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$600 million battery storage project faces resistance in California

Artist's impression of the proposed battery storage project, formerly the site of the power plant's tank farm. Image courtesy of Vistra Corp.

Editor's Note: This story was originally published by Latest climate news. It appears here as part of the Climatedesk Cooperation.

By some criteria, 1290 Embarcadero in Morro Bay, California, appears to be a prime location for a renewable energy storage facility.

On that stretch of coastline stands a power plant that closed a decade ago, with its smokestacks still standing. Vistra Corp.'s proposal for a 600-megawatt battery storage project on part of the site calls for redeveloping the entire area and demolishing the plant and smokestacks to prepare the land for future development. And the site's history as a power plant means it's well positioned for connection to existing transmission lines.

“The location is fantastic and there is certainly a need in the California power grid,” said Mark McDaniels, Vistra's vice president of renewable energy and storage, at a community meeting on April 24.

But some residents of the small town on California's Central Coast disagree, and put a proposal on the ballot this fall that could affect the future of the project. Opponents of the project say they are concerned about the impact on tourism and the fire risk at the facility. One resident called the proposal a “poison bomb” during the meeting.

California recently surpassed 10,000 megawatts of battery storage capacity, a 1,250 percent increase since 2019. On April 19, batteries became the largest source of electricity for the state's power grid for the first time. And in the inland Southern California city of Menifee, a 680-megawatt storage project replacing an old gas-fired power plant will be among the largest battery reserves in the United States.

California gets a growing share of its electricity from the sun during the day. But when Californians get home from work and turn on the lights, the sun goes down, creating a demand that must normally be met by fossil fuels. Battery storage allows power companies to generate electricity from solar panels and windmills when the sun isn't shining and there's no wind.

The state will still need nearly 42,000 additional megawatts of energy storage capacity by 2045 to meet its goal of using 100 percent clean electricity that year. But in some communities, like Morro Bay, the proposed storage projects are facing fierce opposition.

This local resistance shows the tension between the desire for “really high-quality local permits” and the state's push for a “really rapid transformation of the entire electric grid and rapid deployment of energy storage,” which requires rapid approval, said Mariko Geronimo Aydin, co-founder and chief energy economist at Lumen Energy Strategy, which completed an analysis of the state of battery storage in the state for the California Public Utilities Commission last year.

“I think ultimately we want to have both; we don't want one at the expense of the other,” said Geronimo Aydin.

Vistra Corp. proposed the Morro Bay battery storage project in 2020. The project is currently in the draft environmental impact report phase, with that document open for public comment until the end of May. The project awaits review by the city's Planning Commission and City Council.

But the ballot proposal put forward by local opposition group Citizens for Estero Bay Preservation would redirect that process because it requires approval from a majority of voters. Last year, the group collected enough signatures – 10 percent of the city's registered voters – to put Proposition A-24 on the ballot.

Back in 2021, the city changed the use designation of the decommissioned power plant from “Industrial” to “Visitor Friendly/Commercial.” In order for the energy storage project to move forward, the City Council would need to vote on a use designation change to allow industrial use again. If the ballot proposal passes, it would freeze the current use designation of the property and several others in the area and then require a majority of voters to approve another use designation change.

“We felt that such a facility was inappropriate in the center of our tourist area. Our entire city lives from tourism,” said Barry Branin, a member of the group behind the ballot proposal.

Instead, he believes the battery storage project should be located somewhere further inland, in the agricultural valleys east of Morro Bay or “somewhere in the middle of the desert,” near existing renewable energy projects.

“All the people from the valley love coming to Morro Bay, and if I knew a battery plant was being built there … I wouldn't want to bring my family to Morro Rock,” Branin said. “So why deny the rest of the state the use of the coast for economic reasons?”

Branin also argues that inland residents use more air conditioning than those on the coast, so “the batteries should be located near the users whose air conditioners really consume electricity (at night).”

This argument underlies a key intersection between the climate and housing crises in California: For years, housing construction has stagnated on the generally wealthier coasts as residents resist new construction, pushing more Californians inland into communities at higher risk of extreme heat events.

According to Vistra, the project would meet the energy needs of both the state and the local community.

“Our proposed plan puts Morro Bay ratepayers and residents first by leveraging the connectivity infrastructure already in place while allowing for eventual master planning and redevelopment of the remaining property to enhance the Embarcadero area and provide improved public access for the benefit of future generations,” said a statement from Claudia Morrow, senior vice president of development at Vistra.

And not building large storage facilities at sites with existing transmission infrastructure, such as the former Morro Bay power plant, “would result in higher costs for the entire electricity system,” said Geronimo Aydin.

Citizens for Estero Bay also raises concerns about potential fires at the battery facility, citing the nearby example of Vistra's Moss Landing in Monterey County, where in September 2022 a faulty smoke detector triggered water leaks on the battery racks, causing short circuits. The facility was subsequently offline for months.

A community safety report commissioned by Vistra for the Morro Bay project concluded that there was “no significant danger to the community.” It found that a fire at the plant, with winds blowing exhaust fumes toward surrounding homes, would not release enough toxins to pose a significant health hazard. But that has done little to assuage concerns among community members who flocked to a recent community meeting holding blue “Yes on Measure A-24” signs.

Safety incidents in battery storage systems are “relatively rare” in the U.S., affecting between 1 and 2 percent of systems and typically occurring in the first few years of operation, according to Geronimo Aydin. The estimate refers to the industry “while it was in the pilot and demonstration phase,” and she says the industry has since standardized and improved safety practices. However, clearly and accurately communicating the potential risks to residents and other stakeholders is still a major hurdle for the industry.

“We are now at a point where the security risks and how to manage them are very well known to those who work in this field. The challenge now, however, is to communicate exactly what the risk is, that it is a manageable risk and how to deal with it,” said Geronimo Aydin.

Branin is confident the referendum will be successful, but new legislation that allows large battery storage facilities to undergo a permitting process with the California Energy Commission (CEC) rather than doing so at the local level could offer Vistra a way out.

Vistra did not respond to questions about how the ballot proposal might affect the project, and at the April 24 town hall meeting, a Vistra representative said only that the company was focused on the project and the city's current process.

“The applicant says they are committed to the city's process, and we are working with them in good faith on it,” said Michael Codron, the city's interim director of community development. “If the city's process results in a denial, or if the ballot measure precludes the City Council's ability to approve the application, I would think they would invoke the CEC process.”

Anna Harden

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