After experiencing delays with the local municipal permitting process, Vistra Energy has decided to pursue approval to construct a 600MW/2,400MWh BESS located at the site of a retired power plant in the City of Morro Bay via the California Energy Commission (CEC), as permitted under Assembly Bill (AB) 205.
On 28 October 2024, Vistra issued the City Council of Morro Bay with a letter requesting it pause municipal consideration of the standalone BESS following the developer’s decision to utilise the CEC’s opt-in certification process.
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Signed by California Governor Gavin Newsom in 2022, AB 205 increased the CEC’s permitting jurisdiction to also include BESS facilities over 200MWh in size, providing an alternative permitting pathway for developers.
From inactive power plant to battery storage
The Morro Bay BESS project would encompass 43 acres of a 107-acre site owned by Vistra that is currently home to the retired Morro Bay Power Plant, along with its three inactive smokestacks reaching 450 feet upwards.
Investor-owned utility (IOU) Pacific Gas & Electric (PG&E) originally built the Morro Bay Power Plant (MBPP) in the 1950s before selling it to Duke Energy during the late ‘90s, as part of a three-project portfolio of gas-fired plants located in northern and central California.
Following a series of mergers and acquisitions, MBPP ended up in the hands of Dynegy in 2007, which after announcing the plant was no longer economically viable in 2013, closed the site for good in 2014.
The MBPP site came to be a Vistra asset after the Irving, Texas-based company completed a merger with Dynegy in April 2018.
‘More defined pathway for consideration’ with CEC, Vistra says
Ever since plans were first submitted for the BESS with Morro Bay City Council in 2020, Vistra has carried out a series of in-person and online meetings to educate the local community on BESS facilities, including a 2021 online council meeting as reported by Energy-Storage.news,
More recently, in March 2024, Morro Bay’s Community Development Department published a draft Environmental Impact Report (EIR) in accordance with the California Equality Act (CEQA), outlining the potential impacts on the surrounding environment of Vistra’s proposal. The report found that through the use of mitigation measures, environmental impacts of Vistra’s Morro Bay BESS would be “less than significant”.
Even more recently, independent engineers at DNV Energy peer-reviewed a safety report commissioned by Vistra investigating the effects of a fire at the Morro Bay BESS project, finding that “a credible worst-case scenario would not present any significant health or safety risk to the public”.
Despite these recent favourable findings, the City of Morro Bay provided an updated timeline for Vistra to receive a coastal development permit for its BESS project at a 24 September 2024 meeting, predicting an approval date beyond 2026.
City officials stated that they received 214 written comments from the draft EIR and expected to publish the final document required for the environmental assessment next month. However, this will seemingly no longer be required after Vistra’s recent requests for Morro Bay to pause its assessment of the project.
In its letter to officials at Morro Bay, Vistra said that given the extended timeline required for municipal approval, it would pursue the CEC approval process for a “more defined pathway for consideration”.
Once the CEC deems a project application complete, it must approve or deny the application within 270 days.
Decision in the hands of state regulators
Although council officials will still be able to have their say on plans, the final decision on whether Vistra will be able to construct its Morro Bay BESS will be made by the CEC and California Coastal Commission (CCC).
Instead of heading down the local planning route, it appears that developers of BESS projects are beginning to turn to the CEC, with plans for several large-scale projects submitted this year. This includes a proposal from Engie to construct a 1GWh BESS located in the City of San Juan Capistrano, submitting an application with the state regulator earlier in 2024 after it failed to obtain local approval.
A JV made up of Canada’s Capstone Infrastructure and Denmark’s Eurowind Energy also recently submitted plans with the CEC to construct a 400MW/3200MWh standalone BESS in Alameda County, as featured in Energy-Storage.news.
CEC process not expected to commence this year
In 2021, Vistra made an agreement with officials at Morro Bay to remove the MBPP’s inactive smokestacks before 2028 or pay a US$3 million fine.
According to the recent draft EIR, Vistra planned to tear down the smokestacks once the BESS has been placed into commercial operations.
In its letter to Morro Bay officials, Vistra said it didn’t expect to begin the CEC approval process this year. Based on permitting and construction timelines of other similarly sized projects, it’s unlikely that the Morro Bay BESS will be online before 2028.
Although the majority of the MBPP site is set to be demolished, a switchyard owned by PG&E at the site will remain and act as the point of interconnection for the Morro Bay BESS to connect to the California Independent System Operator (CAISO)-controlled grid.
Vistra expects to invest US$900 million into the Morro Bay project, which includes an estimated US$585 million to purchase the BESS units.
