The California ISO appears poised for another breakneck year of battery storage additions in 2024, building on what has rapidly emerged as the largest fleet of electrochemical energy storage assets in the country.

Developers plan to add 6,813 MW of battery power storage capacity in CAISO's domain this year, dominated by four-hour lithium-ion resources, roughly double their additions in 2023, according to an analysis of S&P Global Market Intelligence data. Entering this year, CAISO-connected nonhydro energy storage totaled 8,453 MW, almost all of which was built over the last four years.

Batteries make up the largest share of the planned 12,126 MW of net CAISO capacity additions in 2024, followed by 4,801 MW of anticipated new solar capacity, which is frequently coupled with storage, the data shows. That points to more than twice as much new net capacity as the grid operator absorbed in 2023, although development timelines are often delayed.

But many projects with 2024 completion dates are advancing toward energization in the next few months, ahead of CAISO's peak summer demand season. One of the biggest battery systems under construction in the state is Calpine Corp.'s 680-MW/2,720-MWh Nova Power Bank in Menifee, Calif., most of which is on track to come online in June.

"The real value of battery storage, particularly the four-hour battery storage, is that you can capture the [arbitrage], where there's a lot energy being produced [when] people don't have a need for it and you can shift it to the period in the day, which is in the evening, when life really happens," Alex Makler, senior vice president of Calpine's Western US region, said in a recent interview. "It's not only economically valuable; it's really valuable from a system planning standpoint. It helps with ensuring reliability, adequate supply and it makes room for even more development of renewables."

Arevon Energy Inc. also has major storage and solar projects under construction in California, including the 200-MW/800-MWh Condor Battery Storage Project in San Bernardino County and the Vikings solar-plus-storage complex in Imperial County, which couples 137 MW of photovoltaics with 150 MW/600 MWh of battery storage.

"The Vikings project is in [later-stage] construction, so it will go into commercial operation mid this year, maybe third quarter," Arevon President and CEO Kevin Smith said in an interview. Condor is also "well into construction" and on pace to come online in the "May time frame."

Delayed retirements

The Calpine and Arevon projects are underpinned by long-term offtake agreements with utilities and community choice aggregators racing to add large volumes of carbon-free resources in response to state regulations and rising consumer demand for electricity, largely to charge electric vehicles in the leading US market for EVs.

The contracts help to comply with the California Public Utilities Commission's landmark 2021 order for load-serving entities to procure at least 11,500 MW of clean energy resources between 2023 and 2026, initially aimed at plugging resource gaps from the previously anticipated retirements of Pacific Gas and Electric Co.'s 2,240-MW Diablo Canyon nuclear power plant in San Luis Obispo County, Calif., and several aging gas plants.

But retirements have been delayed. Instead, at the urging of Gov. Gavin Newsom, CAISO President and CEO Elliot Mainzer, state lawmakers and energy regulators, those plants will remain online for at least the next few years due to grid reliability concerns.

The twin reactor Diablo Canyon facility, which was scheduled to retire in 2024 and 2025, now has authorization from California to operate for five more years as the PG&E Corp. operating arm seeks a 20-year license extension from the US Nuclear Regulatory Commission. In addition, the State Water Resources Control Board in August 2023 allowed three gas plants in CAISO territory and one operated by the Los Angeles Department of Water and Power to operate for an additional three to five years.

Thus, generation retirements have drastically slowed in California, with only 10 MW of wind and 3 MW of hydro capacity now anticipated to retire in 2024, according to Market Intelligence data.

Queue reform advances

The robust year of resource development in 2024 comes as CAISO works to complete a major initiative to reform its generator interconnection process to ensure a smoother pathway for future energy and storage projects. The grid operator issued a final reform proposal March 29 that could go before CAISO's board in May.

"We know how important it is for the CAISO to be able to onboard all the necessary resources — over 7,000 MW a year — to stay on track with [Senate Bill 100]," Mainzer said at a March 20 board meeting.

SB 100, a 2018 state law, requires all load-serving entities in the state to cover 100% of their retail power sales with carbon-free resources by 2045. The PUC in February approved a statewide preferred portfolio of nearly 60 GW of new resources needed by 2035, which assumes the addition of 7.6 GW of four-hour batteries and renewables, almost all solar, in 2024.

CAISO wholesale power prices are expected to peak in December at $169.95/MWh in the NP-15 zone in Northern California and $150.20/MWh in the SP-15 zone in Southern California, according to Platts M2MS data. Forward power prices are lowest in the spring, when California's grid experiences lower demand and high renewable energy production. NP-15 prices are expected at $58.95/MWh in May and SP-15 prices at $43.45/MWh in March.

Forward natural gas prices also peak in December and are expected at $6.67/MMBtu at PG&E Citygate and $7.34/MMBtu at the SoCal Gas Citygate, according to Platts data. PG&E Citygate forward prices are lowest in May, at $2.79/MMBtu, and SoCal Gas Citygate prices are lowest in March, at $2.26/MMBtu.

Platts is an offering of S&P Global Commodity Insights. S&P Global Commodity Insights is a division of S&P Global Inc.