California BESS owner alleges chronic failures and arc flash events in Fluence dispute

According to reporting on court filings, the owner of the Diablo battery energy storage project in Pittsburg, California, Diablo Energy Storage LLC, an LS Power affiliate, has filed a cross-complaint against system integrator Fluence alleging a series of technical failures after the project was completed in April 2022. The filing alleges that the control system responded slowly or inaccurately to grid operator CAISO signals, which led to the project being removed from the ancillary services market for several weeks; that Fluence's proprietary human-machine interface monitor did not function properly, leaving the owner operating the site through a data acquisition system it describes as not intended for that purpose; that there were frequent auxiliary control system and inverter failures, including an alleged 27 inverter failures between 13 June and 14 July 2022; and that two arc flash events have occurred since the project went online. The owner seeks the return of about US$229 million paid under an EPC agreement worth about US$238 million, plus damages of at least US$25 million. Fluence had filed a complaint against Diablo in October 2023 seeking US$37 million in damages, declined to comment on the case, and in a regulatory filing said it denies the allegations and intends to defend against them. The project is a 200MW system described as 800MWh but stated in the court filing to have been built to 955MWh. No injuries, fatalities or emergency response are reported in connection with the alleged arc flash events, and the allegations are untested.

The owner alleges the failures arose from Fluence's workmanship and other shortcomings under the EPC agreement, including a failure to resolve warranty items and chronic failures of essential systems, and a failure to provide for unmanned operation. These are one party's allegations in ongoing litigation, denied by Fluence, and no court finding has been reported.

1. EPC contracts for large battery projects benefit from clearly defined performance guarantees and remediation timelines covering control systems, inverters and auxiliary systems.
2. Repeat inverter failures and arc flash events at an operating site warrant early root cause investigation and recording, independent of any commercial dispute.
3. Reliance on a single vendor's proprietary monitoring and control interface can create operational risk if owners are forced onto workaround systems not designed for that purpose.

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