On Aug. 14 and 15, the California electric grid operator made the incredibly rare decision to proactively shut off parts of the electricity grid, resulting in limited rolling blackouts affecting businesses and homes throughout the state.
Forced outages are a tool of last resort, employed in circumstances of incredible stress to the grid and done to protect against more widespread outages. Record heat for several days across parts of the state strained the power grid so much that it started rationing electricity, for the first time in almost 20 years. Notably, temperatures reached 130 degrees Fahrenheit in Death Valley — the hottest recorded temperature on the planet in more than a century.
While the immediate cause is still being investigated, we do know that California’s grid was experiencing multiple, coincident stressors — high demand, generators not performing when called upon and energy imports not showing up.
Rather than thinking of these events as a one-off stroke of bad luck, consider that this soon might be the new normal. And not just in California.
Climate change is driving more extreme weather events, including heat waves, everywhere, all while the grid faces increasing demand from electrification of cars, buses, businesses and homes. How should businesses and other large customers be thinking about the increasing strains from climate change with an evolving energy resource mix?
Some have suggested clean energy is the scapegoat for the recent blackouts. However, not only was clean energy not the source of the problem, it’s the solution. Clean and renewable energy is core to charting a path forward.
Time to ditch fossil fuels-centric planning
In the last 30 years, about one-third of coastal Southern California homes added air conditioners. Higher temperatures put more stress on traditional fossil-fired electric generators, reducing plant efficiency and output, and even caused them to temporarily shut down. In fact, the heat wave last month shuttered a 500 megawatt natural gas unit and a 750 MW gas unit was unexpectedly out of service Aug. 14. Outages of dispatchable fossil generation paired with reduced output from renewables, such as the 1,000 MW reduction in available wind power Aug. 15, resulted in an electric grid unable to meet customer demand.
The grid of the future should prioritize flexibility and nimbleness, and greater deployment of resources such as batteries and larger demand response programs.
California is actively shifting from a fossil-generation-dependent grid to a system that seeks to eliminate carbon emissions by 2045 — an essential step to combat climate change.
Corporate customers, cities and governments are lining up behind ambitious clean energy and climate goals. Technological innovation and rapidly declining costs in renewables, storage and other clean energy resources are enabling California’s evolution to a 21st-century reliable, clean energy grid. The state is a leader in solar power, meeting much of the demand during the sunny hours of the day. However, the grid of the future should prioritize flexibility and nimbleness, and greater deployment of resources such as batteries and larger demand response programs.
Despite the finger-pointing and calls to move back toward natural gas, including from business groups, the recent experience in California shows that the energy transition shouldn’t be abandoned in the name of reliability Rather smart policy, planning and market designs are critical so that utilities and customers can improve reliability through accelerated deployment of these advanced clean resources as fossil generators retire.
Markets and regional cooperation: Bigger is better
California’s electric system is operated by an independent nonprofit organization — the California Independent System Operator (CAISO) — that uses competition among power producers to identify the lowest-cost generators that can be used to reliably meet demand. While recent events have been compared to events we saw 20 years ago in California, flaws and fraud responsible then in California’s market design have since been corrected.
This time around, the experience suggests that fully expanding wholesale electricity markets throughout the West will be a critical tool to reliably and cost-effectively meet demand in the face of climate change and the energy transition. California may be tempted to go faster alone, but it could get there more reliably and affordably with other Western states.
California’s grid imports electricity from out of state generators, and California’s utilities plan in advance for energy imports that are complemented by in-state generators to meet demand on the hottest days. CAISO does not control the number of imports, which were affected by the recent heat wave that extended beyond California. A wider, better coordinated western electricity system could have more nimbly responded to large generators tripping offline and would have cost consumers less by reducing spikes in power costs and the need for backup generators.
A wider, better coordinated western electricity system could have more nimbly responded to large generators tripping offline and would have cost consumers less by reducing spikes in power costs and the need for backup generators.
Efforts are underway to expand the CAISO market through the Western Energy Imbalance Market (EIM), which allows coordinated real-time operation amongst a number of utilities and already has brought $1 billion in customer benefits, although this is a fraction of the benefits of a full competitive wholesale market.
The type of grid event that occurred in August would be best solved by a western regional transmission organization that optimizes electricity generation and demand throughout the West, rationally manages shared operating reserves and plans/promotes interconnected transmission infrastructure. This type of system will be critical to lowering costs to all customers and keeping the lights on, while meeting the clean energy commitments by customers and states.
Even CAISO and the California Public Utilities Commission agree that market improvements may well be needed. California’s approach to ensuring enough generation on the system to meet demand on the hottest days is fractured, complex and undergoing revision.
As we chart a path forward, we need to embrace creative solutions and use the tools that we know can work. Businesses require reliable, affordable electricity. A growing number of businesses also know that transitioning the grid to clean energy can save money while continuing to provide expected reliability.
Embracing innovation and new technology is in California’s DNA; it also could get by with a little help from its friends. By stitching together the West's electricity system, reliability and a clean energy transition can work in tandem, most affordably for all customers.
REBA is organizing related sessions on clean energy markets during VERGE 20. View more information here.