Developer Upstream Energy has negotiated a resource adequacy (RA) agreement with California community choice aggregator (CCA) Clean Power Alliance (CPA) associated with the developer’s standalone Olinda BESS project located in Los Angeles County, California.
The agreement, selected as part of CPA’s June 2024 Clean Energy and Reliability RFO, was discussed and signed off at a 5 December 2024 CPA Board of Directors meeting.
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CPA stated that it launched the tender to fill its portfolio with longer-term contracts, reducing the need to procure from short-term markets that can often fluctuate greatly in price.
BESS to replace California oil & gas extraction facility
The agreement covers 110MW of RA from Upstream’s lithium-ion Olinda Reliability Project, located in La Habra Heights on a site owned by Matrix Oil Corporation. The site is currently being used for oil and gas drilling. As part of project development, the existing oil and gas facility will be decommissioned to make way for the BESS.
The project will connect to the local grid via Southern California Edison’s (SCE’s) Olinda substation, for which an interconnection agreement has already been secured by Upstream, a La Jolla, California-based developer.
Upstream is currently pursuing approval from Los Angeles County to commence construction on the project. The developer expects that a draft Mitigated Negative Declaration will be issued during the first quarter of next year, in line with the California Environmental Quality Act (CEQA) permitting process.
US$15/kW-month fixed rate for resource adequacy
Under the terms of the agreement, CPA will pay a fixed rate for RA from the Olinda project of US$15/kW-month with no escalation for a period of 15 years.
Unlike other agreements seen in California and elsewhere in the US where the offtaker is entitled to all attributes from the project (such as energy and ancillary services), this agreement only covers RA.
As explained in the agenda packet for the CPA board meeting, Upstream has secured Full Capacity Delivery Status (FCDS) with the California Independent System Operator (CAISO) for only 100MW of its Olinda project – meaning it can deliver 100MW of output to the transmission system under peak load conditions.
Upstream is working to secure FCDS for the remaining 10MW, which it hopes to secure during CAIO’s 2026 allocation cycle. However, if Upstream is unable to obtain this, the RA agreement with CPA will automatically drop to only cover 100MW.
The project is set to commence delivery on 1 October 2027.
Investment tax credit for 50% of project cost
The RA agreement reveals that Upstream intends to qualify and utilise investment tax credits (ITCs) up to 50% of the project’s value.
This includes an adder of 10% to the ITC when a development exceeds a certain threshold for the volume of US-produced content present in the project.
In a recent interview with Energy-Storage.news Premium, tax credit platform Crux revealed that of all tax credit transfer deals it had witnessed so far, only 8% had included the domestic content adder, though its figures do not include traditional tax equity deals, which still account for the majority of tax equity financing.
2GWh BESS portfolio sale
Upstream Energy was founded in 2014 to focus on the development of BESS facilities located in the California Independent System Operator (CAISO) area. Although the developer has not often featured on Energy-Storage.news, it was reported in 2022 that Upstream Energy had sold a 500MW/2,000MWh portfolio of BESS projects located in Los Angeles, California to Goldman Sachs-backed developer GridStor.
Despite the Olinda project being located in Los Angeles, there is no indication from materials published by CPA, or publicly available information associated with the project subsidiary, Olinda Reliability Project, LLC, that the project is under GridStor ownership.
CCA alternative to investor-owned utilities
CPA is one of 25 community-operated electricity providers in California providing an alternative to the state’s investor-owned utilities (IOUs) such as Pacific Gas & Electric (PG&E), San Diego Gas and Electric (SDG&E) and SCE, which are three of California’s largest. CPA meanwhile is the US’s largest Community Choice Aggregator supplier.
Through a handful of RFPs issued over the past few years, CPA has hugely increased the size of its renewable energy portfolio, with several portions of these projects allocated to the CCA being brought online in the past 12 months. This includes Clearway Energy’s Arica Solar project in Riverside County and Terra-Gen’s Edwards and Sanborn Solar project in Kern County, as covered in Energy-Storage.news.
CPA launches 300-home virtual power plant scheme
In related news, Clean Power Alliance announced a virtual power plant (VPP) programme for underserved residents earlier this week (17 December).
CPA’s board approved an agreement with home battery systems company Haven Energy to install, operate and maintain solar PV and battery storage systems on 300 single-family homes in the CCA’s service area. Enrolment in the VPP will be available to customers on California’s Alternative Rate Energy Program (CARE) or Family Rate Reduction Program (FERA) rate relief programmes, with applications opening in Spring 2025.
“Expanding the adoption of clean energy requires intentional actions to make it accessible to all residents regardless of socioeconomic status,” CPA board chair Deborah Klein Lopez said.
Eligible customers will receive their distributed energy resources (DERs) equipment at no upfront cost and will be able to own the systems at no additional cost after five years. Meanwhile, their aggregated battery capacity will be leveraged to help CPA manage its peak demand, while each system will retain 20% of its stored capacity to provide backup power in case of emergencies and outages.
Home system solutions will comprise 5KW of solar PV and 20kWh battery systems, meaning a total 4.8MWh capacity will be available to CPA once the backup power requirement is factored in.
CPA claimed it will save the supplier over US$380,000 in resource adequacy costs over three years, while Haven Energy claimed that similar programmes it has implemented elsewhere have enabled customers to save as much as 50% of the cost of their electricity bills. Haven will leverage tax credits and other incentives to offer the systems at no cost.
“The installation of our first virtual power plant is another action we are taking to manage peak energy demand while saving on energy costs,” CPA chief executive Ted Bardacke said, with the supplier considering a rollout of a scheme for multi-family dwellings once the initial programme is underway.
“This new solar programme for our lower-income customers creates an affordable pathway in the transition to clean energy so any customer who wants to can contribute to making their community more sustainable and energy resilient,” Bardacke said.
Additional reporting on VPP programme by Andy Colthorpe.
