Title
Recommendation to Approve the Purchase of Up to 10 Megawatts of Battery Energy Storage Products from Trolley Pass Project LLC; and Authorize Alameda Municipal Power’s General Manager to Sign the Third Phase Agreement With Northern California Power Agency to Enable Project Participation.
In accordance with the California Environmental Quality Act (CEQA), this action is categorically exempt from further environmental review pursuant to CEQA Guidelines Section 15378b (Organizational or administrative activities). (Alameda Municipal Power 10491900)
Body
To: Honorable Mayor and Members of the City Council
From: Jennifer Ott, City Manager
EXECUTIVE SUMMARY
Staff is seeking City Council approval for the purchase of up to 10 megawatts (MW) for a 20-year term from Trolley Pass Project, LLC (Aypa) for battery energy storage products through a Third Phase Agreement with Northern California Power Agency (NCPA) and other member utility participants. This is Alameda Municipal Power’s (AMP) first energy storage project and will help to meet future generation capacity requirements.
BACKGROUND
On March 25, 2020, NCPA, acting on behalf of its Members which includes AMP, issued a Request for Proposals (RFP) for Renewable Energy Resources, Carbon Free Energy Resources, and Energy Storage Solutions, as subsequently amended on April 1, 2022, to solicit competitive proposals for renewable energy projects, energy storage solutions, and products consistent with the Renewable Energy Resources Program (Public Resources Code sec. 25740 et seq.) and the California Renewables Portfolio Standard Program (Public Utilities Code sec. 399.11 et seq.), including amendments enacted by passage of Senate Bill 100 (De Leon 2018), and carbon free energy resources. In latest response to the RFP in April 2024, NCPA received roughly 30 proposals, all of which were solar and/or battery energy storage projects. AMP staff evaluated proposals and narrowed the list down to two projects with competitive costs and ability to provide resource adequacy capacity. The first project was a 200MW solar plus storage facility that unfortunately never came to fruition after months of negotiations due to a lack of an agreement on related risks associated with interconnection and geopolitical policy. The second project is the Trolley Pass Project LLC, which will sell storage products from an up to 400 MW battery energy storage system facility located in San Bernardino County, California (Trolley BESS Facility). NCPA, in direct coordination with those Members who expressed an interest in purchasing storage products supplied by the Trolley BESS Facility (Participants), determined that the offer was competitive and met the needs and requirements of the Participants.
As a result of this determination, NCPA, acting on behalf of the Participants, engaged in active negotiations with Trolley Pass Project LLC to develop the Energy Storage System Agreement (ESSA) attached as Exhibit 2, pursuant to which NCPA, acting on behalf of the Participants, will purchase storage products supplied from the Trolley BESS Facility.
In order for NCPA to enter into the ESSA on behalf of the Participants, pursuant to the terms and conditions of the Amended and Restated Facilities Agreement, NCPA and the Participants shall enter into the Third Phase Agreement (Exhibit 1) to approve all means necessary for NCPA to fulfill obligations incurred on behalf of NCPA and the Participants pursuant to the ESSA, and to enable and obligate the Participants to take delivery of and pay for such electric capacity and energy and to pay NCPA for all costs it incurs for undertaking the foregoing activities. Upon full execution of the Third Phase Agreement, NCPA will enter the ESSA on behalf of the Participants, and such ESSA shall be deemed a NCPA Project by the NCPA Commission. As outlined in the Third Phase Agreement, NCPA will update the agreement on its effective date to replace the initial participation percentages with the final participation percentages for each project participant.
Table 1– Initial Project Participation Percentages
DISCUSSION
Staff reviewed AMP’s load and resource balance projections (see Figure 1 below) and identified the need to procure additional resources to meet future energy demand. AMP staff are still seeking additional solar and winter long-term procurement to meet future demands. However, the Trolley BESS Facility is a standalone storage project and is not eligible for RPS and is classified as an emerging technology with the current regulations. The BESS will charge and discharge and will minimally affect the City’s RPS energy positions due to the round trip 10–15 percent efficiency losses inherent to battery storage systems (see the “Pending Storage Losses” bar starting in 2029 in Figure 1). The value of this project lies in its ability to provide Resource Adequacy (RA) capacity for the City. The resource will charge during low priced hours and discharge during high priced hours to provide energy to the grid with the tolling revenue, or net revenue, lowering the effective cost of the RA provided by the resource.
Figure 1– AMP Resource and Load Energy Balance
Note: This chart condenses the full timeline to highlight the first 5 years.
Staff reviewed AMP’s RA forecast (see Figure 2) and identified the need to secure additional RA resources due to expiring contracts, reduced import availability from the Western Area Power Administration (WAPA) hydro resource, the planned phase-out of an RA capacity resource, and expected load growth from new large customers. Without participation in the Trolley BESS Facility, AMP would need to rely on market purchases to meet RA requirements starting in 2029 (see Figure 2).
AMP must demonstrate to the California Independent System Operator (CAISO) that it procured enough RA capacity resources measured in MWs to meet the Planning Reserve Margin (PRM) set by the CAISO based on the City’s forecasted coincident peak set by the California Energy Commission based on AMP’s historical data.
Figure 2 – AMP RA Balance
Note: This chart condenses the full timeline to highlight the first 6 years.
The Trolley contract offers competitive pricing at not-to-exceed amount of $13.47 per kilowatt-month from the RFP responses and accounts for potential cost pressures stemming from geopolitical developments. The expected not-to-exceed cost for AMP for the 20-year term is $32,334,240 or $1,616,712 annually with up to 10 megawatts of resource adequacy capacity and -2,190 megawatt-hours (MWh) of losses within our RPS energy portfolio in the first year of the contract with an expected decline due to battery degradation.
On September 15, 2025, the Public Utilities Board (Board) adopted a resolution recommending City Council approval of the purchase of 10 MW of Battery storage products from Trolley Pass LLC and authorize the AMP General Manager to execute the Third Phase Agreement to enable project participation (Exhibit 3).
ALTERNATIVES
All other municipal utility project participants are going through similar approval timelines. It is likely not feasible to propose any modifications to the Agreements at this time. An alternative would be to not enter into this agreement and to seek additional bids for energy storage. However, given AMP’s relatively small size, AMP staff would also need to seek additional project participants to move an energy storage project forward.
FINANCIAL IMPACT
There is no financial impact to the General Fund. The power purchase agreement of the energy storage products will be funded starting in FY 2028 through AMP’s power cost budget.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
Article XII Section 12-2 (A) of the Charter of the City of Alameda requires City Council approval for any contract for the purchase of electrical energy or such other public utility service or commodity necessary for the operation of the public utility which exceeds fifteen years.
AMP’s Strategic Plan – Sustainability – Strategy 1: AMP will deliver and maintain 100 percent carbon-neutral energy resources by 2020 and beyond.
ENVIRONMENTAL REVIEW
EXEMPT: The Board’s recommendation to approve the Trolley Third Phase Agreements and authorize the General Manger to execute the Third Phase Agreement does not meet the definition of a project under CEQA, pursuant to CEQA Guidelines sections 15378(b) since AMP’s purchase of capacity and energy storage under this Agreement has no potential to result in a physical change to the environment. The Seller, Trolley Pass Project, LLC, is responsible for obtaining CEQA approvals from the City of Rancho Cucamonga, the Lead Agency, under Article 13.1(g) of the ESSA. NCPA, as the authorized representative of the City of Alameda, as well as the City, shall have no obligation to make any purchases under the ESSA until CEQA approvals are complete, the judicial review period for CEQA challenges has passed, or such challenges, if any, have been dismissed.
CLIMATE IMPACT
AMP will continue to provide 100 percent carbon-neutral energy to Alameda customers. Per the California Energy Commissions’ Power Source Disclosure Program, comparing a similar existing Battery Energy Storage Project to the Trolley Battery Energy Storage Project should have a Green House Gas emissions factor of zero.
RECOMMENDATION
The Public Utilities Board and AMP staff recommend the City Council approve the purchase for up to 10 MW from Trolley Pass Project LLC for a 20-year term of battery energy storage products, and delegate authority to the General Manager to execute the Third Phase Agreement to enable project participation.
Respectfully submitted,
Tim Haines, AMP General Manager
By,
Midson Hay, Energy Resources Analyst
Financial Impact section reviewed,
Ross McCarthy, Finance Director
Exhibits:
1. Third Phase Agreement
2. Energy Storage Service Agreement
3. PUB Resolution