California Demands 3.3GW of New Resources by 2023 to Meet Looming Grid Shortfall

California regulators have approved a 3.3-gigawatt “all-source”
procurement that will pit new renewables, energy storage, demand
response and other clean resources against natural gas-fired power
plants in a race to meet what could be a major shortfall in grid
capacity in the next four years. 

Thursday’s decision from
the California Public Utilities Commission sets the stage for every
utility, community choice aggregator (CCA) and third-party direct
access (DA) provider in the state to secure a share of resources
needed to keep the grid running during times of peak demand.

The all-source procurement is technically open to existing
natural gas plants. But carbon-free alternatives are likely to be
the primary beneficiary of the new opportunities the decision will
open up. Those include solar paired with batteries to shift its
daytime output to late afternoon and early evening, when California
faces its steepest demand peaks, and demand response that shifts
energy consumption away from those critical hours.

But the CPUC’s decision also contained the controversial option
of keeping a set of natural gas-fired power plants open past their
current 2020 closure dates, a move opposed by local environmental
justice groups and clean energy advocates alike. Opponents have
vowed to challenge that part of the plan with state coastal water
authorities, which ordered the closure of the once-through cooling
(OTC) plants in the first place. Those plants use seawater for
cooling, which was deemed environmentally harmful. 

According to forecasts from state grid operator CAISO, a
combination of nuclear
power plant closures
,
natural-gas system constraints
, uncertainty over the value of
solar power and electricity imports from other states in the coming
years, and other factors, could leave the state with a capacity
shortfall of at least 2.3 gigawatts by 2022. Utility Southern
California Edison, which serves the region hardest hit by these
factors, has projected an even deeper shortfall — as much as 5.5
gigawatts by 2023, including the retirement of OTC capacity. 

The CPUC’s new decision expands significantly beyond
its September
proposal for a 2.5-gigawatt
 procurement, which centered on
utility Southern California Edison and CCAs in its territory. 

Instead, the CPUC is relying on utilities, CCAs and DA providers
across the state to procure their share of resources, based on a
measure of their share of system load. Each will need to procure
half of their total by 2021, 75 percent of it by 2022, and all of
it by 2023. 

While groups including the California Community Choice
Association (CalCCA) have questioned the analysis behind the
shortfall projection, “we view the requirement for additional
procurement now as a “least regrets” strategy, since
electricity shortages would most certainly lead to regrets,” the
CPUC wrote.

Southern California Edison will still be responsible for the
lion’s share of the procurement, with 1.18 gigawatts of
incremental procurement. But bankrupt Northern California utility
Pacific Gas & Electric, which has been losing customers, and
thus load, to CCAs in its territory, will be responsible for 717
megawatts, and San Diego Gas & Electric, which is facing the
creation of a city of San Diego CCA that would constitute more than
half its customer base, would be responsible for 239
megawatts. 

CCAs have been taking over an increasing share of customers from
California’s investor owned utilities. Under the CPUC’s
Integrated Resource Plan (IRP) proceeding, which spawned this new
procurement, CCAs are expected to procure about 10 gigawatts of the
projected 12 gigawatts of additional carbon-free generation the
state will need by 2030. 

Under Thursday’s decision, CCAs across the state will be
responsible for roughly one-quarter of the 3.3-gigawatt
procurement. Some of the largest include nearly 200 megawatts for
Clean Power Alliance of Southern California, nearly 100 megawatts
for East Bay Community Energy, 78 megawatts for San Jose Clean
Energy, 67 megawatts for Silicon Valley Clean Energy, and about 55
megawatts apiece for Peninsula Clean Energy and Clean Power San
Francisco, to name a few. 

CCAs already have been signing new renewable energy contracts at
a rapid clip. This week, CalCCA announced that its members have
contracted for nearly 3.2 gigawatts of renewable power purchase
agreements, almost all of it utility-scale solar. While standalone
solar doesn’t provide nearly as much capacity value as it once
did, CCAs have also inked contracts for 239.5 megawatts/788
megawatt-hours of energy storage, more than half of it in the last
year. 

Of this battery capacity, 86 percent is co-located with solar
that charges batteries for use later in the evening, making it
potentially suitable for service as grid capacity. These contracts,
as well as others that haven’t yet been counted in the CPUC’s
baseline, will be eligible for meeting its new procurement targets,
as long as they’re able to provide the capacity services
required. 

Source: FS – GreenTech Media
California Demands 3.3GW of New Resources by 2023 to Meet Looming Grid Shortfall