Center for Energy Efficiency and Renewable Technologies
Providing global warming solutions for California and the West.
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CEERT’s Low-Carbon Grid Program promotes the integration of large amounts of renewable energy on the grid by tracking and intervening in crucial proceedings at the California Independent System Operator (CAISO) and other agencies. We also seek to foster joint operating agreements between the CAISO and the state’s municipal and investor-owned utilities, and promote coordination and consolidation of the Balancing Areas in our state and region as a low-cost means of integrating renewable power. The issues are often highly technical, but have enormous impact on the price of renewable energy projects and their access to the transmission and distribution system.
Alliance for a Clean Economy (ACE): Clean Energy and Economic Recovery
In collaboration with Gridworks, CEERT’s V. John White played a lead role in organizing the Alliance for a Clean Economy, a coalition of 18 California clean-energy associations, companies, and non-governmental organizations (NGOs). ACE has worked over the past quarter to provide the Governor, policymakers, and the Ann O’Leary/Tom Steyer Economic Recovery Task Force with a set of recommendations on leveraging clean energy and transportation to lead the state’s post-COVID economic recovery. ACE sent an initial letter to the Governor and policymakers on June 4, urging state leaders and the Task Force to form an interagency working group on clean-energy solutions to California’s economic crisis and to the weaknesses and failures of the state’s current planning for clean energy, greenhouse gas reductions, and transmission expansions. The letter highlighted the numerous economic benefits of a clean recovery, as well as the climate change mitigation benefits that will promote resiliency, equity, and public health.
On July 16, ACE sent state leaders and the Task Force an extended list of immediate recommendations for promoting near-term, mid-term, and long-term clean job growth and investment, making use of existing authorities rather than requiring major new expenditures or legislation. Near-term recommendations include reestablishing the interagency workgroups that helped lead California out of the Great Recession and sparked clean-energy jobs and investment. Mid-term recommendations outline immediate actions to spur long-lead-time work for clean-energy job growth and investment in 2021-2022, and long-term recommendations detail similar efforts to sustain job growth and investment through 2023 and beyond.
At the request of the Task Force, the ACE team consolidated the recommendation list into four immediate action items, which V. John White presented in early September to Task Force members, the Governor’s and Lieutenant Governor’s Offices, and the California Energy Commission (CEC). CEERT and other ACE members continue to hold conversations with state leaders about this agenda.
Summer Capacity Shortfalls
Later sections of this report detail the daily grind of California Public Utilities Commission (CPUC) proceedings, principally the Resource Adequacy and Integrated Resource Planning rulemakings, on procurement of resources that provide system capacity to the California Independent System Operator (CAISO) –controlled grid. However, events of this summer—rolling blackouts in mid-August, and Stage 2 emergency declarations and suspension of air-quality restrictions to allow fossil generation as a means to avoid further rolling blackouts on Labor Day weekend—have dominated the public discussion about reliability, and have profoundly changed the regulatory dynamic.
The rolling blackouts, the first in the state since the energy crisis of 20 years ago, were relatively minor and short-lived, and occurred during one-in-ten-year heat waves that the adopted national, regional and state reliability planning standards anticipate and allow. The actual impacts of the blackouts on consumers were less than the Public Safety Power Shutoffs that utilities instituted to mitigate wildfire concerns, and significantly less than “routine” distribution-level outages.
The economic impact of the blackouts was trivial compared to the wholesale price spikes caused by generation from inefficient natural gas plants, coupled with fuel shortages in Southern California due to systemic corrosion of gas transmission pipelines in the desert plus operating restrictions on use of the Aliso Canyon gas storage facility. These gas-related costs have approached $1 billion in increased consumer electricity rates this summer, with more to come unless and until reliance on gas generation is reduced. The alternative: major investments in gas pipeline redundancy and new gas generation are costly, take years to accomplish, and run counter to adopted state policy to reduce greenhouse gas emissions, close urban gas storage facilities, and mitigate the impact of fossil combustion on disadvantaged communities.
A preliminary “root cause” analysis of the rolling blackouts published by the CPUC, CEC and CAISO in early October cites extreme weather events aggravated by climate change, a dramatic drop in imports from the rest of the West, and a late planning response to procure new resources to mitigate these trends. The identified proximate causes of the blackouts themselves (unplanned forced outage of a large gas-fired generator near Blythe and inadvertent instructions by PG&E for a major wind farm to reduce output) were of a type and size of events the system is designed to handle without loss of load.
California Independent System Operator (CAISO)
Notable events at the CAISO this summer were the retirement of longtime CEO Steve Berberich, his replacement by Elliot Mainzer, former Administrator of the Bonneville Power Administration, and adoption of a policy to rotate the Board Chair position, with Angelina Galiteva elected new Board Chair.
The CAISO adopted minor tariff changes to improve the efficiency of the transmission system to accommodate new storage + solar resources that will constitute the bulk of new resource additions over the next few years. The changes will be implemented in two phases: Phase 1 involves alterations to the Business Practices Manual and will take effect by the end of 2020; Phase 2, involving FERC approval of tariff and software modifications, is scheduled to take effect in the 3rd quarter of 2021. These changes will allow for the interconnection and operation of about 3-5 gigawatts (GW) of new solar + storage resources on the existing grid and provide critical real-time operating experience to guide further changes to accommodate a significant percentage of the roughly 25 GW of these “hybrid” resources in the CAISO interconnection queue, without major new transmission investments.
On September 22, the Federal Energy Regulatory Commission (FERC) adopted Order 2222, outlining a framework for allowing aggregations of small distributed generation and demand response resources, such as residential rooftop solar + batteries or managed charging of electric vehicles, to participate in wholesale markets and provide capacity and ancillary services to the grid. The Order is largely modeled on protocols the CAISO adopted three years back, and therefore has little direct impact on California other than clearing up ambiguity about what FERC policy in this area would allow.
To date, there have been no such distributed resources formally participating in California markets due to the CPUC’s failure to adopt state jurisdictional rules allowing timely and efficient transmission interconnection and policies governing wholesale compensation impacts on retail rates. However, these resources did contribute significant capacity to the grid on an ad hoc, pro bono basis during the capacity shortages this summer. The status of CEERT’s advocacy at the CPUC on these matters is detailed below.
Together, the new bulk “utility-scale” hybrid renewables + storage, and aggregations of small behind-the-meter hybrids with storage, solar and demand response, offer the vast majority of near-term clean, cost-effective solutions to the capacity shortfalls. The next nine months at the CPUC will be critical for taking full advantage of these opportunities and avoiding future events such as occurred this summer.
Western Grid Integration
CEERT has been participating in biweekly Western Grid Group meetings and Western Clean Energy Advocates (WCEA) meetings on Regional Markets and Resource Adequacy (RA). These groups consist of clean energy, public interest, and industry leaders from across the West, and work to accelerate the clean-energy transformation while improving the reliability and economic performance of the Western grid. WCEA Regional Markets meetings allow CEERT to stay current on market developments throughout the West. CEERT will coordinate with WCEA on comments about accurate real-time greenhouse-gas (GHG) accounting for out-of-state resources in the Extended Day-Ahead Market (EDAM) development process.
The WCEA RA Working Group helps CEERT to keep up to date on RA issues and events in the West and advocate for more effective RA structures in California and beyond. CEERT Executive Director V. John White presented at the July 7 meeting on the history of RA in California and the current state of RA at the CPUC. CEERT Policy Analyst Carleigh Osen is co-facilitator of the WCEA RA Working Group, which has continued to hold biweekly meetings since May.
Discussions with the Governor’s Office
CEERT has worked with AWEA California and SEIA on a draft executive order that the Governor could issue as a means of getting his administration to focus on regulatory streamlining, interconnection and transmission bottlenecks, and delays and barriers to new renewable procurement.
James Caldwell, Jr. is CEERT’s Senior Technical Consultant. His academic and professional background includes over fifty years of experience in the energy industry. For the past thirty years, he has specialized in renewable technology and project development including photovoltaic solar, concentrating solar thermal power, wind, biomass, and geothermal. He has been employed in technical and executive positions in the oil industry (Atlantic Richfield), the California utility industry (Los Angeles Department of Water and Power), the U.S. Department of Energy, renewable trade associations, and several large and small renewable resource developers. Jim has a BS degree in Chemical Engineering from Stanford University and an MBA from California State University at Long Beach.