PG&E wildfire-linked bankruptcy imperils big Bay Area green energy project
Hummingbird Energy Storage complex in south San Jose faces hazy future due to PG&E insolvency
SAN JOSE: PG&E’s bankruptcy could torpedo an energy storage project in south San Jose, a potential failure that could shelve a welcomed green energy project and leave the fate of a big natural gas plant up in the air.
esVolta, a developer of clean energy battery storage complexes, had struck a deal in July 2018 with PG&E to build the Hummingbird Energy Storage project in San Jose’s bucolic Coyote Valley, an endeavor that would help the embattled utility replace three costly natural gas plants. But that collaboration is in limbo now that the utility has filed for bankruptcy, listing $51.69 billion in debt.
“PG&E has made no decisions as to whether to assume or reject contracts as part of filing for Chapter 11,” PG&E spokesman Paul Doherty said Monday.
esVolta said in documents filed with the U.S. Bankruptcy Court in San Francisco that the uncertainty over PG&E’s stance on the power purchase agreement has forced the Hummingbird project into a tight squeeze.
“Hummingbird’s position is becoming untenable,” esVolta stated in the court documents.
Confronted by a forbidding landscape of liabilities and wildfire-related claims, PG&E on Jan. 29 filed for bankruptcy, to ward off its creditors while it attempts to reorganize its shattered finances. The bankruptcy proceeding also could allow PG&E to reject contracts that it had signed, including pacts for dozens of solar, wind, and other clean energy projects such as the Hummingbird Energy Storage complex on Bailey Road in south San Jose.
In July 2018, esVolta and PG&E entered into a power purchase agreement, or PPA, whereby esVolta would develop the complex. If built, the Hummingbird lithium-ion energy storage complex would be one of the world’s largest battery facilities.
Alarmed that PG&E might reject the power purchase agreement at any time, esVolta had asked PG&E to commit to continuing the contract, according to the court papers.
“Hummingbird is in the difficult position of continuing to expend millions of dollars under the PPA and to build a battery storage facility that PG&E may not even want,” esVolta stated in the bankruptcy documents.
PG&E’s financial prospects have turned murky in the wake of lethal infernos that scorched the North Bay Wine Country and nearby regions in October 2017, and a fatal blaze known as the Camp Fire that roared through Butte County and essentially destroyed the town of Paradise and killed 85 people in November 2018.
State investigators determined that PG&E’s equipment was the cause of 17 of the fires of 2017. In recent weeks, PG&E announced it is probable that state fire experts will find that its equipment caused the Camp Fire, which is California’s most deadly and destructive wildfire.
PG&E is already a felon after a federal jury convicted the utility in 2016 for crimes it committed before and after a fatal gas explosion in 2010 that killed eight people and destroyed a San Bruno neighborhood.
esVolta said it would like to preserve the power purchase agreement and complete development of the energy storage complex. But the court papers also made it clear that esVolta has little choice but to proceed with development under the current circumstances.
Environmental groups, PG&E and the state Public Utilities Commission had raced to embrace the green battery venture last summer, saying it would help achieve green energy goals as well as help with the retirement of three natural gas plants, including Calpine’s Metcalf Energy Center in south San Jose.
“If development ceases, Hummingbird risks defaulting under the power purchase agreement,” esVolta stated in the court documents. “If Hummingbird defaults, PG&E can terminate the PPA at will.”
That would force esVolta and the Hummingbird project to forfeit everything that’s been invested in the project.
“The threat of bankruptcy contract rejection has prevented esVolta and Hummingbird from obtaining the third-party financing that is necessary to continue with the facility’s development,” esVolta said in the court filing.
Source: mercurynews
