L.A. Looks to Break Price Records With Massive Solar-Battery Project

The Los Angeles Department of Water and Power is preparing to approve a utility-scale solar-battery project that could shatter U.S. records to date, in terms of both storage capacity and low price. 

8minute Solar Energy's Eland Phase 1 and 2 projects would each consist of 200 megawatts of solar capacity, along with at least 100 megawatts — and more likely 150 megawatts — of battery capacity, according to Eric Montag, LADWP director of strategic initiatives.

The total project would add up to 400 megawatts of solar and 300 megawatts of energy storage, and could be submitted for approval as early as LADWP’s next commission meeting on July 23. 

Speaking at a June 18 commission meeting, Montag described the Eland Phase 1 and 2 projects as groundbreaking not only for LADWP but for the U.S. utility sector at large.

“This is the lowest solar photovoltaic price in the United States, and the largest and lowest-cost combined solar and high-capacity battery energy storage in the U.S., and we believe in the world today,” he told LADWP commissioners.

An LADWP spokesperson declined to comment Monday. 

The projects would sell their 200 megawatts of solar capacity under a 25-year power-purchase agreement with LADWP at a price of $19.97 per megawatt-hour. 

That’s lower than the sub-$25 per megawatt-hour price that Texas municipal utility New Braunfels Utilities got for its 225-megawatt solar PPA with Engie-affiliated Long Draw Solar back in December, among the lowest PPA prices confirmed in the U.S. and the lowest confirmed in Texas. 

According to Colin Smith, senior solar analyst with Wood Mackenzie Power & Renewables, the most recent record-setting solar PPA prices in the U.S. have been coming out of places like West Texas and Nevada.

“A sub-$20 solar-storage PPA in California is exceedingly low,” Smith said. 

It’s also well below the $35 to $38 per megawatt-hour — at that time another low-price record for solar — that developer 8minute offered in its first big solar PPA with LADWP back in 2016.

“We used to talk about how solar PPA prices were competitive with other generation sources,” Smith said. “Now we are seeing solar-plus-storage together as providing greater capacity and still competitive with new-build natural gas and other sources of electricity.” 

Meanwhile, the price for the project’s battery capacity, according to Montag’s presentation, is an additional $13 per megawatt-hour for the 100-megawatt plan, or $33 per megawatt-hour when combined with the solar. There is an additional $6.65-per-megawatt adder for the 150-megawatt option for just under $40 per megawatt-hour combined.

These are close to price points being set by recent projects announced in Nevada and Arizona by utilities seeking to meet gigawatt-scale energy storage targets, Smith noted. 

8minute’s project with LADWP will include about 65 megawatts of additional solar PV beyond its nameplate capacity to serve the battery storage to be added to the project, Montag said.

That’s because the Kern County transmission corridor where the projects are to be built, already the home of about 1 gigawatt of solar PV, has a maximum capacity for how much power it can carry to Los Angeles.

But the 100 to 150 megawatts of batteries to come with the project will “take that extra 65 megawatts beyond that transmission capacity and store it,” Montag said. 

How big batteries are transforming the solar landscape

The batteries will serve multiple purposes, he said. First, they will serve as a shock absorber of sorts for the solar farm, keeping each phase's output to the transmission system as close to a steady 200 megawatts as needed.

Second, and more importantly, they will absorb excess solar generated during the day, and discharge it through the late afternoon and evening to bolster the dropoff in solar generation, combined with the steep rise in customer demand for electricity as people come home from work.

As Montag explained, “As the sun goes down, for the other 1,000 megawatts of solar we have without batteries, the gas-fired generation and hydro have to compensate for that."

Like California’s grid as a whole, LADWP relies on natural-gas-fired peaker plants to get it through times of peak demand. And like the state as a whole, it’s expecting to have less peaker capacity in future years to deal with the problem. 

In LADWP’s case, it and fellow investor-owned utility Southern California Edison are facing the closure of several “once-through cooling,” or OTC, gas-fired power plants in the coming years, due to their effects on the state’s coastal water quality.

Montag cited the need to make up for these closures as a good reason for LADWP’s commission to support the larger 150-megawatt storage option, noting that “we think that’s going to be very necessary to replace some of those OTC units. We’re going to need clean capacity on our system, and this is a great way to do it.” 

L.A. Mayor Eric Garcetti announced in February that LADWP would not spend billions to rebuild those plants, which provide about 1,660 megawatts of generation capacity, but instead will replace them with clean-energy alternatives. These alternatives could include up to 1,800 megawatts of energy storage, according to plans from consultancies Navigant and WorleyParsons presented to LADWP earlier this year. 

As WoodMac’s Smith noted, LADWP is joining the rest of California’s investor-owned and municipal utilities in preparing for a future that will require the integration of ever-increasing amounts of solar power, with energy storage expected to play a major role.

Energy storage at the scale of projects like LADWP’s with 8minute, or the “hulkingly big” solar-storage projects announced by Nevada utility NV Energy last month, are capable of turning solar farms into something closer to a dispatchable resource, he noted. 

“We’ve known for a long time that California has been the No. 1 state for solar on the utility side and the distributed generation side,” he said. "But on the utility side, we’ve known there’s going to be a need for a lot more projects” to meet the state’s long-term 100 percent clean energy goals.

“This is a big project, with a big battery storage component — and it’s probably the first of many to come.” 

Jeff McKay, director of marketing at 8minute, echoed this sentiment in a Monday email. 

“This is what the future of energy looks like and we’re thrilled to be co-creating that future in collaboration with our fellow innovators at LADWP. Together, thanks to Eland’s advanced storage and 24/7 dispatch capabilities, we’re working to dispel misconceptions about the availability and long-term viability of solar power.”