Iron-rich Eagle Mountain, in a remote stretch of desert near Joshua Tree National Park, has been home to a Kaiser Steel mining operation, a backdrop for Hollywood films including “Terminator 2: Judgment Day” and, more recently, the proposed site of what would have been the largest trash dump in the West.
Now, a Santa Monica company, Eagle Crest Energy, has a $2 billion plan to turn the abandoned mine into a massive energy storage facility that would help manage electricity generated from nearby wind and solar projects.
Eagle Crest’s plan, backed by funding from Santa Monica venture capital firm Upfront Ventures but opposed by some environmental groups and the National Park Service, essentially would be a big solar and wind power storage facility. It would turn two huge mine pits into water reservoirs. When solar and wind supply is plentiful, excess energy from solar and wind farms would be used to pump water from the lower reservoir to the upper one; when solar and wind generation is nonexistent, the water would flow in the other direction, powering up to four hydroelectric turbines and sending electricity to the power grid.
At maximum, 1,300 megawatts of electricity could be returned to the grid, enough to power nearly 1 million homes – about 60 percent of what the San Onofre nuclear power plant generated before it was shut down three years ago.
Backers of the project say it’s essential as the state increasingly turns to alternative power sources – chiefly solar and wind – to meet ambitious greenhouse gas reduction mandates. Because wind and solar are intermittent power sources, state officials and electric utility executives have been scrambling to find ways to store that energy and put it on the grid when needed most.
“Energy storage is a cost-effective way to reduce overgeneration of renewable energy during certain time periods and redeliver that renewable energy during peak demand periods,” said Steve Lowe, Eagle Crest’s chief financial officer. “Pumped storage projects, like Eagle Mountain, have been used for decades around the world for large-scale energy storage.”
But environmental groups and the Park Service say the project threatens an aquifer that feeds springs throughout the region, including inside the adjacent national park. In addition, the reservoirs would attract ravens and other natural predators of the threatened desert tortoise.
“The project is simply wrong for this area,” said Seth Shteir, program manager for the California desert field office of the National Parks Conservation Association.
What’s more, Shteir and other environmental advocates are not only against the energy storage project, but they’re pushing for the mine land to be reincorporated back into Joshua Tree National Park. Eagle Mountain was part of the original Joshua Tree National Monument created by the Franklin Roosevelt administration but Congress removed it at the behest of Kaiser Steel and other mining interests in 1950. Now, Park Service officials are in the midst of a study looking at expanding Joshua Tree.
Regardless, Eagle Crest has been steadily forging ahead. Last year, the company received a license from the Federal Energy Regulatory Commission. Last month, after two years of negotiations, the company bought out the remainder of the Kaiser Steel mining concern for an undisclosed sum.
Next up for Eagle Crest: a permit from the federal Bureau of Land Management for right-of-way for transmission lines to connect the project to a Southern California Edison substation 16 miles away. That permit could be issued next year. Barring the filing of lawsuits, construction could begin by 2018 with completion by 2022.
Once operational, Eagle Crest’s revenue would come from contracts with utilities. In essence, the utilities would buy the rights to use the storage capacity at Eagle Mountain.
For example, Southern California Edison could buy the capacity rights for one of the project’s four 325 megawatt turbines for 20 years. Then, it would be up to Edison to use the turbine as it sees fit. If Edison had too much solar power on its grid at 2 p.m., it could send some of that power to Eagle Mountain, where it would be used to pump water from the lower reservoir to the upper reservoir.
Later that day, once the sun has gone down and Edison’s solar production plummets, the utility could reverse the water flow and produce energy.
Currently, the state’s three investor-owned utilities are required to obtain one-third of their power from renewable sources, such as solar and wind, by 2020. State legislators are considering a bill that would boost that requirement to 50 percent by 2030.
The gamble Upfront Ventures and other investors in the Eagle Crest project are also banking on is a California Public Utilities Commission mandate that each of the state’s three investor-owned utilities – Pacific Gas & Electric of San Francisco, the Southern California Edison unit of Rosemead-based Edison International and San Diego Gas & Electric – secure certain amounts of energy storage capacity. The mandate was passed in anticipation of a grid being increasingly reliant on the uneven production of solar and wind energy.
That mandate has set off a cottage industry for the development of energy storage; Eagle Crest investors hope their project will be chosen by one or more of the utilities.
Payments from a storage capacity agreement would be crucial for the project’s success, according to a local renewable energy investment adviser.
“Unlike with traditional hydropower-pumped storage projects that make their money as energy flows in when its cheapest and flows out when it’s most expensive, it’s the monthly capacity payments that matter the most here,” said Josh Haacker, managing director of U.S. Renewables Group in Santa Monica. “Those monthly capacity payments would be used to pay back all the development and financing costs.”
Only a small component of revenue would be from the on-peak and off-peak power price differential, he said.
‘Project that matters’
Eagle Crest first proposed the energy storage idea 20 years ago, but it played second fiddle to a plan by Los Angeles County trash officials who wanted to convert the mine into a giant dump and ship L.A.’s waste there by train. That bid was finally scrapped two years ago.
Initial funding has come from private investors; the only named firm being Santa Monica’s Upfront. Neither Upfront nor Eagle Crest would disclose the size of the VC’s investment in the energy storage project, but the firm typically invests no more than $10 million in a single company.
Upfront is known mostly for backing tech startups, but Partner Steven Dietz, who is also a board member of Eagle Crest, said the firm decided to invest in the energy storage project because of its size, location and importance to the renewable energy industry.
The site is surrounded by existing and potential renewable energy developments, including wind farms near Palm Springs and solar projects in the Mojave.
Dietz said when completed, the Eagle Crest project would be the largest or second largest renewable energy storage project in the nation, if not the world. There are larger energy storage projects, but most draw their power from fossil fuel or nuclear sources.
“Right now, we have no real cost-effective way to store renewable energy in California,” Deitz said. “We would be building something that really matters.”
If the project is built, Eagle Crest would need to draw 33,000 acre-feet of water from an underground aquifer to fill the reservoirs the first time, then draw an additional 1,400 acre-feet each year to make up for water lost to evaporation. (An acre-foot is enough to supply two to four households with water for a year.)
All that water is one of the sticking points for environmental groups opposed to the project.
Eagle Crest cites studies showing the aquifer beneath the mine site holds at least 10 million acre-feet of water.
“At 33,000 acre-feet, we’re just a drop in that big bucket,” Dietz said.
But opponents dispute Eagle Crest’s figures. They say the aquifer is actually much smaller and that the company would pump more out of the aquifer each year than naturally flows in, slowly draining the aquifer and potentially cutting off springs it feeds.
“There is copious pumping of groundwater for this project, far more than this desert aquifer can tolerate,” Shteir said. “Not only that, but there is some connectivity between the aquifer and springs that flow into Joshua Tree National Park and support the plants and wildlife there. This project could endanger those water flows.”
That is one of the reasons that park Superintendent David Smith last year told Palm Springs’ Desert Sun newspaper that the Eagle Crest project was “one of the biggest threats to the park.”
The other major concern park advocates have is the potential impact on two of the major species inhabiting the park: the desert tortoise and bighorn sheep. The reservoirs, they say, will draw in predatory animals and birds that will prey on these two species.
“The native species could end up being killed off or pushed out as invasive species take over,” said former Joshua Tree Superintendent Mark Butler, now an environmental consultant in Nevada.
Eagle Crest’s Lowe said that in response to these and other concerns, the company has made changes to the project to include more water and species monitoring.
“We plan to be a good neighbor,” he said.
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