Clearway’s 560MWh deal with SDG&E shows how 4- and 8-hour storage, tolling agreements, and yieldcos are reshaping green technology, finance, and grid reliability.
Most people only notice the grid when it fails.
California regulators, utilities, and developers like Clearway Energy Group are trying hard to make sure that doesn’t happen—especially during summer heatwaves and evening demand spikes. Their latest move: a 560MWh set of battery storage tolling agreements between Clearway and San Diego Gas & Electric (SDG&E), paired with a solar-plus-storage complex in Kern County.
This deal isn’t just another project headline. It’s a glimpse of how green technology, smart contracts, and new business models (like yieldcos) are changing how clean power is built, financed, and dispatched.
In this article, I’ll break down what Clearway actually did, why 4-hour and 8-hour batteries matter, and what this means for utilities, corporates, and anyone planning serious clean energy investments in 2026 and beyond.
What Clearway and SDG&E Just Agreed To
Clearway Energy Group has secured two energy storage tolling agreements totaling 560MWh with SDG&E, tied to one of its hybrid solar-plus-storage sites in Kern County, California.
Here’s the key structure in plain English:
- Developer: Clearway Energy Group (backed by Global Infrastructure Partners and TotalEnergies)
- Offtaker: SDG&E, a California investor-owned utility
- Asset: Part of a solar-plus-storage complex (including Rosamond South, 117MW BESS + 140MW solar, which entered commercial operation in November)
- Total storage: 560MWh split across two tolling agreements
- Durations:
- One tranche with 4-hour discharge capability
- Another with 8-hour discharge capability
SDG&E essentially “rents” the battery’s capacity and dispatch rights, rather than owning and operating the storage asset outright. Clearway builds, owns, and maintains the system; SDG&E gets long-term access to flexible clean capacity.
This is exactly the kind of green technology investment structure that’s becoming standard in advanced energy markets.
Why 4-Hour vs 8-Hour Storage Is a Big Deal
The most interesting part of the deal isn’t the size. It’s the two different durations.
Short version: 4-hour batteries help with daily peaks; 8-hour batteries start to look like fossil peaker replacements.
What 4-hour BESS is good at
Four-hour battery energy storage systems (BESS) are now the workhorse of US grids. They’re ideal for:
- Shifting midday solar to the early evening peak (the classic California “duck curve” problem)
- Providing fast ramping when demand spikes
- Supplying ancillary services like frequency response and reserves
In most markets, 4-hour systems line up well with current capacity and market design rules, which is why they’ve dominated utility procurements over the last few years.
Why 8-hour duration signals the next phase
Eight-hour storage is different. It can:
- Cover entire evening peaks, not just the highest 2–4 hours
- Support multi-hour heatwaves and extreme events more effectively
- Reduce dependency on gas peaker plants that only run a few dozen hours per year
From a green technology perspective, 8-hour BESS is where energy storage stops being just an optimization tool and becomes strategic reliability infrastructure.
Yes, longer-duration batteries cost more per kW installed, but they often:
- Capture more hours of value across energy, capacity, and reliability products
- Align better with policy goals for deep decarbonization
- Future-proof portfolios against tighter emissions rules on gas plants
By locking in both 4- and 8-hour capacity, SDG&E is hedging: solving today’s problems while preparing for a more electrified, renewables-heavy grid in the 2030s.
Tolling Agreements: How Utilities De-Risk Green Tech
Here’s the thing about energy storage tolling agreements: they’re quietly one of the most effective tools utilities use to expand clean capacity without loading their balance sheets with project risk.
How a storage tolling agreement works
In a typical tolling structure:
- The developer (Clearway) finances, builds, owns, and operates the BESS.
- The utility (SDG&E):
- Pays a fixed or structured fee
- Gets the right to schedule charging and discharging
- Treats the asset like a flexible clean power plant for planning and reliability purposes
It’s similar to tolling for gas plants, but instead of buying fuel and paying a toll, the utility uses renewable energy and storage as the controllable, dispatchable resource.
Why this matters for green technology adoption
For utilities and large buyers, tolling agreements:
- Reduce technology risk: the developer chooses the battery platform, software, and warranties.
- Improve capital efficiency: no need to own the asset while still getting long-term capacity.
- Support regulatory compliance: easier to show progress on resource adequacy and clean energy targets.
For developers and investors, tolling agreements:
- Create bankable cash flows that unlock project finance
- Make it possible to bundle solar-plus-storage into robust revenue stacks
- Attract institutional capital, especially when combined with a yieldco structure
If you’re planning a utility-scale storage or solar-plus-storage project in 2026, and you’re not at least modeling tolling structures, you’re leaving serious financing options on the table.
Yieldcos: Why Clearway Sold the BESS to Its Own Vehicle
Alongside the SDG&E deals, Clearway has sold the battery asset to its associated yieldco (Clearway Energy, Inc.). That might sound like financial engineering, but it has real impacts on how much green infrastructure gets built.
What a yieldco actually does
A yieldco is a public or private company that owns a portfolio of operating clean energy assets—solar, wind, storage—and pays out a large share of cash flow as dividends.
The basic pattern looks like this:
- The developer (Clearway Energy Group) originates, develops, and constructs projects.
- Once a project is built and de-risked, it’s dropped down or sold to the yieldco.
- The yieldco collects contracted revenues (from PPAs, tolling agreements, etc.) and distributes them to investors.
This split allows:
- The developer to be nimble and growth-focused
- The yieldco to be stable and yield-focused
Why this model accelerates clean energy deployment
From a green technology investment perspective, yieldcos:
- Attract long-term, lower-cost capital (pension funds, infrastructure investors)
- Free up the developer’s balance sheet to pursue more projects, faster
- Provide a clear exit path for early-stage capital
When you combine:
- Tolling agreements (predictable revenue)
- Solar-plus-storage hybrids (multiple value streams)
- Yieldcos (efficient ownership structure)
…you get a financing engine that can scale clean infrastructure to the multi-gigawatt level. Clearway’s 10.7GW of operational and in-development BESS across 16 states is a direct result of this approach.
What This Means for Utilities, Corporates, and Cities
The Clearway–SDG&E deal is specific, but the playbook is general. If you’re responsible for energy strategy, here’s how this translates into action.
For utilities and grid operators
You can treat this as a template for decarbonizing capacity without sacrificing reliability:
- Combine 4-hour storage to handle shape and ramping with 8-hour storage for deeper reliability coverage.
- Use tolling agreements to test and scale storage before fully owning the asset class.
- Integrate solar-plus-storage hybrid resources into planning models as dispatchable capacity, not just “variable renewables.”
If your region isn’t yet as storage-heavy as California, you have the advantage of learning from these early deals and skipping some of the trial-and-error.
For corporate buyers and large energy users
You don’t need to be a regulated utility to benefit from this structure.
Forward-thinking corporates are already:
- Signing renewable PPAs bundled with storage to match usage more closely to clean generation
- Using long-duration storage to improve 24/7 carbon-free energy profiles
- Partnering with developers who can aggregate multiple technologies (solar, wind, BESS, demand response)
If your sustainability strategy is still focused only on annual MWh of “green power,” you’re behind. The next step is targeting hourly or sub-hourly alignment between your load and clean supply—and storage tolling-style structures are one of the most practical ways to get there.
For cities, regions, and policymakers
This kind of deal offers a few clear policy signals:
- Market rules that pay for capacity and flexibility, not just energy, are critical.
- Planning frameworks need to explicitly value longer-duration storage, not just 4-hour assets.
- Stable, transparent procurement programs give developers confidence to organize complex financing like yieldcos.
The bigger picture: green technology isn’t being held back by hardware anymore. It’s held back by outdated market designs and risk allocation models. Deals like Clearway–SDG&E show that those barriers are very solvable.
How AI Fits Into the Next Generation of Storage Deals
Because this post is part of our Green Technology series, it’s worth highlighting where AI already plays a role—and where it’s about to become non-negotiable.
Today: AI in operating solar-plus-storage hybrids
For assets like Clearway’s Kern County complex, AI and advanced analytics are already used to:
- Forecast solar output and demand at 5–15 minute intervals
- Optimize when to charge or discharge the battery based on price signals and grid conditions
- Detect early signs of battery degradation or faults
For a 560MWh portfolio under tolling, small improvements in dispatch or degradation management translate into millions of dollars over the contract life.
Tomorrow: AI-native contract and portfolio design
The next wave goes further:
- AI-driven resource planning: helping utilities choose the right mix of 4-hour, 8-hour, and other long-duration storage for specific grids.
- Dynamic contract structures: tolling agreements and PPAs that adjust to real-time risk and performance, guided by machine learning.
- Portfolio-level optimization: coordinating dozens of solar-plus-storage sites to act like a single virtual power plant, bidding into multiple markets at once.
The takeaway: if you’re building or buying large-scale storage in the late 2020s, but your operating model isn’t AI-informed, your economics will be second-tier.
Where This Leaves You Going Into 2026
The Clearway–SDG&E 560MWh deal is more than just a headline in the energy press. It’s a template for how green technology, smart finance, and AI come together to build a more resilient, low-carbon grid.
Here’s the reality:
- 4-hour and 8-hour storage are moving from “pilot” to “standard tool” in utility portfolios.
- Tolling agreements are proving to be one of the most effective ways to de-risk storage while scaling it fast.
- Yieldcos and similar vehicles are unlocking capital at the scale required to hit climate and reliability targets.
If you’re planning your 2026–2030 energy strategy—whether as a utility, corporate buyer, or public agency—the question isn’t whether to use these tools. It’s how fast you can integrate them into your roadmap.
If you’d like a structured way to assess where storage, green technology, and AI fit in your plan, start by asking:
- What share of my capacity needs could be covered by 4-hour vs 8-hour storage by 2030?
- Where could a tolling-style structure lower my risk while accelerating clean capacity?
- Which partners are already combining solar-plus-storage, advanced software, and innovative finance—instead of treating them as separate decisions?
The organizations that move first on those questions over the next 12–24 months will set the pace for everyone else.