By Seth Hilton, Stoel Rives
In August 2020, the California ISO was forced to briefly shed load in the evening hours of August 14 and 15. Those events triggered a flurry of regulatory activity, as California’s energy agencies, and the California ISO, worked diligently to ensure that when California’s abundant solar generation rolls off the system in the evening hours, enough electric capacity was still available to meet load, especially during extreme weather events and/or wildfire events.
During the summer of 2021, the California ISO instituted monthly update calls to discuss summer reliability. The California ISO held the last of these calls on September 24, 2021. As noted on the call, the California ISO managed to survive Summer 2021 without any load-shedding events. July 2021 provided the greatest challenge, due to a West-wide heat wave and transmission outages related to the Bootleg Fire. However, August and September were more mild: In 2020, load peaked at 47,121 megawatts (MW) on August 18. In contrast, the load peaked at only 43,982 MW on September 8.
However, a stack analysis performed by the California Energy Commission staff showed that there is a potential shortfall of over 4,000 MW if an extreme weather event occurs. And, California’s increasing wildfire challenges also threaten California’s ability to import power, a critical component of meeting California’s energy needs.
Potential shortfalls ahead
The California governor’s office, the California ISO and California’s energy agencies—including the California Public Utilities Commission and the California Energy Commission, have engaged in numerous efforts to provide for additional capacity to meet the challenges of Summer 2022 and 2023. Governor Newsom issued an Emergency Proclamation on July 30, 2021 to free up energy supply to meet demand during extreme heat events and wildfires, and to expedite the deployment of additional generation. The California Energy Commission then acted rapidly to issue orders to implement the Emergency Proclamation, including an order establishing a process for review of changes to existing design, operations, or performance of existing facilities, an order to expedite licenses for new emergency or temporary power generators of 10 MW or more, and an order for licensing new or expansions of battery storage systems of 20 MW or more.
The Department of Water Resources and the California Energy Commission also moved to rapidly site four 30-MW temporary gas turbines at two existing facilities, and the California ISO petitioned the Federal Energy Regulatory Commission (and obtained) a tariff waiver to expedite the interconnection of two of the turbines at the Greenleaf 1 facility in Yuba City.
The California Public Utilities Commission has also issued a number of procurement decisions requiring the procurement of additional capacity. In November 2020, the CPUC initiated a new rulemaking (R.20-11-003) to address emergency reliability for the summer of 2021. In February 2021, the CPUC voted out a decision in that rulemaking (Decision (D.) 21-02-028) directing PG&E, Southern California Edison (SCE) and San Diego Gas and Electric (SDG&E) to seek contracts for additional generation capacity. On March 18, the CPUC approved utility contracts for 564 MW of additional capacity by summer 2021, procured pursuant to that decision. On March 25, 2021, the CPUC voted out another decision (D.21-03- 056), requiring PG&E, SCE and SDG&E to take numerous actions intended to reduce demand under stressed conditions, and authorizing the utilities to procure additional capacity.
In June 2021, the CPUC issued another procurement decision (D.21-06-035) in its Integrated Resource Planning Proceeding (R.20-05-003), requiring the procurement of an additional 11,500 MW of “net qualifying capacity” (referring to the amount of capacity that counts towards reliability requirements, not the nameplate capacity).
Demand- and supply-side policies for 2022/2023
By a scoping ruling issued August 10, 2021, the CPUC expanded its summer reliability proceeding (R.20-11-003) to address summer 2022 and 2023 challenges. On October 29, 2021, the CPUC issued a proposed decision in R.21-11-003 that would implement a variety of demand- and supply-side policies and procurement to ensure there is sufficient capacity for the summers of 2022 and 2023. The proposed decision evaluates the CEC’s stack analysis in light of recent events, and concludes that current electric capacity needs for 2022 and 2023 were now in the range of 2,000 to 3,000 MW. The proposed decision would implement a variety of demand response program changes and supply-side measures designed to speed procurement of additional capacity and advance the on-line dates for that capacity.
The CPUC issued two other proposed decisions on October 29, 2021 that were also focused on addressing summer 2022 and 2023 reliability. In R.19-09-009, the CPUC’s microgrid rulemaking, the CPUC issued a proposed decision that would authorize SDG&E to procure up to four new energy storage microgrid projects providing a total of 160 megawatt-hours of capacity to meet capacity needs in 2022 and 2023. The proposed decision would also authorize PG&E to augment its temporary generation program at sites that can interconnect to address capacity shortfalls in 2022 and 2023. And, in its energy efficiency rulemaking, R.13-11-005, the CPUC issued a proposed decision that would approve and fund several initiatives to reduce demand through various energy efficiency actions.
On September 17, 2021, the State Water Resources Control Board also approved extending the once-through-cooling policy compliance deadline for the Redondo Beach Generating Station Units 4, 6, and 8 (834 MW) for two years through December 31, 2023 to provide additional capacity through 2023. Currently pending at the California Public Utilities Commission is a draft resolution (E-5173) which would approve to resource adequacy power purchase agreements between Southern California Edison (SCE) and AES Redondo Beach, LLC for Units 5 and 6 for the period from April 1, 2022 through December 31, 2022.
Additional challenges remain
Despite these efforts, however, getting additional capacity on-line by the summer of 2022 remains challenging. Interconnection timelines remain an issue, even with the expedited permitting timelines provided by the California Energy Commission. For example, despite providing for the expedited permitting schedule for energy storage contemplated by the Governor’s Emergency Proclamation, interconnection timelines have severely limited the number of projects that can take advantage of the permitting order. Similarly, getting the additional gas-fired generation contemplated by the Emergency Proclamation timely interconnected required that the California ISO obtain a limited tariff waiver.
A recent advice letter filed by SCE further illustrates those challenges. Advice Letter 4617-E sought approve of Engineering, Procurement, Construction, and Maintenance (EPCM) contracts with Ameresco, Inc. for the engineering, procurement, construction and maintenance of 535.7 MW of utility-owned energy storage to address summer reliability. According to SCE, interconnection and permitting timelines prevented independent energy storage developers from timely developing projects to meet summer need, while SCE could interconnect the projects much more quickly in its role as distribution system owner and operator. The Energy Division of the California Public Utilities Commission has issued a draft resolution (E-5183) which would approve the EPCM contracts, although a number of independent energy storage developers and industry groups filed protests to the Advice Letter.[1]
Whether all these efforts will be sufficient to avoid load-shedding in 2022 and 2023 remains to be seen. It will depend on a number of factors, including the amount of additional capacity that is actually able to come on line, the severity of any extreme weather events, and the extent to which wildfires will further impact California’s access to electric capacity.
[1] Stoel Rives represents a number of the developers who filed protests.
About the Author
Seth Hilton is a partner at Stoel Rives LLP where his practice focuses on the California energy sector, representing clients before California’s energy regulatory agencies including the California Public Utilities Commission and California Energy Commission, as well as in stakeholder proceedings at the California Independent System Operator. He may be reached at [email protected].
