California eventually wants to run entirely on sources like solar and wind power. For now, it’s aiming to make 60 per cent of its power use renewable. To reach these targets, the state needs to be able to store power it produces – solar power, for instance, is lost unless it’s used right away.
Batteries can hold on to renewable electricity and then deliver it when peak time evening demand kicks in. Utility company Pacific Gas & Electric invited bids to provide the batteries, and power company Vistra wanted to tender. They had plans for a 300MW battery capable of supplying 250,000 homes. Not only was it around double the size of anything else of its kind in the world, but it would also help the business diversify beyond its existing coal and gas-fired generation.
First they needed to know if the move made economic sense. And that’s where we came in. While Pacific Gas & Electric’s contract would give it access to the battery’s storage capacity, it wouldn’t necessarily commit to buying all the energy. So we projected revenues Vistra could expect from the rest of the market. That meant accounting for factors like growing competition from other battery providers, changes in regulations and the fluctuating value of energy.
We showed there was a business case for Vistra to make the substantial investment needed to develop the battery. They were one of three successful bidders. The battery will start supplying power in 2021, bringing California closer to its ambitious targets for renewable energy.