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Calif. grid operator says generation shortfall may prompt more blackouts

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Essential Energy Insights - February 2021

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Calif. grid operator says generation shortfall may prompt more blackouts

As the California ISO warned Aug. 17 that power blackouts could impact millions of customers during an extended heat wave across the western U.S., CAISO CEO Steve Berberich said the grid operator warned utility regulators repeatedly that the state would experience growing generation capacity shortfalls.

"We told the California Public Utilities Commission of a 4,700-MW need through 2022 and that gap started in 2020. Despite all that, only 3,300 MW was authorized for procurement and none starting until 2021," Berberich said during a special telephone conference the CAISO Board of Governors held Aug. 17, following a weekend during which the grid operator twice conducted rotating blackouts because of high demand and tightening reserves.

Furthermore, California is no longer able to import enough power to fill the void, the CEO said. To fix the problem, Berberich added, resource adequacy must be reformed so that utilities and other load-serving entities have enough generation capacity to meet peak demand.

CAISO officials warned the grid operator could have about a 4,000-MW capacity deficiency Aug. 17 with a load forecast of 49,792 MW and that the Aug. 18 load and deficiency could be even higher.

"It is near certain that utilities will have to cut off power to millions of customers [Aug. 17] and [Aug. 18] and perhaps beyond," Berberich said. "Demand will greatly exceed supply."

CAISO had earlier issued a "flex alert" calling for customers to conserve energy use between the hours of 3 p.m. and 10 p.m. through Aug. 19.

CAISO's peak load hours occur in the evening hours as output from California's plentiful solar generation, including rooftop resources, fades with the setting sun. California has added almost no new gas-fired generation and is retiring older gas-fired plants, so replacement capacity is needed when evening loads, especially air-conditioning loads, run high.

High humidity at night blankets the state and holds in heat, so with higher temperatures, air conditioning is used more, said Mark Rothleder, CAISO's vice president for market policy and performance.

Governor asks for an investigation

California Gov. Gavin Newsom on Aug. 17 issued an emergency decree to temporarily allow some customers and utilities to use backup energy sources, including diesel generators, and sent a letter to CAISO, the PUC and the California Energy Commission demanding an investigation into the weekend service interruptions.

In response to a caller's accusation during the public comment portion of the teleconference that the CAISO should have ensured more generation was available, CAISO board member Severin Borenstein said the grid operator cannot be faulted for the shortage of available generation resources.

"The CPUC is the entity assigned to make resource adequacy decisions. If there is a problem with the process CAISO can't fix it," Borenstein said. "This decision has to be made much higher up. Blaming the CAISO for following the law is inappropriate."

Berberich sought to fend off accusations that CAISO was being too conservative in not calling up reserves before calling for rolling blackouts. CAISO is required by the North American Electric Reliability Corp. and federal law to maintain sufficient reserves, even when it means shedding load, he said. The reserves are required to avoid catastrophic grid collapse in the event of unexpected failures of operating power plants and transmission lines, he said.

Berberich said CAISO should have prepared the public earlier for the possibility of outages that began during evening hours of Aug. 15 and occurred again Aug. 16, but he added that it did not anticipate demand would outstrip supplies. "We believed we had adequate supply to cover demand. We were wrong. It's our fault and we apologize," Berberich said. In any event, blackouts would still have been needed, he said.

Rothleder said CAISO scrambled to find available energy from other states to import to California, but the western heat wave limited the amount of uncontracted energy that was available. The state has about 6,500 MW of contracted import capacity but needs about 10,000 MW to 11,000 MW.

"We are collaborating with outside utilities, trying to find as much energy as we possibly can, including additional resources that were out of service," Rothleder said.

In addition, CAISO has put uncontracted exporters on notice they may be prevented from sending their power out of state, and late Aug. 16 launched a search for any capacity that could be available over the next 30 days to help fill the gap, he said.

Berberich said hydro and other resource operators in the Pacific Northwest are running their systems at maximum capacity to help California and the Los Angeles Department of Water and Power has provided some resources to the CAISO. The Department of Defense, industry and commercial businesses have shifted load and reduced consumption, he said.

"We are scouring every corner of our world to find additional load reductions and generation," he continued.

Conditions are not comparable to the July 2006 heat wave, when on July 24 of that year CAISO set its all-time peak demand of 50,270 MW, because California had thousands more megawatts of generation capacity available, including the now-shuttered San Onofre Nuclear Generating Station.

The state's other nuclear plant, PG&E Corp. subsidiary Pacific Gas and Electric Co.'s Diablo Canyon plant, is due to shut down once its operating licenses expire in 2024 and 2025, and Berberich said the time to apply for extensions has passed. In any case, Berberich said he would not advocate for relicensing because nuclear is a baseload resource and instead, quick-start resources are needed to meet peak demand. CAISO Board Chair David Olsen said, "We need to start now to get additional resources to cover the loss of Diablo Canyon."

California's big three investor-owned utilities, Pacific Gas and Electric, Edison International subsidiary Southern California Edison Co. and Sempra Energy subsidiary San Diego Gas & Electric Co., on Aug. 17 were pleading with customers to reduce their energy use and warning them of the possibility of rolling blackouts.