Is This The End For Natural Gas Peakers In CA? Strata Solar's Big Storage Play

'Wave of the future:' Oxnard battery storage system up and running

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Environmental-justice activists in California fight off a new gas plant, get a giant Tesla battery instead

OXNARD, Calif. — What hits you first is how humble it looks. A series of white metal boxes on two dusty acres across the street from farmland. It emits no fumes and makes barely a murmur. It's one of the biggest grid batteries in the world.

The collection of Tesla Megapacks, formally unveiled Tuesday, delivers enough power to run the coastal city of Oxnard, Calif., for four hours in a pinch. Most of the time, the battery serves the broader grid, soaking up California's surplus midday solar power and then delivering electricity during more expensive evening hours.

What sets this battery apart from others like it is that it enabled local activists to stop a plan to build a new gas plant in its tracks, in a long-shot environmental-justice campaign that points to where the clean energy transition is headed.

Now the battery site demonstrates how to locate large amounts of power within populated areas, said John Breckenridge, head of clean energy infrastructure at Capital Dynamics, which owns the battery.

“We're now going to be able to bring people here and [show that] this is pretty benign,” he said. “It doesn't make any noise, no pollution — it's all protected.”

It used to be that if a utility needed more power at key hours, it built a natural-gas-fired peaker plant — and in many places around the country, that's still the case. Nothing else compared in terms of cost and reliability.

So when utility Southern California Edison needed more power back in 2013, it gave the contract to major power producer NRG Energy to build the Puente gas-fired plant on the beach in Oxnard.

But the people of Oxnard — an agricultural city of 209,000, nearly three-quarters Latino, down the coast from more affluent Carpinteria and Santa Barbara — didn't want another industrial facility polluting the coast for decades to come. They already had two power plants and a Superfund site eating up their stretch of shoreline.

“We actually do have the best beaches in Ventura County. We want to protect them,” said Ventura County Supervisor Carmen Ramirez at the battery plant ribbon-cutting on Tuesday.

But the lights must stay on, so the gas plant resistance could succeed only if activists offered another option. That's where batteries came in.

Back in 2017, batteries had proved themselves as a grid tool. They helped California shore up capacity when the Aliso Canyon gas leak threatened the power supply in the southern part of the state. But at the time, nobody had built batteries at a scale to rival power plants.

A state inquiry into whether batteries could work in Oxnard determined they would be three times more expensive than gas. But that report relied on pricing assumptions that were already outdated, and therefore wrong, as I reported in 2017. Later that year, the California Energy Commission decided not to grant permission for the Puente gas plant to be built.

When SCE called for new bids to replace Puente, the biggest project went to Strata Solar, a North Carolina–based developer and owner of solar plants. This was the company's first foray into large-scale energy storage, which is now a key growth area for Strata.

“We created a very interesting template for how [to] do this at scale, so it’s better, faster, stronger for the next one,” said Joshua Rogol, Strata's chief development officer.

That said, the construction process in Oxnard was both fast and safe. The batteries went in between the summer of 2020 and the end of December, and no workers contracted Covid-19.

Strata now has several gigawatt-hours of storage under “active commercial negotiation” in the West, plus half a dozen standalone batteries contracted in the East.

After developing the site, Strata sold the project to Arevon, an affiliate of Capital Dynamics, which invests massive amounts of money to construct and operate clean energy projects for the long haul.

The Oxnard project is Arevon's first large battery array to come online, but the company has nearly 10 times as much storage capacity in the construction pipeline, Breckenridge said. He declined to say how much the battery cost to build but did say it was less than half of what the gas plant would have cost.

Furthermore, the utility contract that kicked off development actually delivers a minority of the plant's revenue. Capital Dynamics engaged the company Tenaska to bid the battery into California's wholesale markets, and the money it makes there unlocks a lower rate for the utility contract compared to gas plants, which have higher operating costs.

“The ratepayers are way better off,” Breckenridge noted.

When the battery delivers peak power at a competitive price, he added, that incrementally suppresses prices and could prevent gas peakers from hitting the prices they need to reach in order to fire up.


Clean grid trendsetter

When the Oxnard battery was first proposed, it flouted the conventions of grid planning. Since then, California's clean grid transition has followed Oxnard's lead.

The state extended the lives of some old gas plants that were supposed to retire, but it has not built any new gas plants since the plans for Puente were canceled.

“There's not going to be any more gas-fired power plants,” said Ramirez, who before joining the local government worked as a lawyer representing farmworkers exposed to pesticides. “This was going to be the last one. Not going to happen anymore.”

Gas currently plays a pivotal role in California's grid. The state enjoys an abundance of midday solar but suffers a dearth of evening power. Gas plants ramp up to keep the grid supplied when the sun sets.

But California authorities recently shifted to batteries as the default resource for new on-demand power plants. The biggest affirmation of this vision came in June when regulators approved a plan to build 11.5 gigawatts — roughly 25 percent of current power plant capacity on the state's grid — all from fossil-free sources.

The new normal is solar plants that fill up batteries to serve evening demand. Other clean resources could fill in gaps, like geothermal, pumped hydro storage, and emerging long-duration storage technologies.

If Oxnard's battery had arrived a little sooner, it could have nabbed the title of biggest battery storage facility in the world. But Vistra Energy built an even bigger one at Moss Landing to support the Bay Area grid. It's anybody's guess how big plants will get to be able to fulfill the 11.5-gigawatt order.

No other states have built batteries as enthusiastically as California, but numerous communities elsewhere grapple with harmful power plant exhaust. Whether or not to build new gas plants has become a crucial point of conflict in grid planning across the U.S. Doing so now could jeopardize grid decarbonization timelines and saddle customers with unnecessary costs as cheaper, cleaner options shift economics.

“We owe a debt of gratitude [to the people of Oxnard] for raising the alarm bells and avoiding a suboptimal outcome of contracts that would allow for these thermal plants to continue operating,” Rogol said.

The “overwhelming support” of the community helped Strata clear the Ventura County permitting process without opposition, he added, a rare feat for any new power plant.

There are lessons there for activists as well as clean energy developers. Ramirez, at the ribbon-cutting, captured the expanding sense of what's possible by quoting Nelson Mandela: “It always seems impossible until it's done.”

The city's environmental justice organizing is not done, however. Work is underway to deconstruct the old power plants still occupying the waterfront, Ramirez said. And then the county must deal with the aftermath of oil extraction that in some cases leaves abandoned wells for taxpayers to clean up.

As those battles continue, Oxnard's battery stands as a quiet reminder that coordinated action can change the energy landscape.