Debt finance

“Historic” 100MW BESS Debt Financing Deal Online in California

Luna Battery Storage, a 100MW/400MWh battery energy storage system (BESS) project in California that secured a “historic” debt financing deal, is now online and serving the community choice aggregator Clean Power Alliance (CPA).

CPA has contracted 100MW of flexible energy storage capacity for 15 years with AES Corporation, which owns the project and developed it through subsidiary sPower – which was later merged into the parent company , becoming AES Clean Energy.

The CPA said last week that it is now receiving clean energy capacity from the City of Lancaster, Los Angeles County system.

“This resource will capture renewable energy during the day when solar power is abundant and send clean energy back to the grid during peak energy demand periods,” said Natasha Keefer, vice president of the CPA power supply.

“The Luna Battery Storage Project is a critical resource and CPA is proud to bring it online in time to meet California’s grid reliability needs this summer.”

As regular readers of note that California has been pushing to deploy battery storage as one of many tools to help the state integrate higher shares of renewable energy and ensure power grid stability because it does because the legacy thermal generation detaches from the system.

Network and wholesale market operator CAISO has targeted cumulative deployments of 4 GW in its service area – covering approximately 80% of state electricity customers – by the end of summer 2022 This effort continues, although recent months have seen some slowdown in the rollout.

California’s Community Choice Aggregators (CCAs) like CPA have become prolific in sourcing energy storage resources over the past two years, and Luna marks CPA’s third standalone battery storage project to date in the state.

One, Johanna Energy Storage System, in Santa Anna, Orange County, is a 20 MW/80 MWh BESS that went live in October 2021 through developer Hecate Energy’s joint venture (JV) with the investor InfraRed Capital Partners, built by Mitsubishi Power and with inverter and power conversion equipment supplied by Ingeteam.

The other covers part of the battery capacity of Edwards Sanborn, a project under construction in Kern County by developer Terra-Gen and EPC partner Mortenson, which also went live in late 2021. When completed, with 760 MW of solar PV and 2,445 MWh of battery storage, Edwards Sanborn appears to be one of the largest, if not the largest, solar plus storage projects in the world to date.

CPA is among the many buyers of this project and, like Luna Battery Storage, has signed a long-term contract for 100 MW of battery storage. Meanwhile, the group, which has around three million customers in California, has also secured renewable energy contracts from various solar-plus-storage projects. This includes EDF Renewables’ Desert Quartzite project, combining 300 MW of solar PV with 600 MWh of batteries.

At Luna, Fluence, a global systems integrator and manufacturer of battery storage solutions, provided its sixth-generation Gridstack BESS solution. AES is one of the main shareholders of Fluence.

In February 2021, SPower entered into a US$152.4 million non-recourse debt financing agreement for the project. At this moment, was told by Frank Beckers, a partner at clean energy consultancy and consulting firm Apricum, that this was something of a “historic deal”, which demonstrated “the ability to leverage significant funding by project loan for a stand-alone large-scale battery storage project,” thanks to the long-term revenues that have been secured through the energy storage agreement with CPA.