Highlighting Innovation: Canadian Solar’s Crimson Storage Project
Canadian Solar • Dec 07, 2021

Introduction:
Energy production from traditional fossil fuels is slowly killing the planet. Biodiversity is shrinking, climate change looks perilous, and our window to repair the damage is closing. Thankfully there is hope and all of us in the renewable energy sector are doing our best to offset as much carbon emissions as possible through PV, battery storage, and wind project development. As noble as our commitment is, there is still a fiduciary responsibility to develop financially sound projects that can stand the test of time generating power for consumers and investors alike. In concept, this sounds simple, but for anyone who has worked to design, and subsequently operate, a project knows, the reality is far more complicated.

Project development in its complexity has created a multitude of problems that need be solved. One problem we realized at Canadian Solar Inc Asset Management (CSIAM) is that companies who work within silos during development, asset sale, or operations suffer from myopia. Those “silos” operate independently and have little regard for downstream implications of their “cost saving” measures. Given our experience supporting asset managers, we have a unique understanding of implications that early decisions have on projects after a decade or more of operations. This includes lessons learned in construction and operations where project developers focused on capital expenditure (CAPEX) requirements but did little to contemplate operating expenditure (OPEX). That fruit, or more importantly insight realized, correlate directly to the real benefits of a competent asset management team. Therefore, CSIAM created a company-wide feedback loop that began with panel manufacturing and has spread through our owned renewable energy project operations group. Teams with different specialities are coordinating at early stages to optimize development (site, interconnection, technology type, warranty, etc.) while keeping an eye on what pitfalls may present themselves down the road. This early-stage insight has led Canadian Solar Inc. and our partners (GridSME and Axium Infrastructure) to our largest stand-alone storage project, Crimson.

Crimson Overview:
The 350 MW / 1,400 MWh Crimson project will be one of the largest battery energy storage projects in the world when it comes online in summer 2022. Earlier this year, Southern California Edison (SCE) awarded Recurrent Energy, a subsidiary of Canadian Solar, Inc., a long-term energy storage contract for 200 MW / 800 MWh for phase 1 of the Crimson project located in Riverside County, California. The contract includes the stand-alone storage project and is part of reliability procurements directed by the California Public Utilities Commission (“CPUC”). The newly signed agreement with Pacific Gas & Electric (PG&E) is specifically in response to a decision by the CPUC in March 2021 for the California utilities to “take actions to prepare for potential extreme weather in the summers of 2021 and 2022.” This additional energy storage capacity further supports Governor Newsom’s recent emergency proclamation to expedite new clean energy projects in light of the ongoing extreme weather and climate crisis faced by the state.

Project Highlights: 

  • Phase I storage COD 8/2022
  • Project size is 50 acres
  • Lithium-ion batteries 

Capacity Benefit:

Independent System Operators (ISO) and Regional Transmission Organizations (RTO) operate real-time and delay-ahead markets to ensure there is enough power supply to meet demand on the grid for today and tomorrow. For long-term grid reliability and to secure sufficient generation capacity to meet future load increases, ISO and RTO’s also operate a capacity market. Capacity represents a resource commitment to delivery onto the grid when demand surges or in case of emergency. Regions impacted by wildfires will substantially benefit from the resource commitment made available by Crimson. 


Canadian Solar Inc. and Axium Infrastructure will be operating the battery system in the wholesale California wholesale power market. Canadian Solar’s majority-owned CSI Solar subsidiary will be providing engineering, procurement, construction, and long-term asset management to meet operational services for the project. The project is intended to improve California’s grid reliability and safety by providing critically needed resource adequacy capacity to meet electricity demand in all scenarios. When it reaches commercial operation in August 2022, it will be one of the largest battery energy storage projects in the world.


The Crimson project aims to support California’s decarbonization and reliability goals with additional non-emitting, clean resource adequacy capacity. The U.S. Interior Department’s Bureau of Land Management had issued final approval earlier this year for the project which is sited on public lands in the California desert.

Additional Benefit Points

  • Phase I will not require tax equity because it is stand-alone storage and does not qualify for the investment tax credits (ITC)
  • Cash yield and contracted internal rate of return (IRR) for Phase I is materially higher than comparably sized PV projects and does not require tax equity
  • Point of Interconnection (POI) well-situated in the CAISO grid connecting California and Arizona providing unique opportunities to capitalize on intra-day energy arbitrage during Phase I’s post-contract period
  • Project size relative to return on investment (ROI) yield impressive per/acre Crimson is located in Riverside County (CA), one of the highest irradiance areas in the United States


Asset Management Influence:
The strongest benefit realized from our team’s influence in the development stage of the project is the direct correlation between early involvement and operational efficiency. CSIAM prides itself on having streamlined and efficient processes across all divisions, and this is easily realized within the CSIAM team. Inclusion in development stages allows our Asset Managers to be fully prepared for the eventual Operational Phase of the project, while also allowing the team to be fully organized in the following ways.


  • Software Efficiency: Utilizing software that increases time efficiency is paramount in asset management. At CSIAM, we have selected partnerships with software providers allowing our team to develop and refine workflow processes, which in turn makes our SME’s more efficient and able to provide a more dynamic picture of operations and financial health of the project. Involvement in the development stage of a project allows us to ensure everything is onboarded early. A clean handoff from development to asset management is key to success, and the development stage involvement from our team helps ensure that we have a fully complete and organized data room even before handoff.

  • Global Workflow Continuity: Another key component to our competence is the workflow processes we have in place. When new software is onboarded, it becomes necessary to refine and restructure certain workflow processes. Once these processes are refined, they can be implemented abroad to make our team more consistent globally. A great team is one that communicates well and has consistent workflow processes globally. This communication allows CSIAM to collaborate and support our clients with less cost relative to time and money.

  • Foundation For Success: It is our experience that success in terms of asset management is largely dependent on having the proper resources. This encompasses the first two bullet points above, but also includes making sure we have the right headcount on our team to go above and beyond for our clients. We believe that involvement in the development stage helps us to identify any future headcount issues internally, and that the resources needed are available for us to perform high-level asset management services. We also utilize time tracking software internally to keep track of time being spent on each project under management. This software helps us to ensure we are pricing a project accurately and gives us a wholistic view of time spent managing the client.

  • Technical Preparedness: When involvement begins in the development stage, our group of Asset Managers test operational scenarios based on technical designs shared early in the development cycle. That feedback optimizes the expected CAPEX and OPEX for a proposed project and helps align expected versus actual costs. Performance optimization is a large part of our foundation and having historical knowledge of the development cycle allows us to make more unique recommendations to drive performance and revenue.

While our team is equipped to take over asset management services at any point in the project lifecycle, our presence in the development stage allows us to build our processes early to ensure our project is performing efficiently and profitably. Align that directive with the expected growth of PV installations (fig. 1) and you can begin to realize the benefits of early-stage asset management support can lend significant fidelity to your CAPEX and OPEX
assumptions.

FIGURE 1

The advantages realized by CSIAMs influence on the development of the project correlates directly towards preparation from lessons learned. CSIAM SMEs test operational scenarios based on technical designs shared early in the development cycle. Canadian Solar Inc. will replicate successes from the Crimson project and future designs with benefits passing directly to project investors and, more importantly, to people who consume our power.

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