A new report finds that California’s resource planning targets “have not evolved to keep pace with climate change-induced extreme weather events, and that energy market practices did not perform as intended during” the August heat wave that resulted in rotating outages.
The Preliminary Root Cause Analysis of the Aug. 14 and 15 outages was conducted by the California Independent System Operator (CAISO), the California Public Utilities Commission (CPUC), and California Energy Commission (CEC).
The preliminary analysis said there was not a single root cause for the rotating outages but identified three broad categories of factors that contributed to the outages:
- The extreme heat storm across the western U.S. pushed demand for electricity beyond resource planning targets.
- Because resource planning targets have not kept pace with the transitions in the energy mix, there were not sufficient resources to meet demand in the early evening hours.
- Some practices in CAISO’s day-ahead energy market exacerbated supply challenges.
In addition to creating high demand for electric power, the extreme heat – above 100 degrees Fahrenheit in some areas – also reduced the efficiency and capacity of thermal power plants and other power equipment. Numerous wildfires were threatening the loss of major transmission lines.
The effects of drought and heat in the Pacific Northwest reduced the availability of hydroelectric power imports into California and cloud cover reduced available generation from all solar generation.
The heat storm the Western U.S. experienced in August was a 1-in-35 year weather event, according to the CEC’s analysis, and it was made worse by “the rapidly evolving demand patterns induced by COVID-19 [that] were not anticipated in the planning and resource procurement timeframe.”
“The energy markets can help fill the gap between planning and real-time conditions, but the West-wide nature of this heat storm limited the energy markets’ ability to do so,” the report said.
In terms of resource planning, the CPUC’s resource adequacy requirements include a planning reserve margin (PRM) of 15%. The report noted, however, that the operational need on Aug. 14 was 1.3% higher than the planning reserve margin, which rose to 2.5% when planned outages are included.
The report also noted that California’s resource adequacy requirements were developed around peak demand. The principle was that if enough capacity is available at peak demand there would be enough capacity at all other hours of the day as well since most resources could run around the clock if needed. That is no longer the case because of the recent increase in solar and other variable resource generation, the report said.
Instead of a single peak, California is now experiencing “multiple critical periods during the day.”
The report identified “net peak demand” as a second critical period, which is defined as peak load less solar and wind generation resources.
Net peak demand is “becoming the most challenging time period in which to meet demand,” the report said. It occurs later in the day than peak demand when solar power resources are fading in the evening and can be exacerbated if the day’s heat is not replaced by cooling evening and night temperatures as occurred during the recent heat storm. “Over time, critical grid needs may manifest in other hours, seasons or conditions as the energy resource portfolio continues to evolve,” the report warned.
California is transitioning to a cleaner energy economy and its renewable energy goals are among the most ambitious in the country. The state’s renewable portfolio standard requires the load-serving entities to procure 33% of retail sales from renewable resources by 2020 and 60% by 2030. The state has also committed to a zero-carbon dioxide electricity supplies for of all retail sales by 2045.
At the same time, generation fired by natural gas, which can fill evening supply shortfalls, is declining in California. Instead, the state has relied on “the tremendous growth in utility-scale renewable generation” to help reduce its reliance on natural gas.
During the heat storm, however, the state’s natural gas fleet experienced 1,400 MW to 2,000 MW of forced outages, mostly because of the extreme heat, the report noted. In addition, there were no substitutes in place for almost 400 MW of planned gas generator outages.
The report also identified energy market practices as a contributing factor to the August outages. Specifically, load serving entities under-scheduled their demand for energy, particularly during the net demand peak time, giving a false signal that there were more internal resources available for export from the state.
In addition, the report said convergence bidding made it more difficult to identify the under-scheduling of demand.
Convergence bidding allow bidders to converge or moderate prices between the day-ahead and real-time markets. Under normal conditions, convergence bidding helps align loads and resources for the next day. But during the heat storm under-scheduling of load and convergence bidding clearing net supply signaled that more exports were possible.
In its preliminary analysis, the report recommended the following immediate actions to ensure reliability for 2021 and beyond, including:
- Update the resource adequacy planning targets to better account for heat storms and other extreme events;
- Ensure that the generation and storage projects under construction are completed by their targeted online dates;
- Expedite regulatory and procurement processes to develop additional resources that can be online by 2021 with a likely focus on demand response and flexibility;
- Modernize the Flex Alert system;
- Coordinate additional procurement by non-CPUC jurisdictional entities to seek better consistency among jurisdictional and non-jurisdictional entity forecasting and reserve margin targets;
- Enhance CAISO market practices to ensure they accurately reflect the actual balance of supply and demand during stressed operating conditions; and
- Improve situational awareness and planning for contingenices
“Publicly owned utilities have been widely recognized as performing extremely well during the heat storm,” said Barry Moline, executive director, California Municipal Utilities Association.
“As state policies move us toward more aggressive goals, we want common-sense reliability solutions. We don’t want to be forced to spend our customers’ resources on off-target projects that benefit particular interest groups and provide limited benefits in the next few years.”
