Plans for underground energy storage facility along Highway 1 may be suspended. Here’s why

A Canadian company wants to hit pause on plans to develop a massive energy storage facility along Highway 1 between San Luis Obispo and Morro Bay.

Hydrostor filed a motion to suspend its application with the California Energy Commission on Wednesday.

“This motion is a result of stakeholder feedback as we examine options to optimize the site location,” Hydrostor senior vice president Curt Hildebrand told The Tribune via email on Friday. “We continue to explore alternative options to develop an energy storage resource to serve the Central Coast community.”

In November 2021, Hydrostor proposed constructing a 400-megawatt, long-duration energy storage plant near the intersection of Canet Road and Highway 1 in the county.

The fossil fuel-free plant, known as the Pecho Energy Storage Center, would have stored energy by taking in excess energy from the grid that would be used to compress and remove the heat from intake air.

The compressed air would then be sent deep underground into caverns, where it would displace water into an above-ground reservoir to keep the system under pressure.

Then, when energy was needed, the compressed air would be reheated and released through a turbine to generate electricity and then sold for use on the grid.

The energy in the plant would be able to be stored for eight hours or more, according to Hildebrand, who graduated from Cal Poly in 1985 with a degree in mechanical engineering.

Although the Energy Commission hasn’t yet accepted Hydrostor’s motion to suspend its application, the agency accepted a similar motion for the company’s proposed compressed air energy storage project in Kern County.

In its motion to suspend the application for the Pecho Energy Storage Center, attorneys for Hydrostor noted the company is “evaluating alternative sites located outside of the coastal zone.”

The coastal zone refers to the stretch of California’s coast under the jurisdiction of the California Coastal Commission.

Energy storage plant proposed in SLO County

The Coastal Commission became involved in the Pecho Energy Storage Center project early on when Hydrostor began drilling operations in early 2022.

The drilling operations were to survey the soil beneath the farmland where the proposed project would sit. Residents in the area described the drilling as loud and disruptive.

Although the drilling was permitted by San Luis Obispo County, Coastal Commission staff said in a February 2022 letter that the drilling would also have to go through the state agency’s permitting process.

The Coastal Commission threatened to fine Hydrostor if it did not secure state permits for the drilling activities.

Hydrostor needed to drill to properly survey the site to ensure its proposed underground caverns would be feasible there, Hildebrand told The Tribune at the time.

Environmental organizations, residents react to project

The Pecho Energy Storage Center project has raked up plenty of opposition since Hydrostar first filed its application.

Morro Bay National Estuary Program executive director Melodie Grubbs wrote in a February 2022 letter that the area where the energy storage plant was proposed is next to Chorro Creek.

The creek is a “habitat for several special status species” including steelhead trout and “is the largest freshwater source for the Morro Bay estuary,” Grubbs wrote in her letter.

Grubbs said that she was concerned with how constructing the large energy storage facility could impact the creek, its watershed and therefore the estuary.

“While the MBNEP certainly is aware of and generally supports efforts to mitigate the impacts of climate change,” she wrote, “care must be exercised for any project in such a sensitive location with a complete understanding of the larger context of efforts to protect and enhance the estuary and the creeks that drain through its watershed.”

Further opposition to the project came from Coastal San Luis Resource Conservation District president Neil Havlik.

In a March 2022 letter, Havlik wrote that constructing more power lines in the project’s vicinity could impede the organization’s ability to expand wetlands there.

Charlene Bucis, who lives along Canet Road near where the energy storage plant is proposed, sent a letter to the San Luis Obispo County Board of Supervisors in December 2021 noting her strong opposition to the proposed project.

“Right now the view from the cemetery and from my home and all my neighbors’ homes that also live at the base of Hollister Peak is the beautiful, untouched, serene countryside that has been the same for thousands of years,” Bucis wrote. “So, our concern is real, and devastating to the homeowners in the area.”

Energy storage project would help California electricity grid

Should the project move forward, it would contribute significantly to the California Public Utilities Commission’s order for utility companies to procure 1,000 megawatts total of long-duration energy storage to be online between 2026 and 2028 to bolster grid reliability.

It’s a much different proposal from the Vistra battery storage plant proposed at the site of the now-shuttered Morro Bay Power Plant.

The Pecho project would deliver 400 megawatts for about eight hours — providing 3,200 megawatt-hours worth of electricity to the grid.

On the other hand, the Vistra project would deliver 600 megawatts for about four hours — providing 2,400 megawatt-hours to the grid.

The technology behind Hydrostor’s proposed project is relatively new. The company has one small “proof of concept” facility located outside of Toronto.

Hydrostor has also proposed a 500-megawatt project in Kern County.

However, that project’s application is currently suspended while Hydrostor evaluates alternative sites and cavern engineering options, according to an Energy Commission order on Aug. 11.

Building the energy storage plant on San Luis Obispo County’s coast was particularly attractive, Hildebrand told The Tribune in 2021.

“The interconnection infrastructure is very prolific in the Central Coast, with the former Morro Bay Power Plant and Diablo Canyon (nuclear power plant),” he said at the time. “We’re very confident that, from an interconnection and market perspective, the site we’ve selected will make a lot of commercial and overall sense going forward.”

Hydrostor’s energy storage plant would likely ensure any anticipated offshore wind energy and other possible clean, renewable energy coming to the county is integrated seamlessly into the power grid.

The $800 million project would also employ between 200 and 450 people during construction, and 30 to 40 full-time equivalent jobs while operational, according to Hildebrand.