SDG&E Expands Energy Storage Capabilities to Enhance Grid Resiliency and Affordability for Customers

Rhea-AI Summary

SDG&E has received CPUC approval to expand its Westside Canal Battery Energy Storage facility in California's Imperial Valley. The expansion will add 100 MW of storage capacity to the existing 131 MW facility, making it 231 MW total when completed in June 2025.

The expanded facility will be SDG&E's largest utility-owned battery storage asset. By year-end, the company's total battery storage portfolio is expected to reach 480 MW of power capacity and over 1.9 GWh of energy storage, including two additional projects in San Diego County.

The expansion will provide four key services: generation capacity, ancillary services, energy balancing, and congestion management. SDG&E has already returned $200 million in federal tax credits to customers, helping lower average monthly electric delivery bills for residential customers for the second consecutive year.

Positive

• Expansion increases storage capacity by 100 MW, creating the largest utility-owned battery storage asset
• Federal tax credits of $200 million returned to customers, reducing monthly bills
• Total battery storage portfolio reaching significant 480 MW capacity and 1.9 GWh by year-end
• Second consecutive year of lower average monthly electric delivery bills for residential customers

Negative

• None.

Insights

Financial Analyst

SDG&E's approved expansion of its Westside Canal Battery Energy Storage facility represents a strategic infrastructure investment that strengthens Sempra Energy's position in the evolving utility landscape. The addition of 100 MW to the existing 131 MW facility will create a 231 MW complex – making it the largest asset in SDG&E's utility-owned battery storage portfolio.

This expansion is financially significant for several reasons. First, it leverages federal tax credits that improve the economics of these capital investments. The article notes that SDG&E has already returned $200 million in such credits to customers, demonstrating the material financial benefits these projects can generate. This has contributed to lower electric delivery bills for residential customers for the second consecutive year, which helps maintain regulatory goodwill.

The enhanced storage capacity provides multiple value streams beyond just storing energy. The four services highlighted – generation capacity, ancillary services, energy balancing, and congestion management – all represent potential revenue sources or cost-saving mechanisms that can improve overall system economics. The ability to store excess energy during low-demand periods and discharge during high-demand times enables more efficient grid operation and potentially reduces the need for expensive peaker plants.

By increasing its utility-owned battery storage portfolio to nearly 480 MW of power capacity and over 1.9 GWh of energy storage by year-end, Sempra is making a substantial investment in infrastructure that should provide returns over many years while supporting California's clean energy transition. The strategic positioning of storage assets also helps mitigate future regulatory risks as utilities face increasing pressure to integrate renewable resources efficiently.

Utility Industry Expert

The CPUC approval for SDG&E's Westside Canal expansion demonstrates continued regulatory support for battery storage investment in California, which is important for Sempra's long-term strategy. This expansion aligns perfectly with the state's aggressive decarbonization goals while addressing the critical challenge of intermittent renewable generation.

The scale of this project is particularly noteworthy. Post-expansion, the 231 MW Westside Canal complex will become a centerpiece of SDG&E's growing battery portfolio, which is projected to reach 480 MW capacity with 1.9 GWh of energy storage by year-end. This represents one of the more ambitious utility-owned storage deployments in the country, positioning Sempra ahead of many peers in the transition toward a more flexible grid architecture.

The multi-functional capabilities of this battery system provide significant operational advantages. Beyond basic energy time-shifting, the system will deliver ancillary services including frequency regulation and voltage support – technical capabilities that are increasingly valuable as conventional thermal generation retires. The congestion management function is particularly valuable in California's transmission-constrained grid, potentially unlocking additional revenue streams through reduced congestion costs.

The financial structure also deserves attention. By securing federal tax credits and passing $200 million in savings to customers, SDG&E has created a win-win that improves affordability while building critical infrastructure. This approach helps build customer and regulatory support for continued capital investment, which is essential for a regulated utility's growth strategy.

The safety considerations detailed in the announcement – including UL/NFPA compliance and multiple emergency systems – address the emerging concern around battery fire risks that have affected some storage projects. This comprehensive safety approach reduces operational risk and potential liability exposure for a technology that will be central to the utility's future.

SAN DIEGO, March 14, 2025 /PRNewswire/ -- San Diego Gas & Electric (SDG&E) announced today the California Public Utilities Commission (CPUC) has approved an expansion of the company's Westside Canal Battery Energy Storage facility in California's Imperial Valley. This expansion project will add 100 megawatts (MW) of energy storage capacity to the existing 131 MW facility and is projected to be fully operational by June 2025.

This expansion project will add 100 megawatts (MW) of energy storage capacity to the existing 131 MW facility.

"The expansion of Westside Canal is a critical step toward strengthening our region's energy resiliency and advancing California's clean-energy goals," said Caroline Winn, chief executive officer of SDG&E. "By increasing storage capacity, we can allow more clean energy to be efficiently stored and dispatched when it's needed most, helping to create a more resilient and sustainable grid for our communities."

Following the expansion, SDG&E's Westside Canal complex will feature 231 MW of energy storage and will be the largest asset in SDG&E's utility-owned battery storage portfolio.

SDG&E's utility-owned battery storage portfolio is expected to reach nearly 480 MW of power capacity and over 1.9 GWh of energy storage by year-end, including the Westside Canal expansion and two additional projects in San Diego County currently being constructed.   

Westside Canal represents a significant investment in the region's energy infrastructure, supporting local communities by providing more reliable and clean power, and positions the region as a leader in sustainable energy solutions. Battery storage is also part of SDG&E's aim to improve energy affordability by securing federal tax credits that can help reduce electric infrastructure costs. In fact, SDG&E was able to lower the average monthly electric delivery bill for residential customers for the second year in a row, in part, because the company returned $200 million in federal tax credits to customers for recently completed battery storage.

The expansion of Westside Canal will provide four key services that enhance grid reliability and efficiency:

• Generation Capacity – Acting as an additional energy resource, the storage system will provide backup power when needed, helping to ensure sufficient electricity supply during peak-demand periods.
• Ancillary Services – The system will help maintain a stable and reliable power supply by supporting grid functions such as frequency regulation and voltage control.
• Energy Balancing – The system will store excess energy when demand is low and discharge it when demand is high, facilitating more efficient energy use and helping to stabilize electricity prices.
• Congestion Management – The system will improve power flow efficiency and support overall grid stability, by absorbing energy near generation sources and releasing it when transmission line congestion is lower.

This addition highlights SDG&E's efforts to modernize the energy grid, integrate more renewable energy, and provide a dependable power supply for the region all while prioritizing safety with advanced measures. The facility is designed to meet strict Underwriters Laboratories and National Fire Protection Association (UL/NFPA) standards and include multiple emergency stops, lockable disconnects and lightning protection.

With safety at its core, SDG&E closely adheres to recognized energy-storage safety practices through robust safety systems, strong coordination with first responders, and regular reviews of the latest research, helping advance a safe transition to a cleaner energy future.

About SDG&E
SDG&E is an innovative energy delivery company that provides clean, safe and reliable energy to better the lives of the people it serves in San Diego and southern Orange counties. The company is committed to creating a sustainable future by increasing energy delivered from low- or zero-carbon sources; accelerating the adoption of electric vehicles; and investing in innovative technologies to ensure the reliable operation of the region's infrastructure for generations to come. SDG&E is a recognized leader in its industry and community, as demonstrated by being named Corporate Partner of the Year at the San Diego Business Journal's Nonprofit & Corporate Citizenship Awards and receiving PA Consulting's ReliabilityOne^® Award for Outstanding Reliability Performance for 18 consecutive years. SDG&E is a subsidiary of Sempra (NYSE: SRE), a leading North American energy infrastructure company. For more information, visit SDGEtoday.com or connect with SDG&E on social media @SDGE.

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on assumptions about the future, involve risks and uncertainties, and are not guarantees. Future results may differ materially from those expressed or implied in any forward-looking statement. These forward-looking statements represent our estimates and assumptions only as of the date of this press release. We assume no obligation to update or revise any forward-looking statement as a result of new information, future events or otherwise.

In this press release, forward-looking statements can be identified by words such as "believe," "expect," "intend," "anticipate," "contemplate," "plan," "estimate," "project," "forecast," "envision," "should," "could," "would," "will," "confident," "may," "can," "potential," "possible," "proposed," "in process," "construct," "develop," "opportunity," "preliminary," "initiative," "target," "outlook," "optimistic," "poised," "positioned," "maintain," "continue," "progress," "advance," "goal," "aim," "commit," or similar expressions, or when we discuss our guidance, priorities, strategies, goals, vision, mission, projections, intentions or expectations.

Factors, among others, that could cause actual results and events to differ materially from those expressed or implied in any forward-looking statement include: California wildfires, including potential liability for damages regardless of fault and any inability to recover all or a substantial portion of costs from insurance, the wildfire fund established by California Assembly Bill 1054, rates from customers or a combination thereof; decisions, denials of cost recovery, audits, investigations, inquiries, ordered studies, regulations, denials or revocations of permits, consents, approvals or other authorizations, renewals of franchises, and other actions, including the failure to honor contracts and commitments, by the (i) California Public Utilities Commission (CPUC), U.S. Department of Energy, U.S. Federal Energy Regulatory Commission, U.S. Internal Revenue Service and other regulatory bodies and (ii) U.S. and states, counties, cities and other jurisdictions therein where we do business; the success of business development efforts and construction projects, including risks related to (i) completing construction projects or other transactions on schedule and budget, (ii) realizing anticipated benefits from any of these efforts if completed, (iii) obtaining third-party consents and approvals and (iv) third parties honoring their contracts and commitments; changes to our capital expenditure plans and their potential impact on rate base or other growth; litigation, arbitration and other proceedings, and changes (i) to laws and regulations, including those related to tax, (ii) due to the results of elections, and (iii) in trade and other foreign policy, including the imposition of tariffs by the U.S. and foreign countries; cybersecurity threats, including by state and state-sponsored actors, of ransomware or other attacks on our systems or the systems of third parties with which we conduct business, including the energy grid or other energy infrastructure; the availability, uses, sufficiency, and cost of capital resources and our ability to borrow money on favorable terms and meet our obligations, which can be affected by, among other things, (i) actions by credit rating agencies to downgrade our credit ratings or place those ratings on negative outlook, (ii) instability in the capital markets, and (iii) fluctuating interest rates and inflation; the impact on affordability of our customer rates and our cost of capital and on our ability to pass through higher costs to customers due to (i) volatility in inflation, interest rates and commodity prices and (ii) the cost of meeting the demand for lower carbon and reliable energy in California; the impact of climate policies, laws, rules, regulations, trends and required disclosures, including actions to reduce or eliminate reliance on natural gas, increased uncertainty in the political or regulatory environment for California natural gas distribution companies, the risk of nonrecovery for stranded assets, and uncertainty related to emerging technologies; weather, natural disasters, pandemics, accidents, equipment failures, explosions, terrorism, information system outages or other events, such as work stoppages, that disrupt our operations, damage our facilities or systems, cause the release of harmful materials or fires or subject us to liability for damages, fines and penalties, some of which may not be recoverable through regulatory mechanisms or insurance or may impact our ability to obtain satisfactory levels of affordable insurance; the availability of electric power, natural gas and natural gas storage capacity, including disruptions caused by failures in the transmission grid or pipeline and storage systems or limitations on the injection and withdrawal of natural gas from storage facilities; and other uncertainties, some of which are difficult to predict and beyond our control.

These risks and uncertainties are further discussed in the reports that the company has filed with the U.S. Securities and Exchange Commission (SEC). These reports are available through the EDGAR system free-of-charge on the SEC's website, www.sec.gov, and on Sempra's website, www.sempra.com. Investors should not rely unduly on any forward-looking statements.

Sempra Infrastructure, Sempra Infrastructure Partners, Sempra Texas, Sempra Texas Utilities, Oncor Electric Delivery Company LLC (Oncor) and Infraestructura Energética Nova, S.A.P.I. de C.V. (IEnova) are not the same companies as the California utilities, San Diego Gas & Electric Company or Southern California Gas Company, and Sempra Infrastructure, Sempra Infrastructure Partners, Sempra Texas, Sempra Texas Utilities, Oncor and IEnova are not regulated by the CPUC.

 

 

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SOURCE San Diego Gas & Electric (SDG&E)

FAQ

How much additional storage capacity will SDG&E's Westside Canal expansion add?

The expansion will add 100 MW of energy storage capacity to the existing 131 MW facility, bringing the total to 231 MW.

When will SDG&E's Westside Canal battery expansion be operational?

The expansion project is projected to be fully operational by June 2025.

What is the expected total battery storage capacity for SDG&E by year-end?

SDG&E's battery storage portfolio is expected to reach 480 MW of power capacity and over 1.9 GWh of energy storage by year-end.

How have SDG&E's federal tax credits benefited customers?

SDG&E returned $200 million in federal tax credits to customers, helping lower average monthly electric delivery bills for residential customers for two consecutive years.

What are the four key services provided by SDG&E's Westside Canal expansion?

The expansion provides generation capacity, ancillary services, energy balancing, and congestion management services.