Community Choice Aggregator (CCA) San Diego Community Power (SDCP) has signed an offtake agreement for a battery storage project being developed by SB Energy in Riverside County, California.
The agreement, discussed and signed off at a recent SDCP Board of Directors meeting, builds upon a previous contract between the two parties originating from a 2023 request for information (RFI) issued by the CCA.
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Formed in 2019, SB Energy is a US-based utility-scale developer backed by two multinational investment firms: Japan’s SoftBank Group and Ares Management Corporation.
1.6GWh BESS retrofit to solar farm
The contract relates to a 200MW/800MWh portion of SB Energy’s 400MW/1,600MWh Athos Energy Storage project located approximately 75 miles east of Parl Desert in Riverside County.
The 1.6GWh lithium-ion BESS is being retrofitted to SB Energy’s operational Athos Solar complex, comprising Athos Solar I and Athos Solar II, rated at 250MWac and 200MWac, respectively.
SB Energy acquired the Athos Solar I + II projects from Intersect Power during 2019 as part of a 1.7GW five-project portfolio of solar projects, covered by sister site PV-tech. Prior to the acquisition, SB Energy and Intersect Power were jointly developing the projects.
Under its Athos Storage LLC business subsidiary, SB Energy obtained permission from the California State Lands Commission in October last year to construct an up to 450MW/1,800MWh BESS at its Athos site.
SDCP opts for RA + TB4 agreement over traditional ESSA
SDCP first came across SB Energy’s Athos storage project towards the end of 2023, after the developer submitted an offer to an RFI issued by the CCA for projects seeking to apply to the California Independent System Operator’s (CAISO’s) 2024 transmission planning process.
Instead of negotiating a long-term offtake agreement, as the project hadn’t yet been awarded full capacity status by CAISO, the two parties agreed upon a short five-year resource adequacy (RA) agreement in July 2024.
This short-term contract not only satisfied a portion of SDCP’s RA obligations but also increased the project’s prioritisation with CASIO’s allocation of deliverability.
In the event SB Energy were to be awarded full capacity status, the five-year RA contract contained certain provisions compelling both parties back to the negotiating table to hash out details for a long-term energy storage services agreement (ESSA).
CAISO has since granted the project interim deliverability status through 2030, after which full deliverability status is expected, according to SDCP.
Despite this, the two parties have opted for a different approach after agreeing terms on a 15-year RA and top-bottom four-hours (TB4) agreement relating to offtake from the Athos Storage project.
Instead of an ESSA, where the buyer pays the seller a fixed price for attributes associated with the project, a TB4 agreement is a type of hedging contract that includes a financial energy swap.
Under the terms of this TB4 agreement, a fixed monthly energy settlement rate paid by SDCP to SB Energy is netted against a settlement rate paid in the other direction decided by CAISO locational marginal prices (LMPs).
The settlement price paid by SB Energy to SDCP is based on the sum of the four highest hourly LMPs in CAISO’s southern trading hub (known as SP15) in the day-ahead market, minus the sum of the four lowest hourly LMPs, for any given day.
In the words of SDCP, the agreement allows the CCA to ‘not bear the operational risk or administrative costs and burdens associated with ESSAs,’ due to SB Energy being responsible for scheduling and optimisation of its Athos Storage project.
In theory, the contract should allow SDCP to capture maximum arbitration value over four hours each day in exchange for a monthly payment.
On the flipside, SB Energy benefits from a guaranteed fixed monthly payment from SDCP, along with the potential of enhanced earnings through trading the BESS in CAISO’s various energy markets.
After reaching out for comment on the importance of this agreement, SDCP’s Chief Commercial Officer, Byron Vosburg, had the following to say:
“San Diego Community Power’s mission is to provide clean, reliable and affordable energy to our customers, and SB Energy shares this commitment. The Athos project will be a critical component to ensure that, not only are we adding energy storage to shift renewable generation to demand hours, but we are creating quality construction jobs that support the energy transition in our communities.”
The project is contracted to commence delivery by 1 January 2027.
SDCP affected by CAISO transmission delays
During the recent board meeting, amendments to a PPA covering 35MW of solar generation and 35MW/140MWh of BESS capacity from a project under development by NextEra Energy Resources (NEER) in Clark County, Nevada, were also approved.
The 15-year agreement, covering energy-only tolling rights and RA from a portion of NEER’s Yellow Pine complex, was contracted to commence in June this year. However, the commercial operation dates for energy-only and RA have been delayed by two and three years, respectively.
As recently reported by Energy-Storage.news, the completion timeline for NEER’s Yellow Pine project has been hugely affected by delays in the completion of an upstream transmission upgrade.
The transmission upgrade in question, jointly owned by Southern California Edison (SCE) and Los Angeles Department of Water and Power (LADWP) was originally expected to be operational this year.
