For better or worse, when it comes to energy, the state of California takes a top-down approach. Laws, policies and regulations are passed and delegated to various state agencies to implement. And if you like the decisions coming from the top, you accept the consequences.
California’s clean fuel standards, for example, are among the reasons for high petrol prices at the pump. Likewise, the various incentives and policies encouraging the adoption of electric vehicles (EVs) has made California home to roughly half of all EVs in the US – ditto for residential rooftop solar panels.
Other noteworthy targets include moving towards a carbon neutral economy by 2045 and one of the most stringent building and appliance energy efficiency standards in the nation.
Having adopted so many targets, many overlapping – at times duplicative – the state’s Senate passed a bill, SB 1389, in 2002 that requires the California Energy Commission (CEC) to
“ … prepare a biennial integrated energy policy report that assesses major energy trends and issues facing the state’s electricity, natural gas, and transportation fuel sectors and provides policy recommendations to conserve resources; protect the environment; ensure reliable, secure, and diverse energy supplies; enhance the state’s economy; and protect public health and safety.”
Not surprisingly, the resulting Integrated Energy Policy Report (IEPR) makes for interesting reading for anyone with enough time and inclination to digest its findings.
The latest draft IEPR, released in Nov 2019, is no exception. It does a reasonable job of describing the multiple challenges facing the state, its various agencies, stakeholder and the public as California moves along its path to carbon neutrality nirvana by 2045.
To get there, however, a myriad of intermediate targets must be achieved in an orderly fashion by various interim deadlines. It is a massive jigsaw puzzle with many moving parts – a point made clear in IEPR’s abstract, which says, in part,
“ …. Many of these issues will require action if the state is to meet its climate, clean energy, air quality, and other environmental goals while maintaining reliability and controlling costs.”
The key, of course, is not that the targets can be reached, but the last part of the sentence, namely, “while maintaining reliability and controlling costs.”
The main driver – and the biggest challenge – is the Senate Bill 100, which calls for California’s electricity system to become 100% zero-carbon by 2045.
At the ceremony signing the bill into law in Sep 2018, former Gov. Jerry Brown decided to go a step further by issuing Executive Order B-55-18, which set a goal of statewide carbon neutrality as soon as possible but not later than 2045, with net negative GHG emissions thereafter.
The electricity sector is the low hanging fruit, the first, the easiest and the cheapest to decarbonize – and naturally the first chapter in the IEPR.
Not only are utility-scale generation getting decarbonized but the state is encouraging distributed generation from rooftop solar panels while pushing building codes and appliance energy efficiency standards farther than any other state. As noted in the report,
“Many customers are generating their own power from rooftop solar and other distributed generation, decreasing demand on the electricity grid.
Further, California is the first state to require rooftop solar on new homes under new building standards that (went) into effect (in) Jan 2020. Many communities are deciding to make their own electric resource procurement choices by forming community choice aggregators (CCAs) to develop innovative ways of providing cleaner energy resources.
As of 2019, roughly 20% of customers have moved from service provided by an investor-owned utility (IOU) to service provided by a CCA. Large commercial and industrial customers are buying their electricity directly from renewable generators, as well as from private direct access providers.”
It points out that, text edited for brevity,
“In light of these changes ……. one of the state’s primary mechanisms for delivering GHG reductions and achieving other environmental and policy goals (namely regulatory supervision by the CPUC) in the electricity sector is fragmenting as responsibility for resource procurement and resource adequacy is more disaggregated than in the past.”
During these upheavals, the state’s biggest IOU, once mighty Pacific Gas & Electric Company (PG&E) is in bankruptcy protection as a result of the devastating wildfires of the past 3 years.
To decarbonize the electricity sector requires phasing out natural gas generation over time,
“… To meet air quality, climate, and other environmental goals, natural gas generation is being replaced by resources including renewables, transmission upgrades, energy storage, energy efficiency, and demand response.”
While few doubt this can physically be done, many wonder how practical, reliable or expensive it will be to operate a network with wide swings in renewable generation without any natural gas peakers – as described in article on page 13.
The following article describes the need for more storage.
Whatever the consequences, California is marching away from fossil fuels. IEPR notes that generation from natural gas plants has already decreased by 22% from 117 GWh in 2009 to 91 in 2018 substituted by renewables, with installed capacity rising from 9,313 MW in 2009 to 23,313 in 2018 (visual on top of page 6).
“By 2025, out-of-state coal imports will be eliminated from the resource mix and the last remaining nuclear facility in the state, Diablo Canyon Power Plant, is slated to retire.”
The eventual phase out of all-natural gas is likely to be gradual, and perhaps never total for all the obvious reasons.
“Currently, natural gas power plants provide about 75% of the flexible capacity available to meet system needs. ….. For the near term, natural gas generation will continue to play a key role in integrating renewable resources and ensuring reliability.”
In the meantime, ever growing percentage of the state’s electricity demand is being served by renewables:
- The most recent solar peak of 11,473 MW occurred on the CAISO system on July 2, 2019;
- The most recent wind generation peak of 5,309 MW was set on May 8, 2019;
- A new renewable peak was recorded on May 15, 2019, with 80% of load served by renewables.
As solar penetration continues to increase from both utility-scale and rooftop PVs, CAISO’s net load experiences ever lager swings in both the morning and at the end of the day as the sun rises and sets – the famous California duck curve (above right).
Unsurprisingly, IEPR notes that, “These ramps, managed by the CAISO and other balancing authorities, are becoming even steeper” (visual below) pointing out that the 3-hr ramp rates “far exceed predictions by the CAISO several years ago, when the maximum ramp rate on a typical spring day in 2020 was predicted to be 13 GW.” By Jan 2019, the 3-hr ramp has reached nearly 16 GW.
On the flip side, the minimum net load is lower than predicted. Several years ago, the CAISO predicted that the net load under a worst-case scenario on a cool sunny spring day when load is low and renewable generation, primarily wind and solar, is high –– would not reach a minimum of 12 GW until 2020.
However, the CAISO now routinely reaches “well below that level on spring days, as well as nearly every month of the year.”
Despite initial reliability concerns when minimum loads dip below 12 GW, “the CAISO grid has remained stable, even though loads have consistently dropped below this level and were as low as 5,439 MW in May 2019.”
IEPR notes that, “Progress is being made in developing performance standards for inverter-connected solar and wind power plants that will help improve reliability and increase services to the grid,” adding that, “There is an increasing need for energy storage that can absorb excess energy and re-inject it into the grid when needed.”
Another noteworthy trend is the growing interest toward hybrid resources, such as solar-plus-storage projects as reflected in an increasing number of inquiries from developers interested in pairing energy storage with either existing or proposed generation – both conventional and renewable.
IEPR says that as of early July 2019, the CAISO’s Generator Interconnection Queue included 35,341 MW of hybrid resources seeking interconnection – that is more than 40% of the total requested. It is fair to assume that most future renewable projects will be of the hybrid variety.
Another promising development is the virtual expansion of the CAISO’s market through the Western Energy Imbalance Market(EIM) even if its physical footprint remains unchanged.
The Western EIM is a real-time wholesale energy trading market that allows participants anywhere in the interconnected Western grid to buy and sell energy in the CAISO market, the dominant one in the Western US (map above). The EIM “… has proven successful in producing cost savings, reducing renewables curtailment, and reducing GHG emissions.”
The existing EIM has 9 members with another 11 entities, including the Bonneville Power Administration (BPA) planning to join by 2022. Assuming all these entities join, in 2022 the balancing authorities participating in the EIM will account for more than 77% of the load in the Western Electricity Coordinating Council (WECC).
This is highly significant, given the seemingly insurmountable political and jurisdictional conflicts in the WECC, which has thus far prevented CAISO from expanding its physical footprint beyond California borders. It currently covers roughly 80% of California’s load.
Moreover, the CAISO is taking on a new role within WECC region as the reliability coordinator (RC) in its control area and it has extended these services to other western balancing authorities.
Looking ahead, CAISO anticipates that RC West will become the reliability coordinator for another 23 entities within WECC, overseeing 87% of the load in the western US.
Following the electricity sector, IEPR moves to other sectors of the economy, notably electrifying buildings and transport. If you thought decarbonizing the power sector was tough, cleaning the transport sector is far more daunting.
Among the multitude of challenges facing California is that for the first time in 40+ years the Trump Administration has decided to revoke the waiver for the state’s vehicle greenhouse gas (GHG) standards and its zero emission vehicles (ZEV) mandate. This has forced California and 22 other states to file a lawsuit to defend their prerogative to set their own standards.
The good news is that several major automakers have already expressed their intention to comply with California’s standards – rather than the federal one. But the fate of the California and the other 22 states that follow its more stringent standards remains to be clarified.
That aside, the state has targets to have 1 million ZEVs and near-ZEVs in service by Jan 2023 while 2 Executive Orders, B-16-2012 and B-48-18 set a goal of 1.5 million ZEVs by 2025 and 5 million by 2030.
California already has over 700,000 EVs and there are estimates that it will have as many as 7 million by 2030 – potentially exceeding the 5 million target. It is already home to more than half of all EVs in the US (visual above).
To meet the projected targets, the CEC estimates the need for
- 121,000 chargers at multi-unit dwellings;
- 99,000–133,000 Level 2 chargers; and
- 9,000–25,000 DC fast chargers in public locations by 2025.
Navigant and Bloomberg New Energy Finance (BNEF) estimate that global PEV sales are growing toward 25-30 million per year by 2030, reaching cumulative sales of 150 million by the same year.
Achieving the goals of the Paris Agreement would likely require deployments well in excess of 200 million ZEVs over the next decade.
Most people reading the IEPR, assuming they manage to get thru it, would most likely conclude that California is pushing too hard and too fast on too many ambitious targets.
The same would probably also conclude that the price of electricity, already high by national standards, will go even higher potentially driving more businesses away from what is already a high cost, high tax, highly regulated state.
Others, however, prefer even bolder and faster targets – propelling California even further ahead of the pack and a leader in a decarbonized future. As an example (box), several California mayors have urged Gov. Gavin Newsom to ban all fossil fuels. Greta Thunberg would be thrilled to hear that.
Perry Sioshansi is president of Menlo Energy Economics, a consultancy based in San Francisco, CA and editor/publisher of EEnergy Informer, a monthly newsletter with international circulation. He can be reached at [email protected]
Source: EEnergy Informa. Reproduced with permission.