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Eyeing Reliability, California May Retain Gas Generation...for Now

Concern over electricity reliability could cause the California Public Utilities Commission (CPUC) to direct utilities and other entities to secure 2,500 megawatts (MW) of generating resources between 2021 and 2023.

The 60-page draft proposal would require entities to conduct all-source procurement, including seeking offers from battery storage, demand response, energy efficiency and renewable energy resources. Also in the mix: existing natural gas-fired generation plants. Regulators could vote on the proposal as early as October.

If approved, the proposed rule would require 2,500 MW of incremental system resource adequacy resources to be procured with at least 60% online by Aug. 1, 2021; 80% by Aug. 1, 2022; and 100% by Aug. 1, 2023.

Commissioner Liane Randolph said in a statement that "unprecedented energy market conditions" were driving the proposal. Those conditions include increasing amounts of renewable energy resources and the planned retirement of 4,000 MW of gas-fired generation subject to state environmental policy that opposes once-through cooling technology. Peak load across the state is expanding to later in the year and into the evening, making solar energy resources a less effective option.

The state's grid operator, the California Independent System Operator, told regulators in written comments that without action, a shortfall of at least 2,300 MW could occur by 2021, and 2,200 MW by 2022. In addition, an operational capacity shortfall could approach 4,400 MW by 2021.

Southern California Edison said that the grid would face a "significant system resource adequacy shortfall" by 2021 unless new energy resources are developed and existing natural gas-fired generation resources are extended on an interim basis. The utility said that the shortfall in 2021 could be as much as 5,500 MW and persist for several years after that.

SoCalEd said the potential shortfall stems from the retirement of a large amount of capacity that relies on once-through cooling technology, the potential for additional retirements of thermal generating units, shifting peak load, reductions in the relative value of solar and wind, reliance on an uncertain level of imports from other states and shrinking electric grid capacity margins.

Solar energy was singled out as potentially problematic. Higher demand into the autumn months and later in the evening typically does not match well with solar, unless it is paired with energy storage technology.

If approved, the PUC would recommend that the state consider extending compliance dates for some generation resources. Those resources are currently expected to retire at the end of 2020 due to once-through cooling policies. Compliance with the environmental mandate could be delayed, however, "to ensure the reliable operation of the grid until the new resources ordered in the decision can be brought online."

Once-through cooling

In 2010, the State Water Resources Control Board (SWRCB) began requiring a phase out of once-through cooling at 19 power plants. Under the policy, plant operators were required to install evaporative cooling technology to reduce water intake.

Some plant owners elected to retire facilities rather than invest in technology changes. The generation resources that are scheduled to retire by Dec. 31, 2020 that could potentially have their compliance dates extended are: Alamitos Generating Station Units 3-5, totaling roughly 1,200 MW of capacity; Huntington Beach Generating Station Unit 2, 200 MW; Redondo Beach Generating Station Units 5, 6 and 8, 850 MW; and Ormond Beach Generating Station Units 1 and 2, 1,500 MW.

Together, these resources represent roughly 3,750 MW of system capacity, all within the designated transmission access charge area of Southern California Edison.

Water woes?

The California PUC said that changing hydrological patterns are making hydroelectric resources more variable each year. It said that peak demand loads are expected to remain high into September each year. That can be problematic because less hydroelectric generation is available in California and across the West in late summer and early fall. The PUC said that energy imported into California from other states is increasingly uncertain on hot days across the Western electrical footprint.

If approved by the CPUC, the proposal will result in the procurement of resources to be brought online beginning in the summer of 2021 and continuing through summer 2023. Given cost trends from similar recent all-source solicitations in California and other states, regulators said they expect that renewable energy and battery storage will compete well against fossil fuel resources.

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Discussions

Matt Chester's picture
Matt Chester on Sep 20, 2019 1:21 pm GMT

I think the biggest issue is in building new gas generation vs. continuing to operate existing gas. When new gas generation is built up, that's either going to become a stranded asset (that the ratepayers are financially on the hook for) or gas generation will persist longer into the future than it needs to at the detriment to carbon neutral generation from renewables and nuclear. 

Bob Meinetz's picture
Bob Meinetz on Sep 23, 2019 4:37 am GMT

"When new gas generation is built up, that's either going to become a stranded asset (that the ratepayers are financially on the hook for) or gas generation will persist longer into the future than it needs to at the detriment to carbon neutral generation from renewables and nuclear."

Even worse, Matt. Chevron and Shell are working to ensure gas generation persists until every available cubic foot of gas is sucked from the ground and burned - ratepayers, carbon-neutral generation, and the environment be damned.

Bob Meinetz's picture
Bob Meinetz on Sep 23, 2019 4:23 am GMT

"Commissioner Liane Randolph said in a statement that "unprecedented energy market conditions" were driving the proposal."

Nonsense.

CPUC is directing utilities to procure 2.5 GW of gas generation for one purpose only: to replace 2.2 GW of clean nuclear generation from Diablo Canyon with dirty gas generation. Why? Because Gavin Newsom and mentor Jerry Brown own exclusive import rights to Indonesian LNG, and it's worth $billions.

Ratepayers are being told Diablo Canyon Nuclear Power Plant is "uneconomical", with the implication that building 2.3 billion watts of gas from the ground up, at ratepayer expense, isn't. There must be a reason why (there is):

"The story begins in the 1960s with the construction of Diablo Canyon. The goal of the state’s electric utilities was, at the time, to reduce dependence on coal, oil and natural gas, which were and remain expensive and dirty.

But the same year the Sierra Club endorsed the building of Diablo Canyon, Brown’s family came into extraordinary oil wealth — wealth that depended on maintaining the state’s dependence on imported foreign oil.

On taking power in 1975, Brown and his allies aggressively wielded power in ways that directly benefited Brown’s family, which included killing nuclear power plants."

Saw it coming a mile away.

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