Tue. Jul 7th, 2020

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Permitting utility-scale battery energy storage projects: lessons from California

5 min read

There are three distinct permitting regimes that apply in developing battery energy storage projects, depending upon the owner, developer, and location of the project.

The increasing mandates and incentives for the rapid deployment of energy storage are resulting in a boom in the deployment of utility-scale battery energy storage systems (BESS). In the first installment of our series addressing best practices, challenges and opportunities in BESS deployment, we will look at models and recommendations for land use permitting and environmental review compliance for battery energy storage projects with a particular focus on California, which is leading the nation in deploying utility-scale battery storage projects.

Land use permitting and entitlement

There are three distinct permitting regimes that apply in developing BESS projects, depending upon the owner, developer, and location of the project.

Utility-Sponsored Projects – Public Utilities Commission

BESS projects developed or owned by the state’s investor-owned utilities are subject to California Public Utilities Commission (CPUC) jurisdiction under General Order (GO) 131-D. GO 131-D governs permitting for utility-owned infrastructure including the potential need for a Certificate of Public Necessity and Convenience (CPCN) or Permit to Construct (PTC) and related environmental review pursuant to the California Environmental Quality Act (CEQA). For BESS projects approved to date, the utilities have invoked an exemption from GO 131-D qualifying such projects as “distribution” facilities falling below applicable 50 MW and 50 kV thresholds, thereby avoiding CPCN and PTC compliance and California Environmental Quality Act (CEQA) review and significantly streamlining permitting.

Private Land Projects – State and Local Government Agencies

For BESS projects developed or owned by private entities, permitting jurisdiction is dependent upon the location of the project, typically either on private, federal or state land, and governed by the applicable governmental agency with jurisdiction over that property. The majority of BESS projects developed to date are located on private land – typically near substation infrastructure and/or generating facilities – and subject to the applicable county or city zoning and land use ordinances and, if necessary, associated CEQA review.

Co-locating BESS facilities with the solar or wind generating source has proven to streamline the permitting process. In such circumstances, several California counties have found BESS projects to constitute an accessory use to the associated energy generation facility, thereby bundling the two projects together, even where a BESS project may be added subsequent to the development of the solar or wind facility. In other jurisdictions, BESS projects have been interpreted as falling within permitted uses for electrical substations and transmission and distribution facilities, thereby avoiding discretionary review; or, alternatively, BESS projects may be interpreted as allowed as conditional uses for similar facilities, requiring a conditional or special use permit and triggering CEQA review.

Federal Public Lands – Federal Government Agencies

For those projects located on federal or state land, permitting will fall under the jurisdiction of the applicable agency and its associated permitting regime – for example, the Federal Land Policy and Management Act’s Right of Way (ROW) process for projects falling under Bureau of Land Management (BLM) jurisdiction. As with BESS projects located on private land, BLM will typically bundle the consideration of a BESS facility with an associated solar or wind facility in an initial ROW Grant, or, if the BESS facility is added subsequent to the generation facility, treat it as an amendment to the ROW Grant. We have not, however, seen BLM treat a BESS facility as an authorized use under an existing ROW Grant, thus the agency must still make an affirmative decision that triggers NEPA compliance.

Environmental review compliance

Where BESS projects trigger discretionary permitting and CEQA or NEPA review, there are a variety of procedural mechanisms for agencies to address environmental review compliance ranging from categorical exemptions/exclusions to a full scope environmental impact report/statement, respectively. Where a BESS facility is combined in environmental review with a solar or wind project, the BESS facility will be subsumed within the scope of that review process, typically requiring a mitigated negative declaration/environmental assessment or environmental impact report/statement. Where a BESS facility is permitted as a stand-alone facility and/or added subsequent to the review of a related solar or wind project, we have seen success in the use of categorical exclusions/exemptions for these projects due to the relatively small size and enclosed nature of the facilities.

While the applicable categorical exemptions/exclusions are specific to the relevant agency, they typically fall within categories for existing facilities, replacement or reconstruction of existing structure or facilities or accessory structures. For subsequently added BESS facilities, BLM has also utilized a Determination of NEPA Adequacy (DNA) finding the BESS facility to fall within the scope of the broader environmental review for the already analyzed solar or wind project.

Given the relatively small footprint of typical BESS projects and their location closer to urban load centers or existing generating facilities, the environmental and natural resource issues emerging to date tend to focus on technology-specific impacts including fire risk, noise impacts and hazardous materials transportation, use, and disposal.

Recommendations for BESS project development

The rapid deployment of BESS projects at large scale to meet regulatory mandates and tax incentives presents developers and regulatory agencies with an array of novel permitting and environmental review issues and potential hurdles.  Developing strategies for addressing land use permitting and environmental review issues early and effectively will facilitate the cost-efficient, timely and successful deployment of BESS projects.  Our “best practices” recommendations for permitting BESS projects include:

  • Prior to engaging regulatory agencies, prepare a permitting and environmental review strategy, which should include references to potentially applicable zoning or land use entitlement requirements and categorical exemptions/exclusions.
  • Site BESS facilities within the existing or anticipated disturbance footprint of a co-located energy generating facility, such as within or adjoining temporary construction laydown areas, parking areas or operations and maintenance facilities; and, for stand-alone BESS facilities, identify existing structures or buildings that could provide the footprint for the facility.
  • Consider identifying a potential BESS facility in conjunction with solar or wind project development to provide optionality for future deployment even if such use is not immediately anticipated.

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David Lazerwitz is a partner and Linda Sobczynski is an associate in Farella Braun + Martel’s San Francisco office. Mr. Lazerwitz is chair of Farella’s Energy and Natural Resources Industry group.

There are three distinct permitting regimes that apply in developing battery energy storage projects, depending upon the owner, developer, and location of the project.
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