Southern California Edison has picked six companies to build 125 megawatts of distributed energy storage and demand response for its Preferred Resources Pilot, a long-term testing ground to learn how distributed energy and the grid can work together.

Winners of this second round of PRP contracts include Advanced Microgrid Solutions, with a 40-megawatt contract for demand response with energy conservation and batteries; Convergent with 35 megawatts of batteries; Hecate with 15 megawatts of batteries; NextEra with 10 megawatts of batteries and 10 megawatts of demand response, NRG with 10 megawatts ofsolar-storage "hybrid," and residential battery startup Swell with 5 megawatts of batteries. 

SCE is offering 10- to 20-year contract terms, with delivery set to begin between 2018 and 2020. Between now and then, these companies will be busy finding sites and signing up customers within a very specific grid footprint -- the areas of Orange County served by SCE’s Johanna and Santiago substations.

This patch of grid is a hot spot for future power shortages and imbalances, caused by the closure of the San Onofre nuclear power plant, the coming closures of natural-gas-fired power plants serving the area, and the changing patterns of grid power generation over the course of the day, largely driven by the growth rooftop solar PV.

These same problems led to SCE's 2014 procurement of more than 250 megawatts of distributed energy resource (DER) capacity for its west Los Angeles and Orange County region. Under regulatory pressure to find "preferred" resources -- anything but fossil fuels, essentially -- to meet its post-San Onofre needs, SCE bought everything from utility-scale and behind-the-meter lithium-ion batteries (AES and Stem), to demand response and ice-cooled air conditioners (NRG and Ice Energy). 

The PRP was started at the same time as a testing ground for these technologies on a more local scale, as well as to develop the technology expertise to expand SCE's smart grid capabilities to include more DERs at a broader scale. Its first procurement was mainly for rooftop solar and energy efficiency, unlike this new round, which includes batteries for all the projects. 

“You’ve got to credit SCE -- they’re really the leaders in the industry in terms of these large-scale procurements,” Kelly Warner, president of Advanced Microgrid Solutions, said in a Tuesday interview. AMS is already working on its 50-megawatt LCR contract, which involves about 100 sites across the west Los Angeles region, he said. It’s a bit ahead of schedule, with an initial five sites set up with the hardware, telemetry and software to start collecting data to share with the utility.  

Its new 15-year, 40-megawatt contract for SCE’s PRP comes with requirements similar to the previous procurement, including multi-hour capacity, he said. But it will differ from its previous SCE work in that “we’re combining load management technologies with the battery system to provide that 40 megawatts,” he said. That involves integrating its economic dispatch engine with the building management systems at its customers’ sites, collecting meter data, and otherwise learning about how buildings use energy, with an eye toward reducing it permanently -- that is, energy efficiency -- or being able to turn it down for hours at a time (i.e., demand response).

That’s important, because a lot of the load reduction SCE is looking for can be delivered via targeted energy-efficiency offerings or smart-thermostat-based demand response, as well as by energy storage, at potentially lower cost. At the same time, batteries provide a reliable, dispatchable resource to backstop any vagaries in a building’s actual power draw at times of grid distress, whether on their own or in combination with other behind-the-meter energy resources -- say, rooftop solar or plug-in electric vehicles.

“We’ve put a lot of thought into it, what things you can co-optimize and what things you can’t,” Warner said. “That ultimately gets embedded into the optimization algorithms that go into our linear programming optimization program, saying this is what you can do, this is what you can’t do, this is how much battery you have available for any of these functions.”

While AMS hasn’t picked its battery supplier, “We have signed a master battery supply agreement with Tesla, so we’re buying a lot of Tesla batteries,” he said. It may also enlist partner Macquarie Group, which committed $200 million to financing new projects with the company in July, though it hasn't made any final decisions on that front, he said. 

SCE’s plans for Orange County involve a lot of data collection, first and foremost to make sure DERs are working safely and reliably. In the longer term, it wants to make distributed energy visible -- and in the case of the PRP, controllable -- for utility grid operators. It’s also making it available to grid planners going about the unfamiliar task of plotting DERs into place in lieu of new transformers or other upgrades, under the state’s Distributed Resources Plan proceeding.