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'Difficult and very consequential challenges' seen in decarbonizing US grid

SNL Image

Power lines transmit wind power from northern California's Altamont Pass. As the operator of the world's largest electric grid targeting 100% clean electricity, the California ISO has become a laboratory for decarbonization.
Source: S&P Global Market Intelligence

In the past year, California, Maine, New Mexico, Nevada, Puerto Rico and Washington have joined tropical trendsetter Hawaii in establishing ambitious new laws aimed at completely decarbonizing their power supplies in coming decades. Similar efforts are underway, some in advanced stages, in Colorado, Florida, Illinois, Massachusetts, Minnesota, New York, Pennsylvania and Wisconsin.

None, however, should underestimate the challenges of turning their visions of ubiquitous carbon-free electricity into reality, according to David Olsen, chairman of the governing board at the California ISO.

"There are a lot of profound changes going on in the power business right now," Olsen said July 11 at a symposium in Berkeley, Calif., focused on slashing fossil fuel use in the western U.S. "To be able to decarbonize electricity, buildings and vehicles are going to have to become both supply- and demand-side resources to able to be dispatched in ways to provide all of the power services that we now get from fossil generation."

Organized by the Electric Power Research Institute, the primary research organization of U.S. utilities, the gathering in Berkeley was the first of a three-part 2019 series on the challenges and opportunities of decarbonizing wide swaths of the U.S. economy. Subsequent conferences are planned for New York and Texas.

All three stem from the group's inaugural EPRI Electrification event in 2018 and reflect the power industry's growing ambition to use its ever-cleaner electrons, which at times are in great surplus, to seize market share in the fossil fuel-dependent transportation and building sectors.

As the operator of the world's largest electric grid targeting 100% clean electricity, the California ISO has become a laboratory for decarbonization. On July 1, the California ISO began grid reliability oversight of 17 electricity balancing authorities across the western U.S. and Mexico, a role it expects to grow. It also coordinates the Western Energy Imbalance Market, a real-time electricity market in the West. Within its expanding scope are numerous corporations, utilities and states seeking to entirely decarbonize their power supplies.

Policy, regulatory challenges

One of the pivotal transformations Olsen sees is the shift from the power sector's reliance on "conventional synchronous generators," including fossil fuel-fired power plants, to "asynchronous inverter-based solutions," such as wind, solar and battery arrays. "There are difficult and very consequential challenges, many new issues to be addressed and resolved, and it's really important for all of us not to underestimate the difficulties of decarbonizing electricity that way," Olsen said. "Nothing will stop progress for clean energy faster than a blackout."

The Federal Energy Regulatory Commission on July 2 approved changes to help the California ISO prevent inverter-based resources from unnecessarily tripping offline and potentially triggering broader outages.

Overall, the challenges have less to do with the technologies themselves, according to Olsen."Replacing gas generation with clean resources is much more a policy and regulatory problem than a technical one," he said in a recent interview.

SNL Image

California energy experts discuss decarbonization in Berkeley.
Left to right: California Energy Commission's David Hochschild, LADWP's Nancy Sutley, PG&E's Fong Wan, and California ISO's David Olsen.
Source: S&P Global Market Intelligence

Xcel Energy Inc., for instance, has operated its wind power in Colorado and Minnesota as dispatchable resources for years, Olsen noted, while the California ISO demonstrated with First Solar Inc. that large photovoltaic projects can follow dispatch signals "much faster and more accurately" than fossil fuel-fired plants.

In California, where renewables currently are not dispatchable, state regulators need to allow new, innovative power purchase agreements "that allow clean resources to be compensated for providing all of the operational capabilities essential for operating the grid," Olsen said.

While the grid operator historically has focused on managing supply and balancing it with anticipated demand, Olsen sees proactive integration of demand-side resources as essential to manage rising volumes of variable renewable generation.

"This is why we have to electrify almost everything, to give us the tools we need to better manage demand, to sync it up with wind and solar output," Olsen said.

At the EPRI event, representatives of utilities around the West, including the Los Angeles Department of Water and Power, Pacific Gas and Electric Co., or PG&E, and Seattle City Light, expressed support for leveraging their decarbonizing power portfolios to clean up other sectors, along with some reservations.

"What keeps me up at night is just the pace of change and being able to ... meet these ambitious goals," said Nancy Sutley, chief sustainability officer at LADWP.

"While we are making electricity clean, we are also competing with a worldwide, U.S.-led fossil fuel boom," added Fong Wan, a senior vice president at PG&E. "We've got to make our electricity prices as low as we can to make the switching easier."