Dive Brief:

  • Toronto-based storage provider Hydrostor is developing 1,000 MW of long-duration energy storage in California, using a patented compressed air technology that, according to President and Chief Operating Officer Jon Norman, operates “effectively like a giant air battery.”
  • The company is developing two projects in the state — each with up to 500 MW of storage capacity and representing a total investment of $1.5 billion — that are scheduled to come online in 2026. Its compressed air technology can provide up to 12 hours of storage, but the projects are expected to have around eight hours of duration, according to Norman.
  • Regulators in California are growing increasingly interested in long-duration storage as the state moves towards its clean energy goals. Earlier this year, a California Public Utilities Commission (CPUC) ruling recommended that the state procure 1 GW of storage with a minimum duration of eight hours to meet system needs after the retirement of the Diablo Canyon nuclear plant.

Dive Insight:

Hydrostor has been pursuing long-duration storage in California since 2017, in part because the company saw a lot of market fundamentals in the state that are compelling for the technology, Norman said — a high renewables penetration, giant capacity needs that are set to increase, and an unwillingness to build more gas plants. 

The state’s last nuclear plant — the Diablo Canyon facility, which serves 10% of its energy portfolio — is set to retire in 2024 and 2025, and regulators are trying to figure out what to replace it with. The recent administrative law judge ruling, for instance, identified the need for 7,500 MW of resources in the next few years, including the 1 GW of long-duration storage. The state’s community choice aggregators have also been eyeing the resource, issuing a request for offers last year to procure 500 MW of long-duration storage that can come online by 2026.

Hydrostor sees significant potential in the state for its compressed air technology. It essentially works by using off-peak renewable electricity to run a compressor that produces heated, compressed air, which is then stored until it is needed. At that point, the compressed air is expanded through a turbine to generate electricity. 

One of the limitations of traditional compressed air energy storage is that it requires a heat source, which has generally been natural gas, said Norman — Hydrostor’s technology, however, uses the heat from the compression process instead.

The company is in discussions with the Southern California Public Power Authority about possible interest in long-duration storage, and is also looking to the state’s CCAs, Norman said.

Hydrostor’s technology is cost-effective for large-scale and long-duration projects, he added — from the 200 MW to 500 MW-plus range, and at a duration that’s four to six hours or greater.

The trick is to “find the sweet spot of how much duration is valuable for that utility, or that grid, versus how cheap we get to supply that duration,” Norman explained. 

But for, say, a 50 MW facility with less than four hours of storage, “we’re not that cost-effective — you’re probably going to build out batteries,” Norman added.

Long-duration storage could play an important role in California’s overall energy transition. Regulators have, over the course of different workshops, discussed some concerns around the state putting all its eggs in the solar and battery storage basket, said Jin Noh, policy director of the California Energy Storage Alliance.

“They see some potential benefit to diversifying” storage resources, he added.

For developers of new projects, including Hydrostor, the challenge is now in having buyers become familiar with the technology and its costs and benefits, as well as delivering the projects on a reasonable timeline, such as the 2025-2026 timeframe that the CPUC has been signalling, according to Noh. 

“Whether these projects, Hydrostor included, can deliver on that timeline and go through the usual interconnection and study process, and manage their supply chains to actually deliver on time — I think that’s going to be something to see,” Noh said.