Southern California Repowering Project Includes 100 Megawatts of Electricity Storage

Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Construction has begun on a second natural gas repowering project being developed by AES Corporation (NYSE:AES) (Arlington, Virginia) in southern California. But this project includes a 100-megawatt (MW) electricity storage project, believed to be one of the largest in the U.S., company officials said.

A unit of Kiewit Corporation (Omaha, Nebraska) is providing engineering, procurement and construction (EPC) services to the gas-fired Alamitos repowering project. This two-unit, 1,040-MW repowering project, valued at about $1.3 billion, will consist of about 640 MW of combined-cycle generation and roughly 400 MW of simple-cycle generation, AES Public Affairs Manager Dalia Gomez told Industrial Info. Unit 1 is expected to be operating by the first quarter of 2020. Unit 2 is scheduled to be completed by the fourth quarter of 2022, she added.

The new generation will replace about 2,000 MW of existing gas-fired generation at the Alamitos site. That existing generation, built in the 1950s, will be demolished once the new gas-fired capacity is operating. Southern California Edison (SCE) (Rosemead, California), a unit of Edison International (NYSE:EIX) (Rosemead, California), will purchase all of the electricity from the new units for 20 years.

"What we're doing at Alamitos is essentially the same as what we're doing at the Huntington Beach site," Gomez said in an interview. For more on that project, see June 13, 2017, article - Construction Begins on New Huntington Beach Power Station.

But there is one big difference: the Alamitos project will include at least 100 MW, and possibly as much as 300 MW, of electricity storage. SCE has contracted with AES for the entire 100-MW block of storage for 20 years. It is believed to be one of the largest electric-storage projects in the U.S. The battery-based storage project will have a four-hour duration period. For more on how electricity storage could change the electricity business, see May 15, 2017, article -- Energy Storage: Dynamic Business That Could Transform the Power Industry.

"We would like to build up to 300 MW in storage at Alamitos," AES' Gomez said. "Right now, we have an offtake agreement with SCE for 100 MW, and we are seeking offtake agreements for up to another 200 MW." The battery storage technology is Advancion, to be provided by AES Energy Storage, another AES unit.

In a statement issued July 5, after AES closed on $2 billion of financing for the Alamitos and Huntington Beach projects, Tom O'Flynn, AES executive vice president and chief financial officer, said, "This transaction is one of the first project financings for battery-based energy storage, demonstrating once again AES' leadership in the energy storage industry." For more on the closing of financing, see July 6, 2017, article - AES Clinches Financing for Southern California Repowering Projects.

Construction of the storage project will begin in mid- to late 2019, and it will be completed by early 2021, Gomez projected.

"Six months ago, a 30-MW battery storage project was the largest project on the market," said Britt Burt, Industrial Info's vice president of research for the Global Power Industry. "Now a 100-MW project has been announced. Electricity storage has clearly moved out of the lab and into the field, yet another sign of how rapidly the electricity business is changing."

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