PROPOSALS SOUGHT FOR POTENTIAL ENERGY STORAGE FACILITY AFTER SUCCESSFUL INTEREST SOLICITATION

Potential 500-megawatt renewable energy project at the San Vicente Reservoir site could help stabilize water rates as a new revenue source

Source:  San Diego County Water Authority

April 27, 2017 (San Diego) - The San Diego County Water Authority Board of Directors today authorized the Water Authority, in conjunction with the City of San Diego, to begin seeking detailed proposals for a potential energy storage facility at San Vicente Reservoir. The project could help ease pressure on electric grids by producing locally generated renewable energy on demand, and also lessen upward pressure on water rates by providing a new source of revenue.

In January, the Water Authority and the city reached out to electric utilities, developers, investors and energy off-takers – other entities wishing to purchase the services that this project would provide – through a Request for Letters of Interest to measure outside interest in participating in the potential San Vicente Energy Storage Facility. The project, which would provide up to 500 megawatts of renewable energy and increase the region’s electric grid stability during peak times for energy use, garnered significant interest through the advertised request.

The Water Authority received responses to the request from 18 qualified parties. These included five full-service entities that would finance, design, permit, build, and operate the potential project and secure an off-taker for the produced energy. Other respondents included two developers, five off-takers, and six other parties interested in constructing the project, providing equipment for the project, or serving as a consultant for engineering, procurement, and construction services.

“We wanted to find out if there really is a broad desire among potential stakeholders to see a project like this in our region, and now we know there is,” said Mark Muir, chair of the Water Authority’s Board of Directors. “We’re now going to gather more details about how it could come together for the benefit of ratepayers.”

The interest letters received also helped the Water Authority and the City of San Diego identify preferred partnership models that minimize risk to the agencies. These potential partnerships include a lease model – in which the Water Authority and City of San Diego would receive a share of revenue for use of their water and land assets – and a limited partnership option.

Discussions with the qualified respondents substantiated major findings from feasibility studies of the potential project that began in late 2013, including:

• The potential project would be a valuable resource. Located in an energy load center, the project would help stabilize the energy transmission grid operated by the California Independent System Operator (CAISO).
• The project size is appropriate. A 500-megawatt project with 5 to 8 hours of energy storage would help investor-owned utilities meet a state mandate to procure 50 percent of their energy from renewable energy sources by 2030.
• Infrastructure exists to support the project. Existing resources the project could capitalize on include the San Vicente Dam and Reservoir and a nearby high-voltage transmission line.

The potential project would consist of an interconnection and pumping system between the existing San Vicente Reservoir and a new, smaller reservoir located uphill. The system would be used during off-peak energy-use periods to pump water uphill to the new upper reservoir, creating in it a bank of stored hydroelectric energy. That energy would be released to the lower reservoir by gravity at times when other renewable energy supplies, such as solar, are unavailable and when energy demand and electricity costs are higher.

In addition to adding renewable energy to the region, energy storage could support electrical grid operations that are essential to integrating large new supplies of other renewable electricity into the California and Western power grids - notably solar, but also wind. It also makes it easier to quickly ramp up or down energy generation as needed.

The Water Authority already operates an energy storage facility at Lake Hodges, which in 2011 began its operations of pumping water to Olivenhain Reservoir and generating up to 40 megawatts of electricity on demand for the region through downhill releases. The agency’s San Vicente Dam Raise Project – completed in 2014 through a partnership with the city of San Diego – provided additional opportunity for energy storage because it created approximately 100,000 acre-feet of new regional carryover storage water supplies and 52,000 acre-feet of new emergency storage capacity. (This increase in water storage also increased the hydroelectric energy potential at the reservoir site.) The Water Authority owns the additional storage capacity created by the dam raise and completed filling its carryover storage capacity in summer 2016.

The Request for Proposals approved today will solicit more specific information from potential project partners. It will require respondents – if not already a full-service team – to partner with other entities to provide a full-service team. Any interested parties can respond, including entities that did not previously respond to the Request for Letters of Interest. The Water Authority expects to advertise the Request for Proposals by this summer, and evaluate received proposals by the end of this year.

One of the Water Authority’s 24 retail member agencies, the City of San Diego maintains one of the world’s largest and most complex water storage, treatment, and delivery systems. The city’s Public Utilities Department imports water supplies for more than 1.3 million city residents, which are among the 3.3 million ratepayers served by the Water Authority. For more information about the San Vicente Energy Storage Project study, go to www.sdcwa.org/san-vicente-energy-storage-facility-study.