The new 5-acre battery storage facility being built in the Visalia Industrial Park will not power up local companies but send contracted electricity to the City of Riverside.Ormat Technologies has signed a 15-year contract for an 80MW/320MWh battery energy storage system (BESS) to the SoCal city 250 miles away from Visalia.
The City of Riverside contract requires Ormat to bring the project into operation by the guaranteed commercial operation date of 1 March 2026, although the company said it expects to be able to do so earlier, by the end of 2025.
In today’s market for electricity, power can be generated not just by utilities like SoCal Edison but by a third-party under electric power agreement – a long-term contract between an electricity generator and a customer, usually a utility, government or company. Customers can often get a cheaper base rate from these agreements and the power can come from far away or next door.
Ormat develops, owns and operates geothermal energy projects, with additional business lines in waste-to-heat and energy storage technologies.
Energy storage comprised just 4% of the company’s total revenues in 2023, but Ormat sees it as a high-growth potential business.
The energy storage division opened in 2020, following the company’s 2017 acquisition of energy storage developer Viridity. Ormat decided to enter the market to broaden its revenue base and noted in 2020 that the COVID-19 pandemic impacted revenues from its geothermal power generation and development as well as waste-to-heat generation.
The company claims 100% of its projects under construction as of Q1 2024 are eligible for the Investment Tax Credit. The Shirk project in Visalia for the City of Riverside is ‘currently expected to be eligible for a 40% tax credit, Ormat said in its announcement this month.
The project is called the Shirk BESS given its proximity to Shirk Ave.
“The Shirk project shows the continued progress that Ormat has been making towards aligning our strategic growth focus to capitalise on key target markets in the US, such as California, while also transitioning our energy storage business to become a higher-growth segment with a balance of contracted revenues,” CEO Doron Blachar said.
Shirk Battery Energy Storage System Project has been approved by the City of Visalia and is under construction at 7626 W. Sunnyview near Shirk.
Visalia and Tulare County will not get the power but they will get property tax.