[0:24] So, whenever you're here, I'll do anything before, but this will get you back. And then if they go,

[0:29] Okay, can you go back to that slide?

[0:31] It's just those two.

[0:32] I don't need that.

[0:33] All right.

[0:36] Is

[3:45] everybody ready?

[3:46] Everybody have their things?

[3:48] Okay.

[3:49] Are we good?

[3:49] Okay.

[3:50] Five, second.

[3:54] Good evening and welcome to the Strategic Development Committee

[3:56] and Special Board meeting of April 9.

[3:58] This room is equipped with a safety alarm.

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[5:04] Chief legal officer, please conduct the roll call.

[5:08] Good, Dr. Sanborn?

[5:10] Here.

[5:11] Vice President Fishman.

[5:13] Here.

[5:13] Chair Bui Thompson.

[5:15] Present.

[5:15] All committee members are present.

[5:17] Also present are directors.

[5:19] Curth, Tamayo, and President Hurley.

[5:22] Great.

[5:23] Item number one on tonight's agenda is provide the board external and internal presentations

[5:28] the 2030 Zero Carbon Plan, specifically around long duration energy storage and battery energy storage system strategy.

[5:37] We have several presenters this evening.

[5:40] First, we have Mike Gravely, he's the teen lead and senior electrical engineer for the energy systems resource research office for the California Energy Commission.

[5:53] Mike, you can take it away.

[5:57] Okay, I will point out if you have questions I have a hearing aids and so it's part I may need a little help

[6:03] Answering the questions or understanding the questions. So I'll migrate it from the commissioner

[6:07] I've been to commission over 20 years working in your storage the whole time prior that I was in industry storage industry for both the military and

[6:13] Private industry so a long history on industry storage today

[6:16] I want to talk about what we're doing in California with the primary focus on

[6:20] Longer Asian storage as we go for it. I'll start with a quick

[6:26] So this is actually from a governor's presentation a several months ago and it just shows what our plan is to reach our SB 100 gold.

[6:35] And right now we're looking at about 60% and clean energy.

[6:40] We have gold of 90% by 2035 and a gold of 100% by 2045.

[6:45] So in the analysis, the CEC is the lead agency of the state to help us to direct us to get to this gold and

[6:52] And we worked with the other state agencies and then they put out a report in 2022, next

[6:58] chart.

[7:00] That shows what that means in the area of storage in general they had a chart, next chart,

[7:06] I'm sorry.

[7:07] Okay, no.

[7:12] What did it meant in storage and what it meant in solar so they're in the report?

[7:16] They said we needed to, from where we are in 2022 to get to where we want to get in 2045,

[7:21] We need to buy renewables that are paid three times faster than we had up history, but

[7:27] energy storage, we had to buy it at eight times faster than we have in the past.

[7:32] Now this chart here shows where we were in 19, and actually this was a little early, so

[7:36] by the end of 23, we actually had 8,000 megawatts of storage under grids.

[7:42] We went from 250 to 8,000 in four years, so pretty radical and pretty substantial successful

[7:48] charge to get us to where we want to go, and in 2035 we're looking at roughly 20,000 megawatts and 52,000 megawatts, and again in that plan currently it says about 2035 we should have about 2,000 megawatts along the recent storage and in 2045, 5,000 megawatts along the recent storage, so that kind of gives us a gold to work with next chart.

[8:19] So I work in the R&D division and have for a long time, we have the current program, which is the Selected Program Investment Charge.

[8:26] I go back many years from, you have the peer program and Smud was our most successful awardee receiving more peer funds than any other entity in California.

[8:38] But so we did a large cessation back, started in 19 and we awarded in 2020 about 25 projects of which 11 of those were for

[8:48] longer racing storage. Eight of them were actual demonstration projects of 10 hours or more.

[8:53] And then three of those were early stage research for a hundred hours of storage. And one

[8:57] of the interesting things we're learning and most of you will hear later form energy is

[9:01] that a hundred hours storage seems to be an interesting design point that keeps coming

[9:06] up. And so the three contracts were three different technology approaches to a hundred hours.

[9:12] All three of them projected the same. That commercial stage they would be able to produce

[9:18] their product at $10 to $20 a kilowatt hour per current prices or $300 to $400 a kilowatt

[9:25] hour for storage.

[9:26] So a pretty substantial change if they're able to reach the goals they have next chart.

[9:37] So in 2022 or actually before that we requested funding of one of the challenges I mentioned

[9:45] with the 8,000 megawatts of storage we have virtually all of it, 99% is one technology.

[9:50] Let me admire it.

[9:51] So if we go forward, there is a value in diversification for a lot of reasons, but

[9:56] also we believe that long-distance storage provides some benefits of lower cost, and

[10:02] the picture of things, higher reliability, longer duration, and better safety records.

[10:09] Most of these technologies do not have thermal runaway or other issues that we've addressed with lifting my up.

[10:15] So we received $330 million last year, and also one of the things we asked for it received was the

[10:23] position of the ability to do non-competitive awards for people who met a certain criteria.

[10:29] And that's in the bill, and also the thing that's in the law is that we define long-duration storage in

[10:34] California as eight hours or more.

[10:37] DOE right now in their documentation claims it as 10 hours or more, but

[10:42] but the roughly the two of them are the same.

[10:45] So going forward, that's what we're doing here.

[10:47] So I'm going to kind of cover with you where we are today.

[10:49] We've been, by virtue of doing the non-competitive award,

[10:53] we actually awarded our first grant in less than four months.

[10:57] And we've been continuing to work that way

[10:59] and I'll show you all the projects that are in process

[11:01] as we go forward.

[11:03] Next chart.

[11:06] So we currently are working with fielding

[11:10] and working on agreements with six different non-lethian

[11:13] my own, long-duration stories technologies.

[11:16] And this is a list here.

[11:17] Obviously, you'll recognize iron flow

[11:19] and because we do have a project

[11:21] that I'll talk about briefly here.

[11:23] For that, we're three of these technologies.

[11:25] Our flow batteries, one of them is the zinc.

[11:28] The other one is iron here, and the other one is zinc here.

[11:32] So the bottom two are both technologies

[11:34] that have the ability to hit that 100 hour mark next chart.

[11:39] So, we do have a project with SMAD.

[11:43] Jehoi Yang right there is our project manager, so you'll see more of him as it goes along.

[11:48] He's working with your team to actually do that.

[11:50] We are in the process of developing the grant as we speak, 10 million from the C-20 million

[11:57] from the SMAD, and we're looking at a project that's about 3.6 megawatts, 29 megawatt hours,

[12:03] and I think you're going to hear a little bit more about this when you hear your SMAD presentation.

[12:07] So, we're interested because of the technology difference.

[12:11] And one of the reasons we're able to use SMUD, and this is a non-competitive award because you previously won the OE award.

[12:18] And you haven't seen previously won many C awards under the peer program.

[12:22] So, you qualified under the law for a non-competitive award.

[12:26] And by virtue of going to you, you can select who you want to be your energy source provider.

[12:31] And because you were working with this company, which we were very interested,

[12:34] If they do, every other, the five of you, the five,

[12:36] all had previous epic awards.

[12:40] The ISS is the only one who doesn't have an epic award.

[12:42] So we are interesting in the recent Smudge use

[12:46] to pick them, and I understand many of those,

[12:48] and we're very interested in working.

[12:49] We also are very excited about having a project

[12:52] in our backyard, so as we go forward,

[12:56] most of our projects are either way north or way south,

[12:59] and so it's typically a flight or a day trip to see them.

[13:02] We're hoping later that we'll be able to bring the legislature and our members and your

[13:08] members to get together and hopefully leverage that for additional funding in the long

[13:13] future.

[13:14] Next chart.

[13:16] So our first project we awarded October of 22 was with the VA House tribe in San Diego.

[13:25] It was for $31 million.

[13:26] It was the largest grant this California had ever given to a Native American tribe.

[13:31] And this particular case, there are a very aggressive project on the left that shows you up in the upper right corner is a storage, 60 megawatt hours of storage.

[13:40] The middle is solar, and all the less is a big parking garage where they're putting in electric vehicles.

[13:45] And they're doing it in complete upgrade.

[13:47] So this is, we're putting in an additional, we're actually adding 10 more megawatts as we speak.

[13:52] We're doing an amendment to that project to bring it a little bit bigger.

[13:55] They're commissioning, as the picture shows, they're putting in the systems now,

[13:59] the batteries are sitting on the ground waiting to be installed.

[14:02] That will be the largest at 35 megawatt hours.

[14:06] It'll be operational in July and it'll be the largest non-Lithia Mayan system in California.

[14:12] Not the country but in California, next chart.

[14:16] The other one, if you've been around for storage and don't know who form energy is,

[14:19] it's kind of missed a few things.

[14:21] We have a project with them in the Bay Area to do a five megawatt, 500 megawatt hour system.

[14:26] It is the largest, not lithium ion system that we've awarded to date.

[14:30] We've awarded that in December and we're expecting them to commission in about two years.

[14:36] It is the front of the meter applications.

[14:38] We're doing both front of the meter and behind the meter applications with these funds.

[14:43] And it's very important for us to understand how it's interesting that those who followed

[14:47] foreign ministry, foreign ministry has six gigawatts of orders and they haven't

[14:52] filled with a system yet so we also are one of those. We have a lot of

[14:55] confidence in their ability to perform but it's going to be there is an

[14:59] element.

[14:59] Okay.

[15:00] It'll be nice for making a walk up and touch the trailer and see it work. Next chart. Is that one, is that one a zinc technology? So again, is that zinc? No, that's the iron air technology. So it's similar to what you're doing, but not exactly the same, but the same iron air and iron flow are probably the closest to the six that we're working with. So, from there. And it turns out, I guess you guys know, but I iron based technologies have a long

[15:29] I mean, 100-year history is not something, it's not a technology that is involved in one of the good things for us in today's world is almost all of their items are sourced in the U.S.

[15:43] They don't have to go outside of the U.S. to build their system, so that's something that's very important to California and the U.S. right now.

[15:49] Let me get in a little, so let me add, can you just explain how the iron air technology would potentially work for a lay person?

[15:56] I'm sorry.

[15:57] What?

[15:57] How is that technology going to work?

[15:58] Do you take the iron and you burn it?

[16:00] I'm going to let these guys produce that a little later.

[16:03] It's just a battery.

[16:04] I mean, to me, I'm sorry.

[16:05] I'm a luxe engineer, not a chemist.

[16:08] And so it's just basically a battery that flows back and forth.

[16:11] I mean, the difference between that there's and flow and form is substantial.

[16:16] And the way they build it, it's still the same technology.

[16:19] So it basically, you know, what form in it you says is they're making rust.

[16:24] And then they're taking it off and building it up and taking it off and they're energy transfers when they do that

[16:30] On the on the cathartic standards

[16:34] So this one is actually a flow battery. This was the zinc bromine from red flow

[16:39] This is up north here. We're actually on thirsty. We're having a ground breaking ceremony on that one

[16:45] So everything is done and we're ready to get started on that project and we're having a big a big presentation with the travel

[16:51] members and our community and the chair of our commission and another of our commissioners will be there.

[16:57] So this project will basically provide them energy research.

[17:02] One of the things you can see two of these projects were specifically for tribes that was at the specific direction of our chair.

[17:10] About a year ago, the CEC five commissioners and the PUC five commissioners all met at a triple site in Northern California.

[17:19] And the first time all ten have ever been in the room together, and they've passed the resolution.

[17:24] And the resolution basically says, look to the teacher, and we're going to help the tribes with their energy independence,

[17:31] help them grow and help them prosper.

[17:35] And so these are two examples of where we're actually delivering on that promise to help them become energy independent.

[17:42] And also, more economically viable, this particular project will reduce their cost by 50%.

[17:48] They also are FEMA rescue area up in the north.

[17:52] So when there's wildfires and storms, they open up their tribe, all area, and

[17:56] people come in that have lost their electricity or lost their ability to stay in home.

[18:01] So they are providing not just for the tribe, but the local community services also, and

[18:06] these batteries will allow them to provide even higher levels of service.

[18:11] Next chart.

[18:13] We do a lot of work with the military.

[18:15] Penal 10 is one, we're doing a special project.

[18:19] Most people know that storage right now has this thing called the investment tax credit.

[18:23] And you can get 30 to 40% of your money back.

[18:27] So it makes it a great investment.

[18:29] So at this case, we're trying to do a third party own and operated large system, 300 megawatts.

[18:35] It's the biggest it'll be, it could be less than that.

[18:37] And it'll support the base for reliability reasons, and when they have exercises and contingencies.

[18:43] But that only happens a few hours a year.

[18:46] The rest of the time, they don't really need it, and it's going to be making money in the

[18:50] market selling energy.

[18:51] And so the goal here is to develop and demonstrate to the marketplace that Energy Storage and

[18:57] California and the world can actually make money and be profitable in these environments where

[19:02] they're able to both provide services to the immediate owner but also provide energy on

[19:09] the open market to support the grid and the reliability of the grid.

[19:13] Next chart.

[19:14] We're also doing a more classical project in the Navy based

[19:17] San Diego.

[19:18] They put in a bunch of solar, and we wanted to do a demonstration

[19:22] with another of our technologies.

[19:24] So we agreed to put in an eight megawatt hour system there.

[19:28] This is an interesting one, because it's space limited.

[19:30] And we have to limit our potential bidders to companies who

[19:34] can double stack their batteries.

[19:35] Most of these are in commercial trailers, commercial containers.

[19:38] And we want them to double stack them to be able to fit

[19:42] and the space to air. So we've got at least four technologies that we feel are viable,

[19:47] and we will have some type of limited competition for this one once the site is ready to go for it.

[19:52] Next chart. The other thing we've been doing is we have some additional work we're doing. We have

[19:57] a test facility that's located on Mirmar, a rain station in San Diego. It has five test stations

[20:03] right now. We're testing the first site as EOS, and it has infinity batteries, both. So the two of

[20:11] So we're testing both of them, we have a trailer, we're running through the full spectrum, we're testing performance, we're testing reliability, response time, safety procedures, and all those things are being developed there, and we will procure the next six months, a ESS battery that we will be putting in the facility to run through the same type of testing.

[20:31] We also received two DOE awards.

[20:33] One of them was with a contractor we have a long history with, and it's with the Valley Children's Hospital.

[20:40] And what we're trying to do is demonstrate the ability to get away from diesel generator back up and go into clean solar and storage.

[20:48] One of the interesting things, all these sites have unique elements, but this particular hospital is in a disadvantaged community where the large portion of their clientele and

[20:58] and patients use subsistence and special insurance.

[21:02] And if something happens, say there's a outage or a PSPS event

[21:07] and they're gonna go to the doctor

[21:08] and they go there and it's closed down,

[21:10] they have to drive three hours to get to the next hospital

[21:14] that will take their insurance.

[21:16] Pretty substantial.

[21:17] This system should allow them to run 24 hours a day

[21:21] and not only the emergency room and the surgery area,

[21:26] but the clinics will be backed up also, so it's a pretty substantial impact to the local community.

[21:32] The second project we're doing is with EZ Inc, which is one of the other two.

[21:35] I mentioned it was 100-hour candidate.

[21:37] We're doing a 12-hour system with them with the DOE, San Diego, we're actually doing it in Livermore.

[21:45] And we'll be demonstrating their capability to do this and then the next step for

[21:50] of them would be to go up to be able to do a multi-megawatt

[21:53] under-hour system and one of the next steps for it.

[21:57] Next chart.

[21:59] The other thing that we were doing with the funding

[22:02] is we're looking specifically, if you remember,

[22:04] that chart showed you we're going from, you know,

[22:06] from eight to 19 and a half to 52.

[22:09] So what happens is two things.

[22:11] One, when you have eight, you can use it all.

[22:14] When you have 19, you probably need it all

[22:15] no matter what it is.

[22:16] But when you hit the 50, you don't really need everything,

[22:19] but 60 to 80 hours a year.

[22:21] You don't need it 24 hours a day, seven days a week.

[22:25] And so the question becomes,

[22:26] one, how can we use long duration storage

[22:29] to lower the cost of supporting the state?

[22:32] And second of all, how can we develop new rates and tariffs

[22:36] so that someone today puts in a 100 megawatt eight hour system

[22:41] and in five years, you know, the first year

[22:43] they're being called every day.

[22:45] And the next year they're being called every other day.

[22:47] And the next year, twice a week, and then once a week, well,

[22:50] eventually they're going to get to the point where they're insolvent.

[22:52] So one of the questions we get into is when you're doing these projects and

[22:56] expanding with so much, how do we ensure that what we're putting in is valuable and

[23:02] we're not building a system that's going to collapse later.

[23:07] And so we're doing this analysis, we're looking at rate structures, we're looking at scenarios.

[23:11] To try and provide California the best understanding of what's the best

[23:16] this mixture of the different technologies, and what's the cost realism, and how can we leverage the most cost effective solutions to meet those needs?

[23:27] Next chart.

[23:28] So obviously, commercialization is a big fact, and in California, the price of lithium ion is basically.

[23:36] And so when I meet with all these companies, and I probably met with 40 companies in the last year that are not lithium ion providers, I ask them two things.

[23:43] One, when can you produce a gigawatt a year because most of them are doing it by hand.

[23:48] And what we've learned is if you can automate your production line, you can drop your price

[23:54] 30 to 40% just by automating it versus doing it manual.

[23:58] So that's become price competitive, which is the second thing, when will you be price competitive

[24:03] with lithium ion.

[24:04] So it's nice to have long duration storage, but we're not going to pay twice the price

[24:09] of lithium ion for long duration.

[24:10] If they can't give them, if they're not cross-dependent,

[24:12] then it's going to go away pretty fast.

[24:15] And so this chart just shows you the different technologies

[24:17] and the research we're doing to show you where we think

[24:20] they are when it comes to being able to become

[24:23] cross-competitive against lifting my own.

[24:26] Next chart.

[24:29] The other thing that we run into obviously here,

[24:31] everybody from here with a couple of fires we had

[24:34] in California at Moss Landing.

[24:36] And so one of the things is now we're

[24:38] interesting different technologies. So when the fireman shows up, in this case in San Diego,

[24:42] there are two technologies that are neither one that they're in. So what do they do? How do they,

[24:47] we don't want them to just turn to water hose and destroy the battery. So we're training them

[24:51] on the unique elements of these flow batteries and these liquid water-based batteries.

[24:57] One of the things we learned early was some of these systems can leak and where the

[25:02] chemicals are not toxic or not deadly, they still cause irritations on your skin

[25:07] And then you would normally wear kind of a hospital, I mean a robe, and wear gloves.

[25:13] And they say, well, we don't have that stuff.

[25:14] So one of the things we're going to do is we're going to put a trailer on site with all that gear right there for them.

[25:21] So when they show up, then they'll have what they need.

[25:24] And as we go through these six different technologies, we're going to develop what we consider a process for

[25:30] of the firefighters to be able to respond to their issue

[25:34] with to resolve the problem

[25:37] and ideally without doing additional damage.

[25:40] Let's start.

[25:42] And the last slide here is just to point out

[25:44] one of the things we're learning.

[25:46] So I've been doing storage a long time

[25:47] and storage in general up until recently,

[25:51] these projects, sequel was not a big deal

[25:53] because there was somebody's sequel exemptions

[25:55] when you're doing solar on the parking lot,

[25:59] solar on the roof. You don't need a waiver storage systems. It's at your backup storage.

[26:05] You're put to half a megawatt or a megawatt. Well, you do 30 or 40 megawatts.

[26:09] All of a sudden, none of those fit. And I was said, now you've got this big battery

[26:13] all over the field. And you have to do an environmental study. You have to do everything to complete

[26:18] SQL. So it's for us for all projects. And so an example is to form an energy project that we have

[26:26] in any Bay Area, the battery being installed on PG&E lands,

[26:30] most of it inside the fence of their substation.

[26:33] We spent six months getting to seek what done, to answer all the questions,

[26:38] where the answer for the people who live next to it, about what's toxic,

[26:43] what's how's it going to affect their quality, how's it going to affect my roads,

[26:46] how's it going to affect these things, and those things, so we end up hard to do that.

[26:49] So, there's an element where we do these projects that we're learning,

[26:52] And even with Smud, even though you guys have done it for us to award to 10 million,

[26:57] we have to complete sequa as we define it.

[27:00] And so we're working in how I was helping.

[27:02] We're working with a contractor to work with Smud so we get that done.

[27:05] Because we have to have that done to be able, and the current plan is to award that grant by July.

[27:12] And the other thing is, it's been through campus.

[27:14] I've been doing a lot, I mentioned a couple of projects that were commercially valuable projects.

[27:18] I've had many discussions and one of them asked me, well,

[27:22] I give them the whole story of why we selected the technology, how reliable it is, our history with it, and they say, well, what do you do for no work, how do you know it's not going to work?

[27:33] Well, I mean, I can't see it's going to work because we haven't built one that big yet.

[27:36] We built a small one, but not a big one.

[27:39] And we've been through with them with a bit different versions.

[27:41] So it was a fair question, but I mean, we try to answer this.

[27:44] So, we're finding that more and more investors are stepping up.

[27:48] I have an investor that I'm working with who has 200 megawatt, eight hour projects, proposals,

[27:57] TPPA with two utilities in California and they're prepared to back up the 20 year PPA.

[28:03] I only have one, none of the other technology has brought an investor ready to do that yet.

[28:08] So, and then, of course, one of the benefits now with the ITC is the faster you do it the

[28:14] more you get, the longer you go away, the actually see value comes down.

[28:18] So there's a big point to try to get these projects and if you can do the manufacturing

[28:22] in the U.S., then you get another 10 percent, and next year, I think I see it.

[28:28] So I'm happy to answer questions or turn it over to your next speaker.

[28:32] Any questions at all from the group?

[28:35] Mike, thank you.

[28:35] This is, I mean, it's really encouraging to see that some of the new technologies and longer storage that are actually getting approaching viability, so that's good.

[28:44] We've got, I mean, all the projections are showing a big increase in battery electric vehicles, fleets, buses, and private cars.

[28:54] It's the CDC doing anything to ensure vehicle-to-grid technology and also the market structures that needed to that.

[29:03] So we're doing all, we're doing all that.

[29:05] So when I mentioned that project, we did $100 billion,

[29:09] 25 grants, so a level of a malongration storage,

[29:11] we had vehicle second use.

[29:13] We had lithium-ion improvements,

[29:15] so they were looking for the technology improvement.

[29:16] We had lithium-ion life extension,

[29:19] and also we're doing a lot of studying on recycle.

[29:23] What do you do at the end of the life and what it is?

[29:24] Now, you know, one of the discussions I have,

[29:27] I'm not talking about non-lithymionist,

[29:29] that how many here have a cell phone or a laptop?

[29:31] And so, again, how many has yourself on the laptop with a 10-year battery in it, and nobody

[29:36] raises their hand?

[29:37] It's the same technology, isn't it, so the more you use it, the more people tell you

[29:40] it's like a loaf of bread.

[29:42] The more slices you pull out, the faster the good loaf of bread goes away.

[29:46] Not true.

[29:47] If somebody thinks you can exercise them every day from zero to top all day long, and in 20 years

[29:52] they continue to operate with maybe two or three percent reduction, but nothing substantial.

[29:57] So there is some value when it comes to these.

[30:00] I actually, I've been doing a grant with the help of the light rail system put in a grant because they wanted to look at their system and they have, and we did this once, actually, we did a project with smud many years ago with the light rail system, not what you used to let the Mayan battery stand, but we're using batteries. So when the train comes in, it charges even at least at this charges. And so, but in their case, they go from zero to ten megawatts for five to ten minutes and they're backed out of zero, and they don't do anything until the next train comes in.

[30:29] which is 45 minutes, I said,

[30:31] but that's a terrible, you know, use case for the Lithuanian.

[30:35] But it's not the terrible use case for many of these

[30:38] non-Lithuan mind, but again, no one's proven it works yet.

[30:40] So that's the type of thing we're doing.

[30:42] So fortunately, I am finding there's no shortage of investors

[30:47] who will invest in companies as venture capitalists

[30:50] where they can invest for 45 years

[30:51] and sell their shares and get their money back.

[30:54] There is just not a lot of them that are ready to say,

[30:56] OK, I'll make my five or eight percent a year for the next 20 years.

[31:00] And how do I guarantee you'll be here in 20, 25 years because the one difference is in here

[31:07] is with not only if you mind I showed you to a six different technologies and they're all

[31:11] pretty different.

[31:12] If one of those companies is out there and you have a 20 year PPA and they go bankrupt because

[31:17] of embezzlement or because of just pure mismanagement, nothing to do with technology, just pure mismanagement.

[31:23] It's hard to find somebody to come in and take over that project.

[31:27] If you have lithium ion, there's a hundred companies in Shell lithium ion.

[31:31] If you got a 20 year PPA and you're a 5 and that company goes bankrupt, there's ten

[31:34] companies that will come in and pick it up and they'll probably charge you a little premium

[31:37] to do it but there's not going to be a problem.

[31:40] If you get a proprietary technology, it's hard to find somebody that's come in and take over

[31:45] that project when you're a 5 or 10 years down the road and you're still looking for another

[31:49] 10 years.

[31:49] but the company that you selected was not a good company.

[31:54] Anyway, any other questions?

[31:55] Does anybody else have any questions?

[31:56] I mean, take questions, much time.

[31:59] Anyway, so I'm happy to answer questions in the future.

[32:02] I'm looking forward to working with you.

[32:04] Yeah, I'll ask a quick brief question.

[32:09] There was 100 million in 2020, and then 140 million,

[32:12] and then the 190 million.

[32:13] And is there more, is there ongoing finding sort of projected, or is that sort of so?

[32:20] So, anyway, so here's the situation.

[32:23] Everybody knows what's happening in California right now, the budget issue.

[32:27] So it actually, we got 190 million last year, and they came to us and said, hey,

[32:32] we want to take back 50 million, but we're going to give you 50 million of different type of funds,

[32:37] which you can use, GGRF funds.

[32:39] Yeah, OK, we didn't lose anything, in fact, of the whole R&D effort.

[32:42] We've got ten-twelfth projects, we've been the only project that did not lose substantial

[32:48] cuts so that the legislature was very interested, so they ask us about asking for more money

[32:54] and they kind of said, look, you know, you've got a good year, be happy with it, okay, okay.

[33:00] However, next year, next year, in 25, we think, we'll have a lot more projects working, and

[33:07] one of the benefits by doing this non-competitive award for those six technologies is we're going

[33:12] I'm going to have systems working that people can see and get data for.

[33:16] And then we can take that to the legislature and say, look, let us do more.

[33:19] And I think we're planning on doing that in 25, up to 24.

[33:23] And I think there's a good chance that we would be, because GGRF funds,

[33:27] they have a considerable amount of funds, and so we can potentially get another 300, 400 million to do projects then.

[33:33] That's our goal.

[33:34] But right now, they said, take what you got and be happy, and I just said, I'm a military guy, I absolutely said.

[33:42] It's not a permanent allocation of the GGRF, correct, is that it isn't an annual appropriation from the legislature?

[33:50] How does this find, I guess let me ask that, it's not the clean transportation fund, what's been your vehicle?

[33:54] So when we asked for the money, we asked for specific use cases application, we wanted to do a megawatt, eight hours is a minimum, we wanted to focus on 10, 20 or 30 megawatt hours.

[34:05] We wanted to take the industry and give them a jump, but not such a big jump, but we're going to choke them.

[34:11] So, but every project we got, everyone we've given to, it's the biggest project they've done in most cases.

[34:18] And so, we are looking specifically at utility scale and big customer, behind a meter project, specifically at demonstrating enough,

[34:29] Now, my goal was to say, look, I'm going to give you this.

[34:33] The next project I want you to be able to do is 200 to 400 megawatts, because if you

[34:36] look at 52,000 megawatts, we're not going to get that at 5 megawatts at a time.

[34:41] We have to get up to 100 megawatts, and we're not going to get any of these technologies in

[34:46] the mix.

[34:47] And so, right now, most of those are telling me, 27, 28, 29, if they get some success and they

[34:54] get a project and get a follow-on project, they can get the money to do their manufacturing,

[34:58] and they can bring their price down.

[35:00] I mean, we actually helped one of the,

[35:02] what we helped us.

[35:03] We put a good word in for one of the technologies

[35:06] to get a $400 million loan to do their manufacturing.

[35:10] I was with, I was with the DOE,

[35:13] have a dinner in DC, and I made a comment,

[35:15] we want them to be able to do one or two gigawatts a year

[35:18] so we can sell two or three gigawatts

[35:21] and they can deliver.

[35:23] He said, oh no, I want them to do five gigawatts.

[35:25] I want them to have enough money to do five.

[35:26] I said, well, I'm not going to argue with that one.

[35:28] But because if you don't have that capacity, it's a chicken in the egg.

[35:32] Nobody's gonna order the gigawatt in just four years to get it, it just ain't gonna happen.

[35:37] When you put up your commercial readiness level, I'm more familiar with the technical readiness level.

[35:41] De, how do you see this early financing and trying to build scale?

[35:46] How will that reduce the timing on that readiness level?

[35:50] Again, this is speculation, but my belief is having been doing this for 20 years and

[35:54] and having worked, trying to put different people.

[35:56] I think by virtue of these projects getting out

[35:58] at a reasonable scale, I mean, going from 100 kilowatts

[36:01] to 10 megawatts is impossible.

[36:05] But going from 10 or 20 megawatts to 100 megawatts

[36:07] is not impossible, it's a very logical thing.

[36:09] So I'm trying to convince people and trying to convince that.

[36:12] I do a lot of speaking with the investment market

[36:14] I'm trying to convince early adopters to be prepared to help.

[36:18] And we're having success.

[36:19] Obviously you guys are a big player with, you know,

[36:23] You guys, we want them to be successful, there's no question.

[36:27] Ideally, all six of them would be successful and be able to reach here, probably won't happen for all six.

[36:32] I think three or four are at least three or four all to pass to be successful and that's what we're hoping for.

[36:39] So it's overdoing it.

[36:40] Perfect, thank you for that.

[36:41] And I just want to thank you and the Energy Commission for the help on the ESS project.

[36:47] when it first came to our board it's been a few years now and it's sort of like

[36:50] we're feeding out a lot of line and a blank check and so it's good to appreciate

[36:55] having the support and we're really happy to partner with you guys and we're

[36:59] really looking forward and we'll spend more time on the sites and stuff and it's

[37:03] just it's perfect for all of us I mean so I'm hoping when we get ready to talk

[37:07] for more money we can bring them out here and show them what's coming and then

[37:10] later show them what's here and so you know not only for us but for you guys you

[37:13] know to get additional funding down a road for different grants you know we do

[37:17] quite a bit of work with DOE and we do partner and we're actually doing some work with your grip projects right now as you're putting in as we are.

[37:24] So it's a great partnership, you know, with Epic because you don't participate, we don't, we can't do anything with you because of that.

[37:30] But that's true for DOE and not true for this program. There's no, this is general fund, basically, so there's no restrictions. That's why we're here and that's why we're doing the project.

[37:39] We'll take checks or cash, Mike.

[37:45] I have a question for you, sorry.

[37:49] What I'm curious about, you know, I'm looking at this and it's basically, you know, the commercial readiness level.

[37:57] What I'm wondering is, are you working with any, you know, public entities like, you know, city or county government

[38:07] And since they have such huge fleets and would definitely benefit from having batteries

[38:16] to store energy during the time when it's best.

[38:23] Are you working with any government?

[38:25] I think we have a 70 million out of the station coming out in July that would be open to any city

[38:31] in the state that wants to do that.

[38:32] Okay.

[38:33] And so it'll be about five projects for a good size project, but so we've been advertising

[38:37] And I mean, we do work in, we are working with them on some of the DOE applications.

[38:41] So we're helping them, our partner with them to see if they can get the DOE funds.

[38:45] But this particular project, I mean, you're going to, I mean, I had a problem with one

[38:49] of the associations who handle storage companies.

[38:52] And when we got the money, they're upset because they're perfect, and we're going to give

[38:55] everybody their first share.

[38:56] And I said, yeah, when you'll spend it, we won't have nothing, I said, we're not doing that.

[39:00] We're going to focus on what we ask for.

[39:02] We're going to commercialize technology.

[39:03] If we're successful, they'll be successful.

[39:06] Yeah.

[39:07] Of course, the other people, and I can tell you,

[39:08] I can say, the adventure capitalists,

[39:10] and I talk to a lot of them, and they call me on the town

[39:12] about what's the California look like,

[39:14] what's the technology look like in the share.

[39:15] Everything we do is public.

[39:17] So I don't have to worry about India, and stuff.

[39:19] So I just share what I have,

[39:20] try to convince them, take a chance.

[39:23] You know, I think the time is right.

[39:24] I use another analogy, you guys were around,

[39:26] and there are days many of you were,

[39:29] and DOE put in $200 million,

[39:31] and we put in $30 million,

[39:32] college, we did about ten projects in California, every company who got that money is no longer

[39:38] around.

[39:39] But because what happened was at the time, they all expanded, hired 20, 30 people, never

[39:46] got a second order.

[39:48] Now in this case, what I track and all these guys is the orders they're getting, and not

[39:52] only I mean, I'm trying to help them, but I mean all of these six people have orders besides

[39:58] our order.

[39:58] We're not the only order.

[40:00] They're out there with DOE, they're out there with communities, and they're getting

[40:02] other orders, and they're using what we're doing to leverage other people to convince

[40:08] them they're a player in the industry, and that's what I'm thinking. All six of them

[40:11] can be successful because we're helping them with the selling part and giving them the capability

[40:19] to grow. But at the end of the day, it's up to them. I've been through about a dozen bankruptcies,

[40:24] and we had one that just kind of closed your doors. We had five sites with incomplete systems

[40:28] that we had to take out, and that's the terrible thing to go through.

[40:32] And that's one of the things when I talk to investors.

[40:34] I'm honest, you know.

[40:36] I do a lot.

[40:37] When we go through these projects, I do a lot of analysis on the company's financials,

[40:41] their management structure, the technology, and their probability of success

[40:45] so that we don't invest.

[40:47] I don't want to invest $40 million in somebody who goes bankrupt for two years.

[40:51] And so we have to be comfortable at least, at least for the next two or three years.

[40:56] You can't predict beyond that, but you can predict who's on a solid path and who's on a rocky path.

[41:02] I actually do, for all of our grants, I actually do a financial resume, other books every year, just to be sure everything looks good.

[41:09] Anyway, thank you all very much.

[41:10] Thank you.

[41:11] Thank you.

[41:12] Our next step is Joel Bodesma, Director of Power Generation.

[41:17] Good evening, Board.

[41:24] So, going into our project on the ESS flow, and I think you guys asked Director Rose asked

[41:30] a little bit about like internally how does the battery work, not being a battery expert

[41:36] per se, but it is a chemical reaction that goes on in the battery.

[41:41] So you really, it's made up of, the electrolyte is made up of iron, salt, and water.

[41:46] So, that's really those two canisters you see at the end, and it's basically a chemical

[41:52] reaction where when you put electricity from the grid, it's forcing some of the ions

[41:57] to move from one side of the battery to the other and then charging the cells that are

[42:02] inside that container.

[42:04] So, that's how you're storing.

[42:05] So, when you're discharging, it's taking those ions or those ions to move back the other

[42:11] way and basically when ions move a electrical engineers say that that's when the electrons

[42:16] are moving and current is the flow of electrons. So you get these electrons that are moving

[42:21] from one side to the other, i.e. being stored in the cells and i.e. creating the battery.

[42:29] So there's a membrane in the middle where these ions move across. So that's really the

[42:34] internal of the battery. The energy warehouse which is their first generation, really it's

[42:40] the beginning of their batteries.

[42:42] Everything is in one container.

[42:44] All the electronics, the controls,

[42:46] and the electrolyte containers are all in this one,

[42:49] 40 by eight by nine and a half foot container.

[42:53] So the partnership that SmudEnter had phases

[42:57] and the first phase was really this demonstration phase

[43:00] where we would build up to four megawatts

[43:03] of long duration energy storage.

[43:05] And really this phase was to make sure

[43:08] that we could achieve reliability and performance

[43:11] and that it ended being a cost-effective system

[43:15] for SMUD, next slide.

[43:19] So as far as where are we right now with phase one,

[43:22] if you recall, I did a presentation

[43:24] at a couple of zero carbon plant updates,

[43:26] but last spring, we really started the iron flow battery

[43:31] project where we began the construction at Hedge

[43:35] Where we did the civil work to remove some equipment some solar old solar panels that were there and really

[43:41] Do the civil work to be able to put these containers down so we ordered six they came in in the summer

[43:49] We began construction there and we finished that construction around mid-September

[43:56] So around mid-September the batteries were in place and they passed what's called a site acceptance test

[44:03] So that's not commissioning the battery.

[44:05] That just means that the vendors delivered the batteries

[44:10] and we were able to start the systems and operate them

[44:13] and the systems tested okay.

[44:16] So really from there though is where a lot

[44:19] of the hard work began for SMUD,

[44:21] which is really how do you take these batteries

[44:23] and integrate a controller and the battery itself has a system

[44:29] that's managing all the electrolyte, the pumps

[44:32] that are moving the electrolyte from one side to the other, charging the cells.

[44:37] But then we still need to connect the controller that's going to be what speaks with the battery

[44:45] and with our own SCADA system, our own controls with, say, our distribution system operator

[44:51] or our power system operator, whichever side these batteries are, whether they're utility scale or distribution.

[44:57] That has taken a lot of effort.

[45:00] From smud and ESS to really select the controller, start creating all the hooks of all the data that's flowing between the two systems. So we've been doing that up to now. And because it is a Gen 1, really working with the SS on working out all the kinks with the batteries, you know, that comes with any Gen 1 battery system. So we have been doing that. We're now at the point where we're finishing up that controller work.

[45:28] That integration and we're now bringing in DSO or distribution system operator or the operators and the PSO operators to make sure

[45:37] That not only do they have all the documentation and understanding of how these batteries work

[45:44] But all the alarming that comes with it do they know when alarm comes in what do they have to take an action?

[45:50] Is it information? Oh do they need to call somebody out? So we're working through all those requirements with the SS

[45:57] So that at the end of this phase, we're ready to enter into the true operational testing of the energy warehouse where ESS and all the engineers are the project people that have been on the project are kind of hands off.

[46:13] The keys are given to the operator and now they're charging and discharging the battery as it as it's supposed to and it's going to be on a schedule on a schedule.

[46:23] so it will be charging during the day and discharging at a set time in the evening.

[46:31] Any questions on where we are with the energy warehouse?

[46:35] Quick question.

[46:37] So what are we doing on the safety side?

[46:39] I was interested to hear that on some of those batteries, they have to have a special onsite

[46:44] trailer for the fire department to actually use the right equipment on batteries.

[46:47] Do we have anything like that or are we training with the?

[46:50] But the good thing about this technology is because of, you know, it's the electrolyte

[46:56] is salt water and iron, there's really not a lot of hazard material that comes with

[47:01] it.

[47:01] Now, there is still containment in case there's leaks, but it's more containing the electrolyte

[47:06] not so much that it's hazardous material as far as the thermal runaway these batteries

[47:10] don't have because they're not lithium, they don't really have that issue.

[47:15] And so that's what makes this technology kind of nice to look at is because not only does it offer long-term, long-duration energy storage, but it also doesn't come with some of those other problems, I guess you would call them to come with the lithium battery.

[47:32] You know, everything has its pros and cons, but that's part of the selling point of this technology.

[47:38] Now they do have to get, they do have to meet California fire code and so we have been working with them on making sure they get all the certifications because but that's more around, you know, how close it can be to other containers, how close it can be to any buildings and all that that we're making sure we meet but up to now things are looking good for the energy warehouse.

[48:00] house. They're still in the process of getting their fire code certification for the energy

[48:05] center, which is the next project. Next slide.

[48:12] So the energy center is a little bit dimmium before we go on because I'm just peeking ahead.

[48:17] Where are we in terms of integration with our Derm system and our ADMS system? Let me look

[48:26] it's Russia, yes. What does that, what does that phasing look like in those time frames?

[48:35] So, ADMS is live and functioning, and we went live with the Delms phase one last year.

[48:42] We September, October of this year is the phase two, and those parts of the project phase

[48:47] two and the phase three, now we incorporated it into the group grant proposal also. So,

[48:53] the phase three and the phase four still we are negotiating on the scope of the project director,

[48:59] And if you let me get back to you on the specific details on the phase 3 and phase 4,

[49:04] a lot of you haven't.

[49:05] Yeah, just to add to that, Director Rose, because of the size of this technology and

[49:10] utility scale, it actually connects into our distribution skater and so the visibility

[49:15] for DSO.

[49:15] And that's the work that Joel was talking about with the operators, making sure that they

[49:19] can see what's happening with this device.

[49:23] But I do think when we talk about McClellan and we get to more utility scale, then we

[49:27] will be, you know, that'll have to come in after these upgrades are done so

[49:31] that PSO has access and control of those battery systems. So phase 1b, this is

[49:39] their energy center. So there's, I'm sure a lot of learning from the energy

[49:44] warehouse that ESS has been making and really incorporated that into their new

[49:48] design. You know, now that we've really worked with them on the controller for

[49:53] the energy warehouse, now that the controller component of the energy center becomes easier

[49:58] because they've already worked through that, the alarming and the manuals and all that.

[50:02] But, and those of you, from the picture you can see that the electrolyte is at the bottom

[50:07] and then they have all the electronics and the controls and the container above, so that's

[50:12] the configuration of the energy center, so you get more long duration energy storage because

[50:19] you have more electrolyte containers, but you can see that it's almost like a two-stacked

[50:25] container configuration.

[50:28] You know, really to move to this phase is really we want to finish the commissioning of

[50:34] the energy warehouse.

[50:36] We want to make sure that we worked out all the kinks and it works and that fire code review

[50:41] that was done on the energy warehouse, but now that this is a larger container with more

[50:48] more electrolyte. We need to make sure that they get their fire code review done and they're in

[50:53] process right now of doing that. I want to put a lot of highlight on that commissioning, successful

[51:00] commissioning. You know, there's been a lot of work up to this point. That's going to be the true

[51:05] test of the battery system, you know, how well it performs night in and day in night out, you know,

[51:12] because it needs to be able to charge reliably every day and discharge and be hands free from the operator so that we know that it's ready for operation.

[51:22] We'll be doing that hopefully starting in the next month as they're finishing up all the working out all the use case scenarios, all the testing scripts, getting everything done, and then we'll be going into that phase and then getting it ready for commission.

[51:38] And this phase is really where, as Mike talked about that, the grant on the 3.6 megawatts

[51:47] is really going to be out of this energy center.

[51:51] And we're planning on doing most of it there at the hedge site.

[51:59] Any questions on the energy center?

[52:03] Next slide.

[52:05] Now, let's move on to McClellan.

[52:08] And so a lot of internal work at Smudd on McClellan.

[52:13] You know, that's a project that, you know,

[52:15] as you guys have asked in the past, you know,

[52:17] is there any infill projects,

[52:18] any projects that we can do more quickly?

[52:22] Well, this was the product of that.

[52:25] So that rendering has the north side and the south side

[52:29] of that corner and on the bottom, on the bottom side,

[52:33] you can kind of see the rendering

[52:34] of the substation connections there on the left side but that's what with those

[52:40] batteries that's what we're envisioning it's going to look like it'll be a

[52:43] 75 megawatt four-hour bez because of its location and our ability to

[52:52] incorporate this project into the grip grant we were able to not just meet our

[52:57] own battery storage requirements for our zero-carbon plan but it adds

[53:02] resiliency into that area. So for doing that, we worked with our distribution and our transmission planning so they could create, you know, they could build a design that would add a couple substations so that we could charge and discharge out into the market and, you know, and take advantage of all that market.

[53:25] it, you know, just the functionality of it, but at the same time, whenever there's a

[53:30] need for liability resiliency in that local area with some switching, they could switch

[53:35] those batteries over into that local distribution and be able to support that area.

[53:40] So kind of a dual function resource there that was hopefully that grip grant will get awarded

[53:50] and we can go ahead and build this project

[53:52] with two new substations.

[53:55] We're targeting the end of 26, early 27.

[53:59] Now this is a project that's dependent on those upgrades

[54:01] for Durham's so that the PSO has the ability

[54:05] to see this facility and control it.

[54:09] We've started the CEQA process,

[54:11] but because it's an infill,

[54:13] we don't think it's gonna be any problems with that.

[54:16] We did have a land option that expires in May of 2025, but we're way ahead of having done all the preliminary design, all the feasibility studies, everything to prove that this is a good project for us.

[54:33] I'm thrilled about this because this isn't my word.

[54:36] And it's right near our peaker plant, right?

[54:40] How close is it?

[54:41] What are the intersections there?

[54:43] Is that on MacColelland's space?

[54:45] Yeah, it's it's kitty. It's I don't know like hundreds of yards away from it's really close and it's really close and we're actually going to connect up to

[54:55] The line that the peeker plant is on to go out into the grid. I don't remember the exact you know from a mile perspective how far we are, but we're really close on that corner.

[55:05] And that would help us also create the resiliency for hotlamping that plant or permanently turning

[55:15] it off, which we've discussed.

[55:17] Yeah, I mean, I think all these resources are part of the portfolio that's needed to

[55:23] reliably retool or repurpose a lot of those plants.

[55:29] So I can't say that this one directly affects, you know, the retirement of that plant, but it sure is part of the pool of resources that's an

[55:39] had reliability because I think in, you know, there's a lot of sensitivity studies that are being done now to make sure that as we're putting on these

[55:48] resources we can zero in on. Not only are we going to be reliable during the peak times, but are we reliable during some of those scenarios one in ten years that are

[55:58] happening every year or those other unique scenarios when you know we have

[56:03] fires and and lot of clouds or like today we had that eclipse that you know

[56:09] yesterday that affected some of the resources for that little period but we're

[56:12] just trying to make sure that that when we're ready to do it that we've kind of

[56:17] met all all our own criteria. Well that's exciting project thank you. That's it.

[56:24] With that I'll turn it over to James.

[56:26] I'll ask one more question.

[56:30] This might be more Paul might get this.

[56:33] Have we been thinking about the RA market

[56:36] and how those sort of spiraling upward costs

[56:40] change our perspective on how we view

[56:43] the long-term energy storage.

[56:45] Can we use some of this to cover our RA requirements as well?

[56:49] Yes, I'll go ahead and answer that one.

[56:51] I think we are actually looking at it.

[56:52] In fact, we are looking at how can we accelerate at the grid side, but also accelerating on the customer side.

[56:58] That's why I know Laura's team is working on what incentive do we need to increase the adoption of batteries.

[57:04] Right now we know we offer $2,500 to put in the power wall.

[57:08] So we're looking at maybe doubling that in terms to increase the number of residential type.

[57:14] Because those takes a while to do, whereas residential is actually much faster.

[57:18] that we cannot know, smaller units, so you need a lot of them, but they're actually

[57:22] easier to implement.

[57:23] And then once you have the incentive, and you have the workforce line up to actually

[57:26] do that.

[57:27] So that is part of our strategy because of the fact that R.A.

[57:30] Price's is kind of going through the roof in California.

[57:38] And that's a perfect lead-in because the next topic that we get to talk about is

[57:42] the customer-sided battery energy storage.

[57:47] I normally present really kind of focused on the grand side of the conversation.

[57:51] And so this is giving me a little bit of an opportunity to talk more on the program side and thinking about it from the battery side.

[57:57] I just want to open with saying kind of how exciting it is to see, we spend a lot of time as we're developing grants, painting that picture and kind of talking about how these technologies come together and to see this conversation build out in the way that it has tonight is really exciting for the work that we do day in and day out.

[58:15] seeing conversations around how California is thinking about 100-hour batteries and

[58:20] leading that down into how we're thinking about long-duration energy storage and

[58:23] the work that we're actively doing at SMUD today.

[58:26] And then there's 75 megawatts at the McClellan battery and the duration there.

[58:31] And then to be able to back that all the way down into the customer-sided battery energy storage side of the conversation and

[58:37] those batteries that are in individual homes or part of multi-family dwelling complexes.

[58:42] really paints a complete picture and it's the type of story that we try and build out when we apply for grants and that really make us competitive in that space because it's not just

[58:52] we're putting this idea on the horizon and we're talking about well if we had all this funding we could potentially do this or if all the stars align we could do these things but we're really there we're taking those steps and that's one of the reasons why it's such an exciting opportunity to be working on these things here because it's driving forward.

[59:11] One of the advantages that we have when we talk about customer-cited battery energy storage,

[59:16] and I'll jump into the actual slides in just a moment here, but one of the opportunities

[59:20] that we have is that these systems aren't looking at CEQA and long lead times and complex

[59:27] land considerations and procurements.

[59:30] We're talking about installing batteries in built space.

[59:33] We're talking about installing batteries as part of the built environment and into people's

[59:37] homes.

[59:37] And so we have a much faster timeline in terms of being able to activate these types of resources into the market and so when we talk about kind of a near-term RA need and the ability to help address some of those those market conditions that we see that are problems right now.

[59:52] A big part of that conversation is what are the technologies that can be accelerated in the fastest way possible to help address that concern.

[1:00:00] To help bring that value forward. And then in doing so, be part of that larger tapestry that's the story that we're trying to tell from a grants perspective. And so that's a little bit of what I want to talk about tonight is kind of where we are on battery storage adoption in the territory. And then look a little bit at that in the context of the zero carbon plan, and the things that we're looking at in terms of pathways to actually accelerate battery energy storage on the residential and behind the meter side, and finally how that ties into our larger grant initiatives.

[1:00:29] So, to just kind of give that high level understanding of where we're at with batteries today.

[1:00:34] Right now, in territory, we have just over 1600 customers that have adopted batteries.

[1:00:40] That accounts for over 2,100, almost 2,200 individual batteries.

[1:00:45] Most customers have single battery systems in their household.

[1:00:48] A number of the solar and storage installers recently have shifted their standard installation

[1:00:52] from single battery to multiple batteries in the household.

[1:00:55] So we do see that the systems that are installed very recently, in the last year, tend to be more of a two-battery installation.

[1:01:05] So think two Tesla Powerwalls instead of one Tesla Powerwall.

[1:01:09] And a lot of that is driven by the OEM that kind of stepped in and said this is the standard configuration when we're thinking about balancing absorbing excess PV generation but also having adequate power for resiliency and backup power for the customers.

[1:01:22] standards. Also understanding that it drives a pretty considerable cost premium buying

[1:01:26] two batteries instead of one. But those 2,100 batteries, 2,200 batteries represent over

[1:01:32] 10 megawatts of storage capacity that's contributing to the grid. A majority of that contribution

[1:01:37] today is really based on our time-of-day rates, customers absorbing excess PV generation, charging

[1:01:42] during our off-peak time periods, and then discharging to help reduce their on-peak energy.

[1:01:50] I do want to call out kind of staying with the top table here that when we look at the

[1:01:54] installations that we have today, Tesla does continue to be the overwhelming kind of

[1:02:01] majority shareholder of those installations, sitting right at about 58, almost 60% of

[1:02:08] the total installations are Tesla, and then the balance of the 40% is a combination of

[1:02:13] different OEMs.

[1:02:16] And so with that, zooming into the bottom table here, just to give everyone a little bit

[1:02:21] of context on how many of those customers are on our solar and storage rate versus how

[1:02:25] many of them are on the NIM rate, we're looking at roughly 1,640 customers total of which

[1:02:32] 642 are on our solar plus storage rate and 998, just about 1,000 are on the NIM rate.

[1:02:40] That becomes important later on when we talk about programs, because when we're looking at getting

[1:02:45] customers to enroll in programs, it requires them to think about how that program might impact

[1:02:50] their net energy metering rate, and it becomes a more difficult conversation,

[1:02:56] more complex for the customers as they're thinking about these things.

[1:03:00] What does that look like in terms of who's grandfathered in the older rate, right?

[1:03:07] Is that the same thing, right?

[1:03:08] Yes, that's the story stories, but ever it is, is that our grandfather rate?

[1:03:12] Yes, yes, yes.

[1:03:14] So, NEM is, or the NEM?

[1:03:17] Scott Martin, CFO, yeah, the NEM up there is the grandfathered one.

[1:03:23] The NEM, other, is the grandfathered and the S and SR is the new rate that was adopt a couple of years ago.

[1:03:33] And

[1:03:39] so when we look at that and

[1:03:40] emrate a majority of those installations have been done over a considerable period of time,

[1:03:45] several of them driven by the ESCHIP program provided by the state is where the early adopters really started to step in from a battery energy storage standpoint.

[1:03:55] And then the solar and storage rate installations are the more recent installations.

[1:04:02] So when we think about that in the context of the zero carbon plan,

[1:04:05] First and top of list is the My Energy Optimizer Partner Plus Program, which is our virtual power plant program that we use to deliver the current battery incentive.

[1:04:16] That battery incentive is $2,500 today as an upfront incentive to support customers in installing battery energy storage systems.

[1:04:24] It also has a recurring benefit for customers participating in the program that's on the order of about $300 per year.

[1:04:30] So, $2,500 upfront, $300 per year, in addition to the retail savings that they receive on their bill.

[1:04:37] For when they do reduce their energy consumption during the on peak period.

[1:04:41] And also when they're absorbing excess PV generation and preventing that from exporting to the grid, but

[1:04:46] rather making best use of their generation.

[1:04:51] When we're looking at kind of where we expected to be in terms of the zero carbon plan and

[1:04:56] looking back at battery energy storage, we were looking at about 4,000

[1:05:00] and batteries by 2024. When we think about the slide that we were just on, we're sitting

[1:05:05] at about 2200 batteries halfway through 2024 or the first third of the way through 2024.

[1:05:13] So we're behind schedule on where that original battery forecast put us when we put together the

[1:05:17] zero carbon plan. A large part of that is that we've not seen battery storage decline in price

[1:05:24] the way that we had early on anticipated.

[1:05:29] We've seen cost reductions regularly on the automotive and electric vehicle side.

[1:05:33] If we look at Tesla vehicles, if we look at Ford vehicles, that tends to be a pretty

[1:05:38] consistent byline, and we've not seen those same cost reductions on the stationary energy

[1:05:42] storage side, which is unfortunate, but it's still the market conditions that customers and

[1:05:49] SMUD has to look at in terms of procuring these batteries and enabling these batteries to provide

[1:05:53] the grid services that we need to really achieve zero carbon.

[1:05:57] And so it's something that we need to be thoughtful of in terms of are there things that we can

[1:06:01] do to help address that kind of primary barrier.

[1:06:05] Also in that same timeline that we've not seen those battery prices decline, we've also seen

[1:06:10] higher interest rates and financing terms become more difficult to obtain, especially for

[1:06:15] customers that may not be optimal credit applicants.

[1:06:20] And so, when we're thinking about the overall impact of that, it means that there's a much smaller market of approachable adopters for solar plus storage, and the cost has not moved along with what they would have expected.

[1:06:31] And so for us, as we're thinking about the batteries that we need, it raises the question of what are things that we can do to help break those barriers down and accelerate this market.

[1:06:39] We look at that in terms of grants and the opportunities that that brings us forward.

[1:06:43] But as we know with grants, a huge amount of that opportunity comes with a, can we prove that we mean it first?

[1:06:49] Can we show that we're doing this today and use the grant to amplify that effort rather than using the grant to be the sole reason that we're able to actually deliver on that opportunity?

[1:06:58] And then the bottom item here is we're thinking about the zero carbon plan is really participation in our virtual power plant program.

[1:07:05] which does require the customer being enrolled in the solar and storage rate.

[1:07:09] Today, we have about 12,000 customers that are enrolled in the solar plus storage rate.

[1:07:15] So that's 12,000 customers that have installed solar since we switch over to that rate.

[1:07:20] So we do see reasonable adoption on the solar side there.

[1:07:24] But when we put that side by side with the battery adoption that we see,

[1:07:28] we're back to that 600 customers, 700 customers that are sitting on the solar and

[1:07:33] storage rate with batteries. That's only about a 5% attachment rate. And so there's a significant

[1:07:39] opportunity to both work with new customers that are adding solar today, six months from

[1:07:45] now, a year from now, and ensure that they have that opportunity to effectively bring battery

[1:07:50] energy storage into that dialogue and that we're moving that forward. But also, these 12,000

[1:07:55] customers, or 11,400 as it were, that they become a very real opportunity to get adoption

[1:08:02] of battery energy storage very quickly to utilize our highly developed solar and storage

[1:08:07] installation networks here in Sacramento to get those systems deployed, but then by doing

[1:08:13] that quickly to bring that value forward that we can address RA requirements and needs in

[1:08:19] a very near-term basis.

[1:08:21] I mean, we know from the years we spent on the solar array, I mean, the value is unlocked by

[1:08:26] having people out of battery.

[1:08:27] It's definitely surprising to have only seen if I signed up take even after a couple of years.

[1:08:33] It is a lot of money, but it's still a good 10% rate of return.

[1:08:39] And so the immediate question is exactly in line with that is, is what can we do?

[1:08:43] How can we help?

[1:08:44] How can we be part of the solution?

[1:08:45] And how can we take that step and then use that step to build the foundation for

[1:08:50] the bigger things that we're trying to do?

[1:08:53] So, I want to talk through some of the pathways and conversations that we're having.

[1:08:57] These aren't finalized.

[1:08:59] This is the absolute end all information here.

[1:09:01] This is part of active work.

[1:09:04] But I want to talk about the pathways that we're looking at to really help accelerate this

[1:09:09] market forward rather than just setting idly and waiting for the market to kind of evolve

[1:09:13] on its own and go where it's going to go without our guidance.

[1:09:16] We want to be part of that solution.

[1:09:17] And so when we talk about that, it really comes down to thinking about what are the barriers that are driving those higher costs.

[1:09:25] What does that conversation look like?

[1:09:27] Supply chain is very top of list for that.

[1:09:30] It can be a significant challenge when we're talking with local solar and storage installers.

[1:09:35] Oftentimes they're talking about making a sale, using the capital that they have in the business to buy one or two batteries at a time,

[1:09:43] and installing those batteries, turning around and repeating it.

[1:09:46] And it's a very low volume, very onesy-to-z conversation.

[1:09:50] They're not just competing with all this solar and storage installers here in Sacramento.

[1:09:53] They're competing with storage installers across the entire country for a finite amount of volume.

[1:09:58] And when you're picking up the phone and calling a vendor that has some reasonable amount of demand, and you're saying, I'd like to buy two.

[1:10:04] The conversation is very difficult to have and you often end up paying a pretty high premium.

[1:10:08] And that conversation becomes really interesting from a smud perspective.

[1:10:12] because when we look at our forecasts, we're not interested in buying two batteries.

[1:10:16] We know that as a region, as a community, we need thousands of batteries.

[1:10:20] We know that in the grip 2024 application that we talked about a couple of weeks ago,

[1:10:25] that included in that application is consideration for 10,000 behind the meter batteries.

[1:10:30] And so we're talking about volumes that are potentially much, much larger than those one, two conversations that are local installers that are having to struggle through to get access to that product and to bring that lower pricing to our communities.

[1:10:42] And so what we want to do is we want to engage with those OEMs, engage with Tesla, and we want to talk about that bulk procurement.

[1:10:49] We want to work through and get that pricing on behalf of our community, on behalf of our local solar and storage installers, so that we can say, we need 1,000 this year, we need 1,000 next year, we have a grant that's going to provide 10,000.

[1:11:02] And we need pricing that reflects that volume, not the onesy-twozy volume when individual contractors call about their installations.

[1:11:09] And we also need to make sure that the contractors and the installers that are local to our community are at the top of that priority list.

[1:11:15] So that when batteries ship, they ship here first.

[1:11:18] Because we're going to use those batteries to show how virtual power plants can deliver our capacity,

[1:11:23] can be part of an energy portfolio that includes distribution-sided systems,

[1:11:27] long-duration systems and utility scale systems at the transmission level to actually deliver on a zero-carbon grid.

[1:11:33] And it starts with these small individual elements, but asking for one at a time doesn't get us to where we need to be.

[1:11:39] And so that's a key element.

[1:11:41] Additionally, we have to address the cost.

[1:11:43] We have to look at unlocking that incentive, providing a more lucrative incentive that's going to really bring that cost down to a point where we don't see a 5% attachment rate.

[1:11:51] where we see a much, much higher number than that, so that we can really see battery adoption that is mirroring that potential 12,000 solar plus storage solar customers that we have on that rate today.

[1:12:02] 5% is a number that can absolutely be improved upon in terms of attachment.

[1:12:07] Question, especially since we have our friend's ear from the Energy Commission, so the state allows local governments and other entities to buy off state contracts.

[1:12:17] facts. What if we get the state to do bulk purchase of residential batteries, and then

[1:12:23] not just smud, but any utility could buy them from the state or by off the same contract

[1:12:31] with the same low rates? Because this is a statewide problem of resilience and especially

[1:12:36] in the rural areas and the mountainous areas. If people don't have batteries, I know people

[1:12:40] that are getting propane tanks that are total environmentalists because they're desperate

[1:12:43] to have resilience because there have been so many power shutoffs.

[1:12:49] Anyway, that's just a thought.

[1:12:51] I mean, I love that we're doing this, but I think about the whole state and that maybe the state could do it.

[1:12:56] I know the state jumped right in on PPE purchases for other states even.

[1:13:02] So, just a thought.

[1:13:04] Well, we do have programs for substantial funding for decarbonization, which this fits into.

[1:13:12] Thank you. So if it's in the decarbonization, we have reliability requirements for trying to do so.

[1:13:18] It does fit. It's just not by division, but there's, you know, there's an efficient division and reliability division that are working these issues in this part of the standards.

[1:13:26] So I've worked with the standards division on storage and things like that so we are addressing it

[1:13:33] I'm not sure if the same pay but it is a recognized problem and they are trying to one of the challenges on the VPP

[1:13:39] that we've running to is the public law requires you can't wheel energy over a different line

[1:13:47] unless you're a utility so it really limits the third party VPP picture if it's not

[1:13:59] That's a really interesting thought, because we've done it with the school buses at CARB, and the DGS has gone and done these large steel contracts that everybody can take a part of as well.

[1:14:13] Yeah, I think it is worth asking about, and it's also, I mean, people like me that have solar, we want it batteries, but we just can't afford them.

[1:14:21] Even with our iron son, if it's just not, does it make sense?

[1:14:25] And it's frustrating that my car has a battery that's four times more powerful,

[1:14:29] and I can't access it, and it's sitting in the same garage.

[1:14:32] And then at the end of life, we have to think about battery walls,

[1:14:35] which are super hazardous waste, literally on the wall of a garage.

[1:14:38] What is going to happen at that end of life?

[1:14:40] If we're going to install it and encourage it, like we did with solar,

[1:14:44] we're having the same problem with solar at the end of life.

[1:14:46] Everybody's screaming, it's hazardous waste.

[1:14:48] What am I supposed to do with it?

[1:14:49] Where am I supposed to bring it?

[1:14:50] And it's a giant fight right now in the state of the waste management.

[1:14:55] So hopefully we think about the whole solution when we start pushing these things out too.

[1:15:00] And hopefully Tesla, we can negotiate with them about taking them all back and making them into new batteries. Absolutely, absolutely, absolutely. That calls to mind one of my favorite comparisons to the automotive industry from the stationary side, is that you can go and buy a Ford Lightning for now, I think $72,000, and it has the equivalent of 10 Tesla Powerwall batteries worth of energy storage in that same vehicle. And those 10 Tesla Powerwalls installed or 10 batteries, not necessarily Tesla,

[1:15:29] but just 10 batteries installed.

[1:15:31] They're going to cost you $120,000 to get them installed.

[1:15:36] And for $72,000, you can have the same battery

[1:15:39] and you get the truck for free.

[1:15:41] So it's an interesting conversation.

[1:15:44] And there's room to have this negotiation

[1:15:47] to bring this cost down, to bring this value forward.

[1:15:49] And there's room to think about the role

[1:15:51] of electric vehicles in that long-term solution

[1:15:53] and how these things all play together.

[1:15:56] Again, part of that very exciting tapestry

[1:15:58] that bringing everything together and us being able to actually show that the industry, the

[1:16:04] world, how it can work is why we are top of list for these opportunities.

[1:16:13] Last item on the list here is really looking at the efficiency of these installations.

[1:16:18] Another challenge is that there are local solar and storage installers that are very good that

[1:16:23] have been doing this for a long time.

[1:16:24] There are others that are trying to make the transition from HVAC service into this industry

[1:16:29] We are starting brand new businesses in this industry because of the emerging opportunity.

[1:16:33] And understanding the processes and the applications and

[1:16:37] what the material looks like and understanding what a fast application is going to look like versus one that's going to get sent back two or three times.

[1:16:44] That's customer satisfaction, it's cost for that installer.

[1:16:49] And it's how long it takes us to bring this capacity online to actually provide the grid services that we're all collectively looking for.

[1:16:56] And so the other thing that we're looking to do is partnering with our local installer network to create those standardized processes and applications and documents so that there's not this business barrier to entry of those that know the right loopholes and boxes to check versus those that don't standardized streamlined easy to access fair and competitive is highly valuable in terms of making sure that we're getting the best price forward for both us on the capacity side and bringing the resources as grid resources but also customers in making this investment

[1:17:26] and getting the highest quality lowest cost solution

[1:17:30] into their garages.

[1:17:34] It's not just those residential batteries, though.

[1:17:37] It's not just the single family homes.

[1:17:39] It's not just the garages that we need to be thinking about

[1:17:41] in terms of accelerating battery energy storage.

[1:17:44] It's also thinking about the work that we're doing to bring

[1:17:46] batteries forward in multi-family programs

[1:17:49] and multi-family communities.

[1:17:52] And so one of the efforts that we have right now

[1:17:54] is working with sun and battery and Chesapeake Commons,

[1:17:58] a local multi-family dwelling here in Sacramento.

[1:18:01] They actually own four different facilities.

[1:18:03] Phase one is looking at one of these four,

[1:18:05] specifically the Chesapeake Commons site owned by Wasatch.

[1:18:11] It's a 100 battery installation,

[1:18:13] so 700 kilowatts, 2.1 megawatt hours,

[1:18:16] and this will be a aggregation of batteries

[1:18:20] all at one site that Smud will have full dispatch control

[1:18:23] over, and we'll be looking to both test the ability of these batteries to provide local

[1:18:29] services to those customers, provide grade level services like resource adequacy, but

[1:18:35] also because of the concentration of these battery systems, we'll be able to look at and

[1:18:39] study the ability of them to unload and support that local service transformer.

[1:18:43] So as we're thinking about things like transportation electrification and building electrification

[1:18:47] and growing load, also looking at how these different ERs and battery energy storage

[1:18:51] which can help mitigate that load growth so that we can use that same level of infrastructure

[1:18:55] to support that kind of energy portfolio of the dwellings as we move forward on this effort.

[1:19:03] So this gives us a first opportunity to do that testing and to build this out.

[1:19:06] As you recall from our grip application, a significant expansion of these multifamily dwellings,

[1:19:11] I think 2500 potentially of the 10,000 batteries was included in that.

[1:19:15] So this becomes a significant part of that story as well.

[1:19:18] Well, we do have a very large number of multifamily dwellings across the community.

[1:19:23] And so thinking about how we don't make this a program or an opportunity to work with

[1:19:27] smud just for those that have garages or happen to be in a situation where they can

[1:19:31] install these batteries.

[1:19:33] But making sure that we have as broad and comprehensive of a solution as possible, because there will

[1:19:38] be electrification challenges and infrastructure challenges at these sites as well.

[1:19:41] And we want to have a broad portfolio of solutions to address that part of the tapestry.

[1:19:52] So as we think about kind of those additional considerations in that forward looking strategy,

[1:19:57] I kind of wove throughout the conversation, the fact that this early work, this acceleration

[1:20:02] conversation, is really done in advance of when that grip opportunity under task area three

[1:20:08] would come the fruition, those additional 10,000 batteries.

[1:20:11] This is the foundation.

[1:20:12] This is the groundwork that gives us the opportunity to not just win a grant and then eventually figure out how we're going to do it but to accelerate into that opportunity on the timeline that are zero carbon demands that are zero carbon plant demands and also that the more near term resource adequacy needs for California demand.

[1:20:30] And so this is part of that narrative.

[1:20:33] It includes those multifamily projects and it's in line with the different phases of

[1:20:38] the germ's implementation and the ADMS implementation that Suresh describes to a question

[1:20:43] earlier and thinking about how this is all part of the aggregated portfolio, not one-off solutions

[1:20:48] and one-off programs.

[1:20:49] It really is that comprehensive solution and that comprehensive portfolio to create the

[1:20:53] value that we're looking for.

[1:20:56] Sorry.

[1:20:59] Questions?

[1:21:00] So

[1:21:06] far away, definitely too much.

[1:21:10] We've had, it's been a while actually since I've had a constituent feedback, but I've

[1:21:17] had several in the past with really high panel upgrade costs.

[1:21:22] And so how do we, have we put much thought into the A, the interconnection process that

[1:21:28] would be the panel costs and doing it sent panel costs when we're talking about trying to get

[1:21:32] That is the onsite, the household level of battery storage installed, and multifamily from that matter.

[1:21:41] So a big challenge with some of the panel upgrades is that there's a wave of emerging technologies, smart panels, and automated controls that are at the front end of code and certification and compliance testing where they're not kind of that generally readily available technology.

[1:22:00] There's a number of pilots going on across the state, and we're also actively monitoring that technology.

[1:22:06] That represents an area of research that could significantly address that.

[1:22:10] On our side, as we're looking at it, we also think about it in terms of making sure that we're making best use of the available panel space to enable electrification.

[1:22:21] Part of the education campaign around calls mud first with respect to electric vehicle charging, for example, is making sure that when somebody's thinking about installing a home.

[1:22:30] that they actually understand the needs that they have for that EVSE that they're putting in their garage and that we're not taking up all the panel bandwidth to install a 19 kilowatt EVSE in a garage or upgrading to install even a 7 kilowatt EVSE in a garage if that customer maybe only needs three and by making that decision to have a 3 kilowatt EVSE, you leave room to think about what your water heater upgrade is going to look like and what your stove top upgrade is going to look like to induction when you're ready.

[1:22:57] And so it's not a kind of silver bullet type solution, because you get into very specific customer circumstance.

[1:23:05] But it starts with those education initiatives, and we book in with the future technology that can help alleviate this more aggressively.

[1:23:15] As we're looking at battery specifically as being part of that solution, one of the things that we do here that SMUD was able to uniquely do first is work with Tesla to utilize their meter calls.

[1:23:27] to actually install at the point of the utility meter which allows them to more easily provide

[1:23:34] whole home backup. That allows that battery to interact with that whole home load more

[1:23:39] actively and has the potential to look at some of those opportunities to mitigate those costs

[1:23:45] in the future. So it's a huge cost opportunity for a conversation and one that we're very actively

[1:23:50] looking at both in a education and program standpoint but also very heavily on a research side.

[1:24:00] So, what kind of timeline are we looking at here because I know we've got a lot of

[1:24:05] solar installers who have also told us they've seen a big drop in and solar installs

[1:24:10] and they if they can be repositioned to help install batteries that could be a way to keep

[1:24:15] that workforce strong and the jobs here locally strong.

[1:24:20] What kind of timeline are we on for the whole project?

[1:24:24] So we are having these conversations with the OEMs and the manufacturers right now to understand what we can get in terms of optimal pricing and what that bulk conversation would look like.

[1:24:38] And in parallel with that, we are also having interviews with some of our local solar and storage installers, so some of the ones that have the highest participation in our programs.

[1:24:46] And also some that haven't been able to participate in our program to understand the barriers that we can most aggressively address and knock down.

[1:24:54] By prioritizing the things that we're able to have the most control over, we're able to get this done as quickly as possible.

[1:25:00] And so without kind of giving an absolute this date type of answer, we're talking like months like this summer, not end of this year type of conversation.

[1:25:12] Oh, that's wonderful. Great to hear.

[1:25:14] And now everyone has heard me say that.

[1:25:16] Yeah, I said it publicly. You were recorded.

[1:25:21] My team will let me know.

[1:25:25] At the risk of irritating those same providers

[1:25:28] and small business folks that we're trying to save.

[1:25:31] Are we looking at, you sort of got into this a little bit

[1:25:34] when we talked about the multi-family.

[1:25:36] But I mean, are we looking at putting storage

[1:25:38] at some of our substations and providing community benefits

[1:25:40] It's that way to essentially community, community storage?

[1:25:45] Yes.

[1:25:46] Yep, absolutely.

[1:25:50] Any other questions?

[1:25:54] Any other comments?

[1:25:55] Okay.

[1:25:56] Thank you so much.

[1:25:57] Thank you.

[1:25:59] Okay, have we received a new request to speak?

[1:26:02] No, we don't have any requests to speak on this item.

[1:26:06] Okay, and then anything off?

[1:26:10] No, nothing not the agenda.

[1:26:11] Okay, so we have not received any cards at this time.

[1:26:18] If you have comments, you'd like to be included in the record, you can send them within

[1:26:23] two hours at the end of the meeting.

[1:26:25] I don't, was there any summary items?

[1:26:28] I didn't have anything.

[1:26:29] Did anybody have any?

[1:26:30] Okay.

[1:26:31] And then we will be moving to the closed session.

[1:26:38] Any requests to speak on that?

[1:26:41] Having completed the open session portion of the meeting, the board will now enter into closed

[1:26:45] session with the following items, there will be no reportable action.

[1:26:49] So the first is conference with our legal council on existing litigation.

[1:26:53] There's no intersection, five, four, nine, five, six, point nine, D, one of the government

[1:26:57] code, AMIR's versus MUD and Superior Court case, 34, 2022, zero, zero, three, one, three, four,

[1:27:06] two, nine.

[1:27:07] I think that's it for today, and we will move into the next one.

[1:27:13] Thank you.

Committee - Strategic Development

Agenda

Transcript