Lessons from Aliso Canyon: Using Energy Storage as a Reliability Resource to Overcome Natural Gas Shortages

June 3, 2016
The gas leak at Aliso Canyon’s underground storage facility has become infamous as the largest natural gas leak in U.S. history. The carbon footprint from the gas leak is said to be larger than the Deepwater Horizon leak in the Gulf of Mexico in 2010, and has left the facility with less than one-fifth of its capacity. Southern California Gas Company (SoCal Gas) is now barred from storing gas at the Aliso Canyon facility until all wells are thoroughly investigated, and determined to be safe.

A report released in April by the California Public Utilities Commission (CPUC), California Energy Commission (CEC), the California Independent System Operator (CAISO), the Los Angeles Department of Water and Power (LADWP), and SoCalGas predicted up to 14 days of rolling blackouts this summer as demand for electricity spikes with the warmer weather. Eleven million people across the greater Los Angeles who receive natural gas supplies from Aliso Canyon are likely to be affected by these blackouts.

Storage to the Rescue

Governor Jerry Brown called on the CPUC to take steps to guarantee reliable gas and electricity service through the summer, when energy demand peaks. The CPUC quickly narrowed in on energy storage as a critical solution to address reliability. Energy storage can be a fast-responding, firm and dispatchable resource, and can be constructed, interconnected and installed in a fairly short timeline. In fact, storage projects built over the next few months could already start alleviating demand for natural gas by next winter.

Last week, the CPUC granted approval to Southern California Edison to procure energy storage to help alleviate the outage concerns from the Aliso Canyon leak. The CPUC ruled that SCE should acquire front-of-the-meter storage that must be operational by December 31, 2016 in order to quickly start serving their purpose as a reliable alternative to natural gas. CESA is encouraged by the CPUC recognizing energy storage as a viable and well-suited technological solution to help address the LA Basin reliability issue. CESA will ensure successful and timely implementation of these energy storage solutions by working with the CPUC to secure the appropriate regulatory approvals and actions and with the SCE to better understand reliability and ramping needs and to support interconnection and site hosting.

Shaping Long-term Solutions
In addition to short term reliability issues, the Aliso Canyon gas leak has also raised significant questions about natural gas as a reliable resource in the long-term. Many stakeholders, including CESA, are pushing for the state to consider this gas leak a motivator to reduce overall reliance on natural gas and increase the share of renewable energy and energy storage. As a quick-start, easily deployable, and modular resource, energy storage provides the grid with resiliency during outages caused by gas supply shortages, generator outages, or transmission and distribution line failures, while enabling renewable energy resources to be dispatchable and reliable. In particular, the Aliso Canyon gas leak has raised questions on whether fuel diversification should become a requirement in the CPUC’s Resource Adequacy program.

Importantly, CESA advocates for greater deployments of energy storage due to the ‘optionality’ to serve reliability needs during emergency situations. SCE was lauded for its 260 MW procurement of energy storage in its 2013 Local Capacity Requirements (LCR) Request for Offers (RFO), which has turned out to also benefit SCE in addressing LA Basin reliability issues. With these energy storage resources on track to be installed in the affected area, SCE has the flexibility to re-purpose these energy storage resources to address near-term LA Basin reliability issues. CESA believes that other utilities should take from this experience to procure energy storage to be afforded the ‘optionality’ that SCE has to support  reliability needs during often unforeseen emergency situations.

At Energy Storage North America (ESNA), a keynote panel on October 4, ESNA’s opening night, will bring together executives from SoCal Gas, Southern California Edison, AES, and CAISO to explore the role that storage can play in risk mitigation and resource diversification for the Western power grid. Stephen Berberich, President and CEO of the California ISO, will moderate this panel discussion, pushing panelists to explore the key steps to needed to create a reliable, future-proofed grid.

Don’t miss out on the conversation – Register for ESNA today.

Procurement Update - September 4, 2016

San Diego Gas and Electric has received CPUC approval to expedite procurement of two turnkey energy storage projects from AES Energy Storage - a 30 MW / 120 MWh system in Escondido and a 7.5 MW / 30 MWh system in El Cajon. 

Southern California Edison has submitted three projects for CPUC approval thus far: a 2 MW / 8 MWh system from Grand Johanna (Powin Energy) in Irvine, a 20 MW/ 80 MWh system from AltaGas in Pomona, and 5 MW / 20 MWh system from Western Grid in Santa Paula.