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The Cow Palace arena, just south of San Francisco, has hosted Dwight Eisenhower, the Beatles, the San Jose Sharks NHL team, and an annual rodeo since it opened in 1941. But an even bigger act is setting up next door: an enormous battery that will perform a starring role in the Bay Area’s energy ecosystem.
Developer Arevon has begun construction of the Cormorant Energy Storage Project, which will occupy an 11-acre vacant lot just southwest of the Cow Palace in Daly City. The battery facility will be large by industry standards, with 250 megawatts of Tesla Megapack containers, capable of discharging for four hours straight, for 1 gigawatt-hour of total stored energy. Bigger batteries have been built, but when Cormorant comes online in about a year, it will be poised to be the country’s largest battery nestled within a major urban area.
Arevon has contracted the battery for 15 years of use by MCE, one of California’s biggest community choice aggregators — entities that purchase electricity on behalf of local residents as an alternative to Wall Street–owned for-profit utilities. The state requires MCE to buy grid capacity commensurate with its members’ usage, and the Cormorant project will fulfill 10% of this annual requirement, known as resource adequacy in California bureaucratese.
MCE has become a major force in the greater Bay Area: It now serves all of Marin and Napa counties, most of Contra Costa, and half of Solano. The aggregator can contract for power plants across California, but it looks for sites within or near its service territory when possible, said Jenna Tenney, MCE’s director of communications and community engagement.
“Having a storage project in a community is going to add to resiliency in that community,” she said. The battery will bring $73 million of property tax revenue to Daly City, she added, and Arevon will donate $1.5 million in community benefits.
Cities need power, but generating it within urban cores is a difficult feat. California effectively stopped building gas-fired power plants, but even if that were an option, sticking a smokestack in San Francisco wouldn’t fly. These days, California expands generation by building large-scale solar plants in wide-open spaces, but those plants need to ship their power over many miles of transmission lines to reach the cities where it gets consumed.
The Cormorant battery provides something new: a dense source of on-demand power that can slip into the urban fabric without any local air pollution, and which absorbs the far-off solar generation at midday to discharge later at night. Arevon CEO Justin Johnson estimated that the battery, fitting on the site of a former drive-in movie theater, could cover the electricity needs of some 321,000 homes for four hours straight.
“It couldn’t keep the whole city going, but it certainly, without a doubt, increases the reliability of the grid in that area in a substantial way,” he said.
Arevon didn’t jump to the highest echelon of energy storage development from nothing. The firm has invested $11 billion in projects and owns 6 gigawatts of solar and battery installations operating across 18 states.
The company launched in 2021 as a spinout of Capital Dynamics, a private equity fund that amassed an early portfolio of energy storage assets. Arevon is owned by the California State Teachers’ Retirement Fund, Dutch pension fund APG, and the Abu Dhabi Investment Authority. Those firms invest for steady, long-term growth, and their patience lends itself to Arevon building and owning batteries for the long haul, instead of building to flip to other buyers.
“When we’re in there developing assets in the community, we can tell them, hey, we’re going to be here a long time,” said Johnson, who stepped up from COO to CEO in March. “You’re incentivized to engineer it well, construct it well, operate it well.”
Arevon focused on the Daly City location because electricity price volatility tends to be highest in proximity to major consumption, Johnson said. Places like that — whether metro areas or large industrial hubs — see the greatest swings from peak to off-peak hours, and having battery facilities to arbitrage between those times should push prices down in the long run. But building within a city comes with obvious trade-offs.
“Siting any infrastructure, whether you’re putting in a Walmart or upgrading an intersection or doing anything in a high-density area, is tough … especially so for power plants or facilities like this,” he noted.
Tough but not impossible, as Arevon proved in San Diego’s Barrio Logan community with its Peregrine project (another entry in a portfolio of projects sporting avian nomenclature), which came online last year. There, the company squeezed 200 megawatts of batteries between a naval shipyard and a light-rail track, in the shadow of the Coronado Bridge. In Daly City, Arevon will need to carve through roughly a mile of streets to run high-voltage cable underground to the nearest substation.
Such projects “reduce your lifespan a little bit” from the stress, Johnson said, but once built, the intrinsic difficulty becomes a sort of strategic moat. If a competitor wanted to open up next door to Cow Palace, well, they probably couldn’t find a viable space.
“Those are assets I’m really proud to own, and I think they’ll become just more and more valuable over time, because they’re hard to replace,” Johnson said.
To achieve that longevity, the batteries need to survive, and that premise is not to be taken for granted, given their location 90 miles north of Moss Landing, where the largest battery fire combusted a little over a year ago. Safety concerns are understandably higher in dense urban areas, so assuring the community that a Moss Landing–style disaster won’t happen here was integral to securing permits.
Arevon’s choice of battery, Tesla’s Megapack 2 XL, addressed the safety question. The containerized storage product is filled with the lithium-ferrous phosphate cells, a battery chemistry known to be significantly less fire-prone than earlier lithium-ion varieties. The older Moss Landing facility packed a huge amount of batteries into a single legacy structure, where they became fuel for an immense conflagration. The Megapack containers, in contrast, will be spread out across the site in a design that will prevent a fire from spreading beyond a single metal box. If one unit ever did catch fire, it would damage only a fraction of 1 percent of the plant’s capacity.
Workers are grading the site and installing “geo piers,” columns of aggregate that extend about 30 feet underground to stabilize the site during earthquakes. This is not an idle threat — the Bay Area just experienced a 4.6 magnitude tremor in the wee hours of Thursday morning. After that work is complete, the 280 Megapacks will take their places so that Cormorant can make its debut.
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