Pacific Gas & Electrics woes look set to worsen – its $51.69 billion debt may necessitate the shelving of plans for the building of its Hummingbird Energy Storage project in San Jose.
Bankruptcy proceedings may determine that PG&E can reject contracts already signed, including agreements for dozens of clean energy projects.
The utility struck a deal with esVolta, who develop clean energy battery storage facilities, to build the project, in the hopes of helping the utility replace three expensive natural gas plants. The partnership has all but ground to a halt since PG&E’s bankruptcy.
In July 2018, esVolta and PG&E entered into the power purchase agreement, (PPA) which confirmed that esVolta would build the facilities, set to be one of the world’s largest battery storage facilities.
“PG&E has made no decisions as to whether to assume or reject contracts as part of filing for Chapter 11,” PG&E spokesman Paul Doherty said.
In documents filed with the US Bankruptcy Court, esVolta expressed uncertainty regarding PG&E’s stance on the agreement, and the project is under pressure.
“Hummingbird’s position is becoming untenable,” esVolta stated in the court documents.
esVolta has asked PG&E in court papers to reaffirm its commitment to the contract.
“Hummingbird is in the difficult position of continuing to expend millions of dollars under the PPA and to build a battery storage facility that PG&E may not even want,” esVolta stated in the bankruptcy documents.
PG&E’s financial prospects have turned murky in the wake of lethal infernos that scorched the North Bay Wine Country and nearby regions in October 2017, and a fatal blaze known as the Camp Fire that roared through Butte County and essentially destroyed the town of Paradise and killed 85 people in November 2018.
Environmental groups, PG&E and the California Public Utilities Commission embraced the green battery project in 2018, in the hopes that it achieve green energy goals and expedite the retirement of three natural gas plants.
“If development ceases, Hummingbird risks defaulting under the power purchase agreement,” esVolta stated in the court documents. “If Hummingbird defaults, PG&E can terminate the PPA at will.”
That move would force esVolta forfeit everything that’s been invested in the project.
“The threat of bankruptcy contract rejection has prevented esVolta and Hummingbird from obtaining the third-party financing that is necessary to continue with the facility’s development,” esVolta said in the court filing.