Private entity sought to develop San Diego pumped-storage energy facility

By Jay Landers – 8/30/2021

In 2018, the state of California updated its Renewables Portfolio Standard to call for obtaining 60% of its power from renewable energy sources by 2030. At the same time, the state also mandated that its electricity system be powered solely by carbon-free, renewable energy sources by 2045. Meeting these ambitious targets will require no shortage of technological developments, particularly batteries or other means of storing electricity generated by intermittent, renewable energy sources, especially solar and wind power.

As part of its recently enacted budget for 2021-22, California included funding to help foster the development of one such storage method, known as pumped-storage hydropower. In particular, the budget provided $18 million to the city of San Diego and the San Diego County Water Authority for use in advancing their planned joint project known as the San Vicente Energy Storage Facility.

The funding will enable the two entities to issue a request for proposals in September for a private partner willing to develop the project at its own expense.

The roles of pumped storage

Typically, pumped storage entails pumping water from a lower reservoir to a higher reservoir during off-peak hours when electricity demand is low and energy production exceeds demand. During periods of peak demand, the water is released from the upper reservoir to the lower reservoir to generate additional power. As the water flows downhill, it powers turbines that generate electricity, which is then transmitted to the electrical grid.

Increasingly, pumped storage is being viewed as a way to take advantage of excess electricity produced during the day by renewable energy sources, primarily solar and wind. In essence, these hydropower facilities act as giant batteries, storing renewable energy for use during periods when renewable energy generation cannot meet demand. This is the approach that the proposed San Vicente Energy Storage Facility would take.

Project components

The new facility would take advantage of the water stored behind the existing San Vicente Dam, near Lakeside, Calif., says Neena Kuzmich, P.E., the deputy director of engineering for the SDCWA. “The project will build a new upper reservoir that will hold approximately 8,000 acre-ft at a higher elevation,” Kuzmich explains. “There will also be a tunnel system with an underground powerhouse containing four reversible pump turbines that would connect the two reservoirs.”

In 2014, the city of San Diego and the water authority completed a joint effort to raise the city-owned dam by 117 ft, increasing its storage capacity by more than 150,000 acre-ft (see “Vulnerable No More,” Civil Engineering, November 2016, pages 64-71). Today, the San Vicente Reservoir can hold up to 247,000 acre-ft, Kuzmich says. Of this amount, the SDCWA owns 157,000 acre-ft of storage capacity, while the city owns the rest.

Ultimately, the San Vicente Energy Storage Facility could store as much as 500 MW of capacity for eight hours, or the equivalent of 4,000 MW/hr per day of energy, according to a project fact sheet from the city and the SDCWA. “When operating, the project will provide enough energy for about 135,000 households,” the fact sheet states.

The location of the San Vicente Energy Storage Facility is ideal from the standpoint of transmitting energy generated by the project. “San Vicente Reservoir is near major electricity transmission interconnection facilities, which would allow the project to play a central role in integrating solar and wind energy from across the Southwest for use in San Diego County,” according to a July 16 SDCWA news release announcing the state funding for the project.

Next steps

As for funding, the $18 million “will cover the environmental reviews, the preliminary engineering, as well as the activities related to obtaining a (U.S. Federal Energy Regulatory Commission) license” for the project, Kuzmich says.

These activities are to be conducted by whichever “full-service team” ultimately is selected by the city and the SDCWA to implement the San Vicente Energy Storage Facility, she notes. The selected team also would “prepare an economic pro forma model to determine the required revenues to recover their costs,” Kuzmich says.

Assuming the project goes forward, the selected team “will fund and finance the implementation work” and then own and operate the completed facilities, Kuzmich says. The project developer would accrue the revenues associated with electricity generation. In turn, the city and the SDCWA would lease water from the San Vicente Reservoir to the developer for use in the pumped-storage facility, Kuzmich says. Revenues realized from the leasing arrangement would be split equally between the city and the water authority.

After advertising the RFP in September, the SDCWA expects to hold an interview process “towards the end of the year,” Kuzmich says. The water authority’s board then would approve negotiating with a potential developer. “That would be the basis for developing a project development agreement,” she says. Any completed agreement would have to be approved by the water authority’s board as well as San Diego’s city council, Kuzmich notes. “We’re hoping that by the middle of next year, 2022, that we’ll be able to complete negotiations for the project development agreement,” she says.

The initial activities related to environmental reviews, preliminary engineering, and licensure are expected to “take about four years to complete,” Kuzmich says. Construction is expected to wrap up in 2030. A preliminary estimate put the cost of the facility at about $1.5 billion, Kuzmich says. “But until the developer prepares a detailed cost model, the actual cost is not known,” she notes.

As envisioned by the city and the SDCWA, the energy storage facility would be completed at no cost to themselves. However, energy rates would later be increased to account for the operations of the facility, according to Kuzmich.

Multiple benefits

For the city of San Diego, the San Vicente Energy Storage Facility offers certain key benefits, says Alexandra Berenter, a senior manager of external affairs and water policy within the mayor’s office. “It will help avoid rolling blackouts in our area through on-demand energy production, and it will help meet both state and local climate goals,” Berenter says. “The project also could mitigate costs for water ratepayers across the San Diego region by generating additional revenue to help offset the cost of water purchases, storage, and treatment.”

At the same time, the project is designed to protect against the low reservoir levels that have forced at least one major hydropower facility in California to shut down operations in recent weeks. In early August, the California Department of Water Resources removed the 644 MW Hyatt Powerplant at Lake Oroville from operation because of declining water levels in the reservoir.

“This is just one of many unprecedented impacts we are experiencing in California as a result of our climate-induced drought,” the DWR said in an Aug. 5 statement. “California and much of the western part of the United States are experiencing the impacts of accelerated climate change including record-low reservoir levels due to dramatically reduced runoff this spring.”

Raising the height of the San Vicente Dam increased the extent to which the dam can carry over storage from one year to another. Therefore, the San Vicente Reservoir is less susceptible to annual fluctuations in runoff compared with other reservoirs in the state. For this reason, the reservoir “provides significant reliability,” Kuzmich says. “The additional water volume that was achieved with raising the San Vicente Dam provides enough water to reliably run this energy storage facility,” she notes. “That’s unique about this project.”

If completed, the new pumped-storage facility would be the fifth such plant in California. In fact, the SDCWA owns and operates one of those existing installations. The 40 MW Lake Hodges Pumped Storage Facilities includes a reservoir located below the water authority’s Olivenhain Reservoir. A tunnel connecting the two reservoirs conveys water through an underground pump station housing two pump turbines, each capable of generating 20 MW of electricity.

Although similar in layout, the 500 MW San Vicente Energy Storage Facility would be more than 12 times the size of its Lake Hodges counterpart, Kuzmich notes.

Funds for Pumped Storage Hydro Expected To Help Propel California’s Clean Energy Future

By: Cameron Schilling, Vice President, Market Strategies and Regulatory Affairs, NHA

Employees working at the San Diego County Water Authority and the City of San Diego likely won’t be taking much of an August vacation. Instead, many of them will be gearing up for preliminary studies, environmental reviews, and licensing activities for the proposed San Vicente Energy Storage Facility.

That’s because the facility – being proposed in partnership by the city and the county – received a shot in the arm in July 2021, when California Governor Gavin Newsom signed the state budget into law. Specifically, the budget includes $18 million in funding – enough to advance the project through initial design, environmental reviews, and the federal licensing process.

The proposed 500-MW project would be located outside of San Diego. It is designed to be closed loop or “off-river,” which means the facility will have few environmental impacts to the local area.

The city and county say the project is vital to supporting the grid’s integration of variable resources like wind and solar. Here’s an excerpt from a news release on the San Diego County Water Authority’s website:

“California sources nearly one-third of its power from renewables, mainly solar and wind. The target for renewable energy in California is 60% by 2030. Such a major shift to renewables will require new kinds of investments, markets, and business practices. Electric grids need to be more flexible; new kinds of power supplies will help deliver energy flexibility when needed; and new pricing systems are needed to send clear signals to developers and financial markets that these projects need to move forward.

Pumped energy storage projects are a major piece of the solution. They are designed to store excess renewable energy from solar and wind during the day, and then discharge that energy when energy use increases in the evening and renewable energy is not available.

Why It Matters

California has one of the strongest renewable portfolio standards (RPS) goals in the United States – to  reach 100% of retail sales coming from renewables by 2045. The state is the tip of the spear for regions who are trying to integrate renewables in a cost-effective, reliable, and swift manner.

As the electric power blackouts of 2020 demonstrated, that aggressive goal is being met by the stark reality facing grid operators who must balance load and demand on a 5-minute basis.

In recent years, grid operators have struggled with the “duck curve” with solar generation peaking in the middle of the day and receding at the same time load increases for the evening residential load. The end result is a daily 8-GW ramp in less than three hours that cannot be reliably filled with solar or wind.

The California grid will need roughly 50 GW of long-duration storage by 2050. In 2019, backers of the proposed San Vicente Energy Storage Facility released a whitepaper detailing the value this facility would bring to Southern California. The paper explained how the facility will be critical to serving both the morning and evening peak, while also lowering costs by absorbing excess solar in the middle of the day. Two years later, that need is critical as ever.

What’s Next? Still a Long Way to Go

While the $18 million in funding is a positive development, the proposed project still needs to be licensed by the Federal Energy Regulatory Commission (FERC) — a process that can take 3 years.

In 2018, Congress and FERC adopted a 2-year licensing process for closed loop pumped storage and for adding power components to existing dams. However, that expedited process requires the applicant to come to the Commission with a near completed application. So, rather than streamlining the permitting, the 2018 law merely truncated the same laborious process into a much quicker time frame. This is why no proposed pumped-storage projects have successfully applied for the expedited licensing.

All this means that the San Vicente Energy Storage project still has many hurdles ahead.

Yet, the $18 million from the state means the project can proceed into the next phase. “This $18 million in State funding is the jump start we needed for the City of San Diego and the San Diego County Water Authority to move forward with the environmental permitting and licensing that is needed,” said Gary Bousquet, Deputy Director of Engineering at San Diego County Water Authority.

At the National Hydropower Association (NHA), we see this project, and many others like it, will bring significant value to a California grid that is starving for long-duration storage.