California’s Big 2021 Decision on Grid Reliability: Expand Supply or Manage Demand?

At-a-Glance:

California is facing a major decision under a tight deadline — whether it should push for large-scale power plants and batteries to prevent a repeat of its August 2020 rolling blackouts this coming summer or turn to behind-the-meter resources such as batteries and demand response. To learn more, read California’s Big 2021 Decision on Grid Reliability: Expand Supply or Manage Demand?” 

Key Takeaways:

  • The California Public Utilities Commission (CPUC) issued a ruling in late December asking the state’s three big investor-owned utilities to find ways to expand supply-side capacity before August 2021.
  • Demand-side solutions – behind-the-meter batteries, smart thermostats, and commercial and industrial demand response – may be a more realistic set of options to meet CPUC’s August 2021 deadline.
  • The joint California agency root-cause analysis into last summer’s grid emergency highlighted “demand response and flexibility” as the resources most likely to be able to be added by mid-2021.
  • Existing rules may be dampening the potential for capturing California’s nation-leading roster of behind-the-meter resources, which adds up to gigawatts’ worth of latent capacity.
  • Barriers aren’t stopping companies from enlisting new demand-response and behind-the-meter-battery customers in California. Oakland-based startup, OhmConnect raised $100 million in December 2020 from Google-affiliated Sidewalk Infrastructure Partners to build out 550 MW of residential load flexibility via smart thermostats and Wi-Fi-connected smart plugs.

Path to 100% Perspective:

Opening up greater demand-response flexibility in California will not only help prevent grid emergencies like those experienced during the rolling blackouts last summer; it will also help advance California’s efforts on the Path to 100% clean electricity. California should pursue an approach that includes adding new innovative demand response systems and more thermal generation flexibility.

 

Photo by Kai Gradert on Unsplash

Cal-ISO renewable capacity climbs, storage resources coming onto system

At-a-Glance

The California Independent System Operator added 2.1 GW of capacity to its grid in 2020 with another 3.3 GW permitted with online dates in 2020 or 2021 as the state works to achieve its ambitious 100% clean energy mandate over the next 25 years. To learn more, read Cal-ISO renewable capacity climbs, storage resources coming onto system.”

Key Takeaways

  • In 2020, Cal-ISO had 2.1 GW of capacity added through September of which 1.3 GW was gas-fired, according to U.S. Energy Information Administration (EIA) data.
  • EIA also shows 3.3 GW permitted with an online date in either 2020 or 2021. About 2,500 MW of this is under construction which includes 1.5 GW solar, 800 MW battery and 200 MW wind.
  • Cal-ISO president and CEO Elliot Mainzer has said the grid operator is working to improve its resource adequacy system following the rotating outages in August.
  • “Longer term, we’re working very closely with the [Public Utilities Commission], the Energy Commission and others in the regulatory space to try to make sure the resource adequacy paradigm in California is modernized sufficiently to recognize the changing resource mix,” Mainzer said. “There’s a lot of additional solar and batteries and wind and other renewables coming onto the system.”
  • Renewable generation curtailments in 2020 were up 220% year on year, according to ISO data.

Path to 100% Perspective

No power system can achieve 100% renewable electricity just by adding more renewable generation. It also needs to slash fossil-fueled generation. That means reducing reliance on traditional gas- and coal-fired plants, whether they’re used for baseload or to back up variable renewable generation. And that can be harder than you might think. The challenge is that traditional fossil-fuel-powered plants are inflexible: they can’t just switch off when the sun is high and switch back on when the sun sets. Because traditional power stations require many hours to shut down and many hours to start back up, they cannot power up and down quickly enough to handle predictable shifts in demand and generation, let alone unexpected changes in the weather. To ensure a steady flow of electricity, California’s traditional gas-fired power stations have to keep running at 40% to 50% capacity, even on a bright, sunny day. Running at low capacity is inefficient and emits large amounts of climate-warming carbon.

 

Photo by Jarosław Kwoczała on Unsplash

Missing Pieces of Decarbonization Puzzle Realized

Jussi Heikkinen, Director of Growth & Development, Americas
Wärtsilä Energy Business

These are exciting times as the renewable energy future is a focus for so many organizations and governments around the world, as indicated by attendance of the Wärtsilä sponsored webcast hosted by GreenBiz on November 19, 2020, Missing Pieces of Decarbonization Puzzle Realized. Emerging technologies are moving closer to reality, which makes ambitious energy goals more realistic and the path to 100 percent renewable energy is now within reach.

A place where the transition to renewables has progressed quite far already is California. The lessons learned along the way have been plentiful, but powerful nonetheless. The record-breaking heat wave that swept across the western part of the country and caused a series of blackouts in the Golden State, offered additional modelling opportunities to demonstrate the most effective mix of energy to accommodate any extreme weather situation during the transition, and to meet clean power mandates.

The big challenge facing California and the rest of the world is how to integrate renewables into the grid while building security of supply and a sustainable power system with an affordable plan for everyone involved.

That’s why Wärtsilä launched its Path to 100% initiative. We believe a 100% renewable energy future is possible, practical and financially viable so we assembled a community of experts to produce solutions based on science and engineering. This fall, we published a white paper that describes the Optimal Path to decarbonization for California using new hourly load data provided by this summer’s extreme heatwave.

In the whitepaper, Path to 100% Renewables for California, we modelled an approach for  California to reach its climate and clean power goals faster, at a lower cost to ratepayers, all while maintaining system reliability.

The “Optimal Path“ includes renewable carbon neutral fuels – hydrogen and synthetic methane. Curtailed renewable electricity is used in the process with water to produce hydrogen, and carbon is captured from air to produce synthetic methane with hydrogen. These fuels are used in power plants to provide a long term energy storage for seasonal and weather management needs. In the Optimal Path scenario, Renewable Portfolio Standard (RPS) commitments would actually be reached by 2040, five years ahead of schedule.

Generation costs in the “Optimal Path” scenarios are between 50 and 54 dollars per megawatt hour in 2045, while these costs would be almost 3 times higher if California opted to use only solar, wind and storage to build the power system. This cost difference is excessive and not beneficial for industries or households to pay. Additionally, carbon emissions are at net zero in 2045 in both scenarios.

How can California get on the Optimal Path to a renewable energy future? One recommendation is to recognize carbon neutral fuels – as presented above – to be counted as renewable for RPS purposes. This would enable the utilities to start looking for ways to invest and use such fuels to the benefit of California.

Another state aggressively pursuing renewable energy goals is Texas. Co-presenter and Electric Reliability Council of Texas (ERCOT) Principal of Market Design and Development, Kenneth Ragsdale shared the Lone Star State’s progress on integrating renewables into the power system.

Climate Imperative’s Executive Director, Bruce Nilles offered a big picture perspective on electricity generation capacity and the commitments needed to accelerate decarbonization.

To watch the recorded presentations from Wärtsilä, ERCOT as well as Climate Imperative and download presentation materials, register today for the Missing Pieces of Decarbonization Puzzle Realized webcast.