Palo Alto agrees to buy 50 MW share of NCPA 'Trolley Pass' battery project, council cites capacity and climate benefits

Palo Alto’s City Council unanimously approved participation in a 50‑megawatt share of the Northern California Power Agency’s 400‑megawatt Trolley Pass battery storage project on Sept. 15, adopting staff recommendations to enter a 20‑year agreement that starts in 2029.

Director of Utilities Alan Kuretori and senior resource planner Dr. Jim Stack described the Trolley Pass project as a battery‑only resource sited in Southern California. Staff recommended a 50 MW share — part of a 400 MW facility being subscribed by multiple NCPA members — to replace potential future capacity shortfalls and to capture market value from daily energy price differentials. The proposed contract price is $12.71 per kilowatt‑month (about $7.6 million per year for Palo Alto’s share) subject to a narrowly defined industry cost‑adjustment mechanism developers are invoking in the current market.

Stack said the project’s revenue streams include energy arbitrage — charging batteries during lower‑priced midday hours and discharging into higher‑priced evening hours — and resource‑adequacy (RA) capacity credits. He told the council that in Southern California, heavy midday solar generation can push wholesale prices negative, making midday charging particularly valuable. NCPA staff and consultants modeled the contract and projected a net positive value to Palo Alto of approximately $4.5–$8.0 million annually under current assumptions; staff noted that those results remain favorable even if a developer invokes a contract price adjustment of up to 6 percent tied to tariffs or tax‑policy changes.

Kuretori and Stack described procurement challenges in California’s market — long grid interconnection timelines and recent tariff and tax‑incentive uncertainty — which have complicated negotiations on other solar+storage offers; they said Trolley Pass was attractive in price and structure compared with other offers they reviewed. The Utilities Advisory Commission and the Utilities Oversight Coordinating Committee both recommended approval; NCPA’s governing commission had approved the project in June.

Council members asked about risk: whether prices could fall in future years, the contract’s obligations and whether being short on RA would create penalties if the city lost expected hydro capacity in a later compliance year. Staff said the city is obligated to pay the contract capacity charge once the contract is executed and that the project will be operated to optimize energy and capacity value; staff also acknowledged uncertainty but said the offer remained attractive against market alternatives.

The council voted unanimously to approve the contract and related authorizations for the city manager to execute the agreement and any ancillary documents through NCPA. The recorded vote was unanimous; the motion carried.

Ending: Council described the purchase as a prudent step to strengthen capacity and to support Palo Alto’s carbon goals by improving the city’s ability to store and dispatch renewable energy when the grid needs it.