San Diego water board looking into pumped storage hydro

The San Diego County Water Authority board of directors has 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 MW 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.

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 Request for Proposals (RFP) 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.