The California Independent System Operator (CAISO) has approved a request from Pacific Gas and Electric Company (PG&E) to provide a mixture of energy storage, energy efficiency, and system-wide upgrades to ensure reliable electricity in the Oakland, California, area, after the retirement of an aging Dynegy jet fuel-powered plant.

PG&E received CAISO approval for its Oakland Clean Energy Initiative (OCEI) March 22. The utility said it will soon open a two-month request-for-proposals process for providers of distributed energy resources to propose storage and efficiency solutions that would provide 20 to 45 MW “of clean energy resources.”

CAISO has a reliability-must-run contract with Dynegy, which owns the 165-MW Oakland Energy Facility at in Oakland, near Jack London Square, to purchase power during peak periods. CAISO in early 2017 said retirement of the 40-year-old plant, which began operating in 1978, presents a risk to local transmission reliability. It said it would look at alternatives, including a new fossil fuel-powered plant, additional transmission lines, or a clean energy portfolio.

“The Oakland Clean Energy Initiative represents an innovative, tailored portfolio of distributed clean energy resources combined with traditional transmission substation upgrades that meet the local reliability needs in this area of Oakland, enabling the retirement of the aging, jet fuel-powered plant,” Roy Kuga, vice president of grid integration and innovation for PG&E, said in a statement.

Kuga said PG&E and CAISO worked together during recent transmission-planning cycles to study how distributed clean energy resources could become part of a solution to the current plant’s retirement. He said CAISO found the OCEI would be both a clean and more affordable option, as opposed to adding transmission lines or building a new fossil-fuel plant.

“There has been widespread support for this solution from local community representatives, environmentalists, elected officials and other groups, with a focus on using local workforce,” Kuga said.

The Rocky Mountain Institute in a recent report, part of a 2017 effort including PG&E that analyzed the long-term viability of power generation in Oakland after the current plant is retired, said “PG&E has determined the viability of an innovative solution set that would replace the power plant’s energy supply with a portfolio of local distributed energy resources, such as solar, battery storage, demand response, etc., to meet reliability needs in this area.”

PG&E said it will move forward with upgrades to existing substations as part of the effort to ensure reliability. The utility said the OCEI would be the first time local clean-energy resources are deployed proactively as an alternative to fossil-fuel generation to ensure transmission reliability in its service area. The utility also said it will continue to work with East Bay Community Energy, a community choice aggregator, “to determine and meet the clean-energy and reliability needs of local customers.”

PG&E in its statement said it will seek cost recovery for the battery storage with the Federal Energy Regulatory Commission, and for other distributed energy resources with the California Public Utilities Commission. It said it expects the OCEI will be in service by mid-2022.

Darrell Proctor is a POWER associate editor (@DarrellProctor1, @POWERmagazine).