Direct Energy Business to use some of world’s biggest battery projects to serve California customers

LS Power's Gateway project, currently thought to be the largest battery energy storage system in operation globally. Image: LS Power.

US electricity provider Direct Energy Business will be using some of the world’s largest battery energy storage systems to help cover its customers’ peak demand for power, signing contracts with project developer and investor LS Power.

As has been reported widely by this site and others, California is currently suffering an almost perfect storm of energy supply and network problems, with battery storage charged from renewables often cited as one of the key ways those problems can be resolved.

The state is already leading the US, and indeed much of the rest of the world, in rapid deployment of lithium-ion battery storage assets - with a growing proportion of those capable of storing and discharging energy for around four hours

Direct Energy Business - a subsidiary of UK-headquartered utility Centrica until an acquisition was announced this August by US utility major NRG Energy - has signed 10-year Resource Adequacy contracts with LS Power for power for two of its projects in California.

One of those, Gateway Energy Storage, is already up and running, and at 230MW / 230MWh is the largest battery storage project in operation in the world, with plans to soon expand that to 250MW, while it will “eventually” have a full four-hour discharge capability (1,000MWh), according to an LS Power representative who spoke to Energy-Storage.news as the project in California’s Diego County went online in August.

The other, Diablo Energy Storage, is under construction in Pittsburg, California and is scheduled to go online in the second half of next year. At 200MW output, it will also be one of the world’s largest projects of its type to date and is among a number of 100MW+ projects LS Power is working on, although numerous projects under development in the same state and elsewhere around the globe are likely to overtake it within a year or two.

Direct Energy Business is defined as an Electric Service Provider (ESP) that offers retail electricity to so-called Direct Access customers: customers can buy their power from an ESP instead of from a regulated utility in California, while operating within the service areas and on the electrical infrastructure network of those utilities. 

While initially it was large investor-owned utilities, of which there are three in California, that were tasked with driving forwards energy storage procurement by state-level mandates and regulations, other electric supplier entities such as community choice aggregators (CCAs) have recently become involved and now it seems Electric Service Providers serving Direct Access customers are too. 

The company said the Resource Adequacy agreements, as well as “energy storage swaps” covered by its contracts with LS Power, will provide additional support to the electric grid to help prevent the blackouts to which the California grid has become prone, allowing some of its customers’ peak demand to be covered by renewable energy stored in the batteries after sunset and reducing reliance on fossil fuels across the electric system.

Resource Adequacy, as the name implies, are requirements for available energy capacity which California electricity providers are obliged to meet and although that mechanism is widely considered to be somewhat in need of overhaul, not having been revised since 2004, has nonetheless lead to many off-take contracts for solar-plus-storage and standalone energy storage capacity in the state. 

Direct Energy Business said its new-found embrace of the benefits of energy storage is a change in strategy for the company in California and the company’s senior VP for its North American Power and Gas businesses David Brast said that it helps the company to support the growth and integration of renewables as well as improving reliability of service for customers.

“California has recently faced significant challenges with reliability and will need to modify statewide energy procurement approaches to meet the state's aggressive climate goals,” Brast said - California is targeting 100% renewables by 2040, one of the most aggressive goals in the world.

“By working with technological innovators like LS Power, we are able to be on the forefront of helping the state deliver clean, reliable power to the millions of homes and businesses in California.”

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