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Southern California Edison considers withholding liquidated damages from Ameresco after 2.1GWh portfolio delays

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Utility Southern California Edison (SCE) is considering withholding liquidated damages from Ameresco after continued delays to a 537.5MW/2,150MWh BESS portfolio.

Ameresco has developed the three projects, totalling 537.5MW/2,150MWh of battery energy storage system (BESS) capacity, for SCE through a turnkey engineering, procurement, construction and maintenance (EPCM) agreement which the two parties originally negotiated back in October 2021. 

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US$1.226 billion contract value 

The California Public Utilities Commission (CPUC) approved the EPCM agreement, worth an estimated US$1.226 billion, in December 2021 after SCE carried out a competitive procurement process conducted between August and October in 2021.

SCE carried out the procurement to find a developer capable of deploying BESS facilities at sites owned and operated by the California utility. The three facilities were expected to be online by the end of August 2022 to provide SCE with incremental capacity to meet peak electricity demand during the summer season, however, this isn’t how events panned out.

Series of delays and force majeure events

In June 2022, Ameresco issued SCE with a force majeure event notice stating that a delay in the delivery of batteries from China would hamper the developer’s ability to complete the project before the contracted operational date. Ameresco blamed the delays on Covid-19 related factory shutdowns in China but also new shipping restrictions imposed by the Chinese government.

Towards the end of 2022, SCE instructed Ameresco to adjust the completion of the sites to 2023 after the utility was hampered by “permitting delays and engineering issues”.

In January 2023, SCE received another force majeure notice from Amereco stating that winter storms in Southern California had delayed the projects further.

Liquidated damages

SCE has informed Ameresco that it intends to withhold liquidated damages for one of the project sites, following Ameresco’s issuance of an invoice for the specific site in February 2024.  

In Ameresco’s recent quarterly 10Q report filed with the SEC, the developer stated that it was “working with SCE to analyse the applicability and scope of force majeure relief”, and that it doesn’t believe liquidated damages should be applied in this instance. 

Under the terms of the contract between the two parties, once liquidated damages have been triggered, they will accrue for a period up to 60 days up to a maximum of US$89 million.

Ameresco expects all three projects to be in-service by the end of July 2024, according to SCE’s parent company’s (Edison International) recent quarterly 10Q report. 

This is after it was reported in March last year that the portfolio would “reach substantial completion” by summer 2023, which was covered by Energy-Storage.News. 

Developer protests

The contract between Ameresco and SCE was protested by several prominent developers within the energy storage industry, including Broad Reach Power (now a part of Engie), Hecate Grid (jointly owned by Hecate Energy and InfraRed Capital), Avantus, Aypa Power, Strata Clean Energy and also Clearway Energy. 

The developers took issue with several elements of the proposed contract, including but not limited to: SCE obtaining permitting exemptions under the California Environmental Quality Act (CEQA), the cost of the development being “well above” similar industry resources and SCE excluding third-party ownership options.  

Despite these protests, CPUC approved the contract with only one minor modification. 

Ameresco to construct BESS facility for Pacific Northwest utility 

In other news, it was announced this week that Ameresco had struck a deal with Snohomish County Public Utility District (PUD) to construct a 25MW/100MWh BESS for the Washington-based public utility. 

Under the terms of the agreement, Ameresco will own the facility and Snohomish PUD will be the exclusive offtaker of power from the facility through a tolling arrangement. In the 8 July 2024 announcement, Ameresco stated that it expects to commence construction on the project towards the end of this year, with the facility set to come online in 2025. 

The agreement follows similar arrangements which Ameresco has secured over the past few years. A ribbon cutting ceremony (pictured) was recently held at the site of a 18.6MW solar and 6MW/6MWh BESS facility which Ameresco had constructed for the US Army in Maryland. 

The Fort Detrick US Army Base is purchasing energy from the Ameresco facility under a 25-year power purchase agreement (PPA).  

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