A new frontier in the energy-water nexus is being forged in Southern California. Teaming up with Advanced Microgrid Solutions, Irvine Ranch Water District will be using an energy storage system to reduce its costs and help ease demand on the grid during peak hours.

The project is the largest of its kind at a public water agency in the U.S., and the 7 megawatt (MW) and 34 megawatt-hour (MWh) network will utilize Tesla batteries to store power at 11 of Irving Ranch Water District’s (IRWD) most energy-intensive points in its operations – including three water treatment plants, six pumping stations, a deep water aquifer treatment plant and a groundwater de-salter facility.

For IRWD, the largest water utility in Orange County, electric usage is the third largest expenditure in its budget, said Paul Cook, the agency’s general manager. “We move a lot of water, we treat a lot of water and that takes energy,” he said.

IRWD’s project signals a growing opportunity for water agencies to utilize energy storage, not just to reduce the costs of their own operations, but to play a larger role in helping to reduce peak demand on the grid, and thereby cut the need for more fossil-fuel consuming power plants.

Electric utilities have to deal with peak demand on the grid during certain times of the day (usually late afternoon), and customers such as IRWD often have to pay more for usage during those times.

Energy storage allows IRWD to charge its batteries from the grid in the evening while demand is low (and power is cheaper) and then draw from the batteries during peak daytime hours, thereby cutting costs and reducing grid pressure. The district projects a savings of $500,000 a year and its only upfront costs, said Cook, were staff time and consultants. Advanced Microgrid Solutions (AMS) is responsible for designing, financing and operating the system, which comes with a 10-year power-purchase agreement from Southern California Edison, the biggest electricity provider in Southern California.

AMS has a 50 MW contract to supply power for Southern California Edison from energy storage projects, and it can call on 6 MW from IRWD’s system to help meet grid needs for the electric utility.

Grid stabilization and modernization is a pressing issue in Southern California. Several years ago, after San Onofre Nuclear Generating Station was taken offline and other regulatory changes phased out some coastal power plants, Southern California Edison needed a way to help manage the intermittency of renewables, which grew by leaps and bounds, and tackle concerns with peak power demand.

Traditional technology has relied on peaker plants (usually gas powered), but they can take hours to rev up, “so you have very expensive fossil-fuel backup system just to handle the transition back to the global peak at the end of the day,” said Susan Kennedy, cofounder and CEO of AMS. “It is the antithesis of our carbon goals to have a redundant system in place, and it’s wildly expensive.”

As a solution, Kennedy said she fell in love with the concept of batteries combined with demand response software, which creates a kind of virtual peaker plant. “If you can put batteries and software and harness the load, you can be the solution the utilities need on the distribution system,” she said. “You can save everyone money while you’re doing it.”

It’s also a solution for water utilities, too. Part of AMS’s magic, said Cook, is the technology that enables a “bumpless” transition from grid to battery and back to grid without having any interruption in operations. “It gets us to where we can be more self-reliant,” said Cook.

While the IRWD project is the largest so far, AMS has a previous 4 MW project in the water industry with Inland Empire Utilities Agency in western San Bernardino County. Inland Empire is working toward being gridless by 2020 by combining energy storage with solar, wind and biogas.

And other water agencies are knocking on the door as well, said Kennedy.

“The water industry so uniquely needs energy storage,” she said, because its facilities need lots of power and can’t be easily turned off during peak pricing times. “It’s wasteful and expensive for water agencies to navigate electricity tariffs.”

Because of the power needs required by bigger agencies, many of them have also been aggressive about pursuing alternative energies like wind, solar and biogas, but integrating those successfully requires energy storage.

“For Southern California in particular, this is a no brainer – they have to do it,” she said. “Southern California Edison is buying. Every water district inside Southern California Edison should be signing up for this.”