PGE lands giant battery energy storage projects as grid transition fuels utility investment

Portland General Electric's (NYSE: POR), a leader in the battery industry, has announced contracts for two new massive installations. One of these projects, worth $360 million, is owned by the company.

The state's biggest electric utility is pursuing ambitious greenhouse gas reduction targets in 2021 Oregon laws.

The energy storage that was never considered when fossil fuels were the main tool to maintain grid reliability at peak demand can help utilities maintain grid stability and take advantage more cost-effective, but intermittent, clean energy resources.

PGE CEO Maria Pope told investment analysts in a Friday call that 'volatility is difficult' from solar and wind. These assets could not have come any sooner, and we are looking forward to their addition to our growing renewable portfolio.

These investments are also a source of growth for PGE, and highlight the opportunities that the grid-driven climate change can provide to electric utilities.

Spending $775M and counting

The North Portland project, combined with the $415 million wind power purchase announced in Montana last year, gives PGE $775 millions of capital investment out of a resource request for proposal from 2021. PGE has announced that it is nearing a final agreement for a battery energy storage project. This could add another $140 to PGE's base rate.

Investor-owned utilities earn a fixed rate of return on the rate base.

PGE officials reported that in a call with analysts they had noted a 61% "win rate" -- measured in megawatts, the ratio of company assets to contracted resources -- for the 2021 solicitation. The utility runs a competitive procurement process, which is overseen by Oregon Public Utility Commission and includes an independent evaluator. Some independent power producers have claimed that the process is biased in favor of utility ownership.

Pope stated in an investor call that he believes the competitive nature of the process helps to deliver the best project for the customer over the long-term.

PGE anticipates filing another request for proposal in the next few months.

The company's battery energy storage system announced on Friday is notable for its size and location. Both the North Portland system and Troutdale's will offer up to 200 megawatts in generating power for four hours. The two battery systems dwarf PGE’s largest system to date, a 30-megawatt four-hour project in Morrow County that was co-located alongside wind and solar resources.

Largest procurement outside California

These new projects are also standalone systems that will be paired with substations, and located close to the demand. This can ease grid congestion. PGE stated that the combined projects represented the single largest standalone energy storage purchase by a U.S. electric utility outside California.

In a press release, PGE stated that the projects 'would provide enough emissions-free energy to power approximately 260,000 homes for about four hours at times of peak demand (5-9 pm on weekdays).'

The battery systems are expensive, but they can provide PGE with an alternative for the wholesale market in times of high demand, such as during heatwaves or cold snaps.

Both projects are the work of California developer Eolian, and frequent PGE partner NextEra Energy Resources will operate Troutdale's facility. NextEra Energy Resources will also provide power from Troutdale to PGE under a twenty-year agreement.

PGE stated that the North Portland project will begin operations in mid-2025, and the Troutdale facility at the end of 2024. The Business Journal published a report in February about Eolian's North Portland plans. The project will be located in the Rivergate Industrial Area on the former Time Oil Site along the Willamette River.