Procurement is a boon for solar-storage, demand response and other clean resources, and could forestall last-ditch option of keeping coastal gas plants open.
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 contains 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: greentechmedia
