The City of Palo Alto, California, a public power community, on Sept. 15 approved a battery storage project contract involving the city’s utility.
This is the first utility-scale battery energy storage project for the city, said Alan Kurotori, Utilities Director for the City of Palo Alto, at the meeting.
Jim Stack, Senior Resource Planner for Palo Alto, presented details on the energy storage contract at the meeting.
He noted that that there is an agreement between the Northern California Power Agency and Trolley Pass Project LLC for a 400-megawatt battery energy storage system in San Bernardino County, California.
“We’re recommending that Palo Alto take a fifty-megawatt share of the project,” Stack said prior to the City Council’s vote.
The rest of the project will be contracted by seven other NCPA members – including Silicon Valley Power (Santa Clara), Lodi, Redding, Alameda and smaller members.
The contract is a 20-year term starting in 2029, with a total cost of up to $161 million, for an annual cost to Palo Alto of about $7.6 million.
There are some caveats, Stack noted.
“What we’re seeing in the industry now” due to “all the uncertainty that’s been introduced recently with tariffs and tax incentives changing [is] that developers are really insisting on provisions being added to contracts that allow them to raise the contract price after you execute the contract if they can show to an independent auditor that their costs have increased due to” certain specified reasons, such as tariffs and tax incentives.
He said that this could result in a slight increase in the price of the contract that would have to be invoked within the next year.
But in spite of that, Stack noted that the contract price is very attractive “compared to what else we’re seeing in the market for storage, which is typically priced in the $15 to $16 [$/kilowatt-month] range, so even with [that contract price increase], it’s still more attractive than…really all the other offers we’re seeing in the market today.”
