Developer Arevon has begun building a 1-gigawatt-hour storage project in Daly City, near the Cow Palace arena, where it will serve up clean energy at night.

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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.

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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.

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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.

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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.

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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.

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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.