by Jeff St. John
June 09, 2017

We’ve spent a lot of time over the past week delving into how President Trump’s decision to pull the U.S. out of the Paris climate accord highlighted the inevitable economic forces moving the country toward a greener energy economy. The evidence is coming not just from green energy advocates, but also from executives of coal-heavy utilities like American Electric Power

But while the move away from coal power is being supported by growth in wind and solar energy, it’s mostly being driven by a greater reliance on cheap natural gas -- a relatively cleaner fuel, but still a contributor to global warming. And for vanguard states like California, that’s a problem. 

California’s natural gas debates 

California may be leading the country in policies to promote carbon-neutral energy resources, but that doesn’t mean it’s not building new natural-gas-fired power plants. Over the past decade, investor-owned utilities have faced the closure of one of the state’s two nuclear power plants in San Onofre, putting intense pressure on Southern California Edison and San Diego Gas & Electric to make up for that lost baseload power with as many “preferred resources” -- anything but fossil fuels, in other words -- as possible. Last year, Pacific Gas & Electric announced plans to close the state’s last nuclear power plant at Diablo Canyon, and committed to a replacement plan that uses as much energy efficiency, renewable energy and distributed energy resources (DERs) as possible. 

Still, the San Onofre replacement plans from SCE and SDG&E also included billions of dollars for gigawatts' worth of new natural-gas-fired power plants, angering environmental and green energy advocates who have been pushing for a more green-friendly mix. In a 2015 decision denounced by environmental and renewable energy groups, the California Public Utilities Commission (CPUC) allowed SDG&E to contract with NRG Energy for a 500-megawatt natural-gas-fired power plant in the coastal city of Carlsbad.

Now these green groups are putting their hopes behind a state regulatory review of SCE’s proposal to build a 262-megawatt natural-gas plant in Oxnard. Last year, the CPUC decided to delay the project until it got an environmental review from the California Energy Commission, the first time it's taken such a step. This review includes not only an assessment of how the plant would impact the state’s carbon reduction goals, but also how rising sea levels could affect its long-term viability -- an all-inclusive look at climate-change impacts. 

On the public power front, the Los Angeles Department of Water and Power, the country’s biggest municipal utility, announced this week that it will put on hold a planned $2.2 billion investment in gas plants, while it conducts a clean-energy analysis of its 20-year plan to overhaul more than two-thirds of its generation mix. That’s a big change from its previous plan, and comes in the face of some significant community organizing in support of more investments in renewables and efficiency. LADWP has also announced its hopes to get all of its energy from carbon-neutral resources by 2030. 

A greater Western grid gains momentum 

Part of California’s push toward a greener grid involves expanding its grid operations and energy markets across the Western U.S. This long-running effort has already seen California ISO enlist multiple out-of-state utilities and grid operators in its Energy Imbalance Market, which allows them to bid resources in 5-minute increments to meet CAISO’s “final few megawatts of power” needed to balance the grid from hour to hour. But that’s a relatively small market, compared to CAISO’s day-ahead energy markets, which offer a far simpler way to schedule and forecast energy supply and demand.

Efforts to expand day-ahead trading outside the state’s borders were shelved by Gov. Jerry Brown last year. This year, environmental and green energy advocates have started a new advocacy effort to pass a law giving CAISO the authority to create an independent board open to any utilities within the 38 separate “balancing authorities” west of the Rockies -- an important first step in creating a pan-Western energy market. 

The California State Assembly held an informational hearing on the matter this week, giving advocates a chance to weigh in. In a letter from the Fix the Grid Coalition, the group laid out the environmental and economic benefits of pan-Western energy trading. A CAISO report found that implementing a regional energy market with PacifiCorp alone could reduce power-related carbon emissions by about 12 million tons by 2030, and save California ratepayers up to $894 million, with some $691 million of that attributable to regional renewable procurement savings.

The groups also focused on the negative health impacts that natural-gas power plants have on the largely lower-income communities they're located in. As these plants are called into service to meet late afternoon demand spikes, they're increasingly idling and ramping throughout the day, which makes their emissions profile even worse, it noted. To deal with the problem, Fix the Grid wants CAISO to increase transparency and availability of dispatch data, and work with local air districts to create dispatch models that reduce those impacts. 

Energy storage as jobs creator in Washington state

This week’s letter from the Fix the Grid Coalition notes in its first paragraph that job creation is a key benefit of expanding the Western grid, both in enabling “strong, sustained growth in skilled electric sector jobs and reasonably priced energy to drive job growth in the broader California economy.” It cites the CAISO study, which found that an expanded modern electricity market would create over 100,000 full-time jobs in California by the year 2030. 

In Washington state, which is pursuing its own renewable energy and grid integration goals, a new report from the American Jobs Project took a look at the potential job creation potential of the “grid modernization industry” -- a term that includes everything from heavy infrastructure and equipment to software and services. According to its analysis, the state could “reasonably support an average of over 13,800 direct, indirect, and induced manufacturing and supply chain jobs annually from 2017 through 2030,” serving both in-state needs and export markets. 

That growth will only be possible, however, if the state removes some critical barriers, the group says. Those include lack of access to capital for small companies, worker training, and more “open-access services for companies and researchers to validate, test, and demonstrate new hardware or software products and services.” 

Washington does have an important R&D partner in the form of the Department of Energy’s Pacific Northwest National Laboratory, which has been experimenting with real-world grid edge technologies since the GridWise projects of last decade. 

The growing -- and consolidating -- market for energy storage management

While falling battery prices are the main driver for increased adoption of grid-scale energy storage, better software and management services are also helping to lower project costs. Last week, LG CNS landed a $43 million contract to deliver, operate and maintain two energy storage systems to Guam Power Authority, the utility serving the U.S. Pacific island territory. The 40-megawatt, 24-megawatt-hour system is the largest yet for the IT services subsidiary of South Korean giant LG, and will use LG Chem lithium-ion batteries and its Energy Management System to provide frequency regulation and solar photovoltaic ramp rate control. 

Including this project, LG CNS will have deployed over 125 megawatts of energy storage projects to date, making it one of the largest providers of energy storage services in the world. Indeed, the energy storage industry has grown to the point that software solutions are becoming attractive acquisition targets. Energy storage provider NEC Energy Solutions has built on the battery management technology from A123 Systems, the bankrupt battery company bought by China’s Wanxiang and sold to NEC in 2014. And Greensmith, the U.S. startup that’s managing megawatts' worth of battery projects in the U.S., was bought by power plant specialist Wartsila last month. 

Packaging the solar-storage solution

Merging energy storage and solar PV is a critical feature for today’s battery management software vendors, and pretty much every provider of behind-the-meter batteries and rooftop solar is working on the challenge. The latest announcement on this front came this week from Green Charge Networks, the distributed energy storage startup bought by French energy services giant Engie last year. On Wednesday, Green Charge announced its new package designed for commercial solar developers and asset owners, including “design services, advanced control software, proven hardware, operations monitoring, and a kilowatt-reduction-based performance guarantee.” The latter guarantee is part of Green Charge’s shared-savings business model, as opposed to leasing structures from competitors such as Stem.

Venture capital roundup

This week, we covered the launch of a new venture fund from energy developer Invenergy that will target startups building a "digital application layer" to help make the electric grid more distributed, reliable and renewable. This week, Entic, which makes software and sensors for the building energy management market, raised $3 million, according to an SEC filing. Last week, the Florida-based company announced it had received an undisclosed investment from Blackstone, which indicates the source of the new funding. Entic has deployed its technology in hotels, hospitals, office buildings and sports complexes, and in March won a deal at the Hilton NY Midtown hotel.

On the energy storage infrastructure front, ViZn Energy, a startup building zinc-based flow batteries, has raised another $1.9 million, according to a U.S. Securities and Exchange Commission filing this week, adding to a round that raised $2.7 million in February. The Montana-based company raised $10 million in April 2016, as well as $6.7 million in 2015, and had previously raised about $20 million from “high-net-worth individuals,” CEO Ron Van Dell told us last year. ViZn is supplying a 2-megawatt battery for Hecate Energy in a project in the territory of Canadian grid operator Ontario IESO, and has a contract manufacturing relationship with Jabil.