California heatwave catches grid operator unprepared

On Saturday, August 16, Death Valley in California hit an astonishing 129.9 degrees Fahrenheit (54.4°C) at 3:41 pm, among the highest temperatures  recorded anywhere to date, according to the NOAA. The rest of California, while not as hot, has nevertheless been breaking heat records.

In the midst of the Covid-19 pandemic, with people encouraged to stay home, the grid operator, the California Independent System Operator (CAISO) announced that it did not have enough juice to keep everyone’s air conditioners humming. On Friday August 15, it did what all grid operators must do to avoid a total catastrophe by instituting rolling blackouts.

CAISO was aware of the heatwave and began planning – but for a number of reasons now under investigation – it failed to have sufficient resources to meet the load.

Temperatures turned out to be hotter than expected, and cloud cover in the desert – where the bulk of the utility-scale solar power plants are – reduced solar generation. Making matters worse, neighboring western states were also impacted by the same heatwave with little extra power to sell.

On top of it all, it didn’t get much cooler after the sunset, which meant that air-con units were running into the night when there was no solar output. It was the perfect storm.

A visibly annoyed Governor Gavin Newsom acknowledged the state had failed to predict and plan for the energy shortages. “I am not pleased with what’s happened,” he said, before adding: “You shouldn’t be pleased with the moment that we’re in in the state of California.”

He said he would ask the California Public Utilities Commission (CPUC) and the CAISO to investigate.

“These blackouts … are unacceptable and unbefitting of the nation’s largest and most innovative state. This cannot stand. California residents and businesses deserve better from their government.”

Steve Berberich, the retiring CEO of CAISO, said they had warned the state utilities commission of a resource gap.

“We have indicated in filing after filing after filing that the resource adequacy program was broken and needed to be fixed,” he said, adding, “the situation we are in could have been avoided.”

Not exactly what the governor wanted to hear. The state’s three biggest utilities  — Pacific Gas & Electric Co (PG&E), Southern California Edison Co (SCE) and San Diego Gas and Electric Co (SDG&E) – turned off power to more than 410,000 homes and businesses for about an hour at a time until the emergency declaration had passed.

The ISO instituted a second, but shorter, rolling outage on Saturday evening that cut power to more than 200,000 customers. The utilities, however, want to make sure the customers don’t blame them for the outages.

PG&E to confused customers: Don’t blame us

California’s 3 large utilities are mostly out of power generation business, they no longer dispatch plants or manage transmission congestion. When not distracted by wild fires or lawsuits brought on by the victims or fighting with the regulators, they maintain and operate the transmission and distribution lines.

During the recent heat wave, they have had to resort to rotating outages as directed by CAISO, whose job is to make sure the grid des not fail. Customers, however, have no idea who is who and why their AC stops working when it is triple digits and they are stuck at home. It’s been a PR fiasco for everyone, from the Governor down, and everyone is pointing at someone else for the blame.

PG&E, for example, sent an electronic message to all its customers pointing out that:

“Due to extreme heat across all of California, the California Independent System Operator (CAISO) that runs the state’s electric grid, may require PG&E and other electric utilities to turn off power for short periods of time called rotating outages. These outages may last between 1 to 2 hours for most customers. These are not Public Safety Power Shutoffs due to extreme fire danger, and are not related to any issues with PG&E’s equipment or its ability to deliver energy locally. Other power utilities in the state may be directed to conduct similar rotating outages. These outages are called by CAISO to keep energy demand from exceeding supply, and prevent larger outages on the grid.

Based on the weather forecast, these potential rotating outages could occur during peak periods of approximately 3 pm to 10 pm each day, starting Monday, August 17th and continuing through the evening of Thursday, August 20th. A decision on whether to do them will be made by CAISO each day.”

Ahmad Faruqui, a principal at the Brattle Group and an expert on utility tariffs, blames the rotating outages on the state’s failure to integrate the demand and supply sides of the market.

He noted, “When California had its energy crisis in 2001, retail and wholesale markets were disconnected. Wholesale prices shot through the roof while retail prices did not move at all.”

A number of economists, Faruqui included, called for dynamic pricing as the default tariff at the time. This year, after years of deliberations, California’s investor-owned utilities will begin rolling out simple, static, time-of-use (TOU) pricing as the default tariff in California. It’s a classic case of too little, too late, according to Faruqui, who added, “What California needs now is to make dynamic pricing the default tariff.”

There are no shortages of advice, sought or not. The American Wind Energy Association of California (AWEA-California) issued a statement that pointed out another obvious flaw in the current system. It said (with minor edits):

“Right now, California has a renewable energy system that is heavily reliant on the sun, and solar resources are performing exactly as (they) should: … producing huge amounts of energy (when the sun is shining), but the State needs a better plan for providing clean energy in the evening period when the sun sets.”

Hmm. With all the talk about the famous “duck curve” since 2012, why didn’t CAISO prepare for this earlier?

With the finger-pointing just beginning, the proponents of California’s green agenda are keeping fingers crossed that the lights will stay on and CAISO will survive a major meltdown. If the lights go out again for any extended period, the naysayers will be able to claim that “I warned you this was going to happen sooner or later.” That’s what happened in South Australia after its blackout.

It was the first time in 19 years that CAISO had to resort to mandatory rotating outages. The last time there were outages was during the 2000-01 California electricity crisis. It did not endear the then-Governor Gray Davis to voters. Davis, a Democrat, lost in a recalled election in October 2003 and was replaced by Arnold Schwarzenegger, a Republican.

Newsom does not want a similar fate.

Fereidoon Sioshansi is president of California-based energy advisory firm Menlo Energy Economics.