fleet, Southern California could face energy shortages and rolling blackouts as early as next year, according to state analyses.

Gov. Jerry Brown declared a state of emergency for Los Angeles County in January, giving utilities and regulators the push to come up with non-traditional alternatives to fill this projected shortfall in peak energy capacity as quickly as possible. That included energy efficiency and demand response -- and in a May order from the CPUC to Southern California Edison, permission for an “expedited procurement” of new energy storage resources that can be on-line by year’s end.  

SCE’s submissions this week show that it’s turning to some “shovel-ready” projects to meet this unprecedented timeline. Each project is designed to provide up to four hours of energy per day, to help the utility and grid operator CAISO supply the peak energy needed to keep air conditioners and lights on during hot summer afternoons and evenings. Each also has a lot of the groundwork already in place, which makes sense, given the rush to set them up.

Take the example of the 2-megawatt lithium-ion battery array being proposed by Grand Johanna, a wholly-owned entity of battery systems provider Powin Energy (PDF). Using an existing 35,000-square-foot warehouse in Irvine, California, Powin will preassemble the battery packs and run them with its battery management software.

Likewise, the largest project being proposed by SCE, a 20-megawatt, 80-megawatt-hour project from AltaGas Pomona Energy (PDF), is being built at that company’s San Gabriel Energy Facility natural-gas power plant, with its pre-existing links to the grid. This project will use battery management software from Greensmith, a well-known provider for utility-scale projects.

SCE’s third project, a 5-megawatt lithium-ion system from developer Western Grid (PDF), is different, in that it comes with only a three-year contract term, rather than the 10-year terms for the first two. But that’s mainly because its future energy capacity has already been spoken for, via a contract award last year to help SCE meet requirements set under California’s broader energy storage mandate, which requires the state’s big three utilities to procure 1.3 gigawatts of energy storage by decade’s end.

That contract, like the others under SCE’s 2014 Energy Storage request for offers, calls for Western Grid to have the battery up and running by 2020. But with the new proposal, the two are planning to speed up that deployment, with the proposed contract serving as a bridge agreement for the intervening three years. 

A similar move was made by SDG&E in July (PDF), when it announced plans to expedite 37.5 megawatts of energy storage projects with AES Energy Storage that it had already contracted to help meet its storage mandate. The San Diego-area utility wasn't part of the original Aliso Canyon order, but was added by the CPUC later in the process. 

Just how much more expensive it will be to get these fast-tracked storage projects up and running, compared to their more slow-developing brethren, wasn’t completely clear from this week’s utility filings, since they’ve redacted all specific financial details.

"These procurements provide an interesting case study for how quickly storage can actually be deployed -- assuming the December 31 deadline is indeed met -- if all the stakeholders are aligned," Ravi Manghani, GTM Research's chief energy storage analyst, noted.

The CPUC has made it clear that it would permit some excess cost associated with moving storage projects through so quickly, he noted. The CPUC is taking confidential data from both utilities to cross-check it with the prices they’ve paid for energy storage projects under earlier procurements, to measure whether they’re price-competitive with previous solicitations, adjusting for the expedited delivery date, and the fact that fewer developers will be able to meet the deadline.

In the case of SDG&E’s projects, “the AES contracts compared reasonably to the cost of projects from the previous RFO,” the CPUC wrote. But SDG&E noted that among the projects that didn't make the cut for expedited installation, many were "two to three times higher than prices for comparable offers from its recently completed 2014 All Source RFO," indicating the potential for additional costs that could be ascribed 

SCE is expected to propose some more expedited storage in the next 30 days or so, Manghani added. "The three projects proposed this week are part of SCE's Aliso Canyon Energy Storage Resource Adequacy (ACES RA Only) RFO. There's another RFP that SCE is pursuing, ACES Design, Build and Transfer, which could see more storage procured," with the potential for even larger megawatt awards, he said. 

The CPUC approved SDG&E's contract this week, and is expected to act quickly to review SCE's proposals, with hopes of approving or denying them by mid-September. Even so, it will be a challenge to get the projects grid-ready by year’s end, in SCE's case, or by Jan. 31, 2017,in SDG&E's case. 

While the Aliso Canyon crisis has put a high premium on speed-to-market for these projects, the energy storage industry has already been moving toward a more streamlined set of processes for getting projects from conception to operation. SCE has already been asking battery vendors to pre-engineer systems for rapid deployment, which will be useful for inserting storage as an option alongside traditional grid equipment.

At the same time, battery management software vendors and systems integrators have targeted speed-to-market as an important factor in reducing overall balance-of-systems costs for projects, as well as adapting to changing market opportunities.

And whatever the costs of responding to the Aliso Canyon crisis, be justified in comparing them to the potentially dire consequences of doing nothing.

According to the California Energy Commission, the Aliso Canyon shutdown could affect power plants providing nearly 10,000 megawatts for the Los Angeles Basin, most of which are called in to provide electricity on hot days or during power outages (PDF). Under a combination of worst-case circumstances, Southern California could see up to 14 days of blackouts this summer.