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Calif. power grid faces 'precarious transition period' amid gas outages

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California will decide later this year whether to extend the operating life of AES Corp.'s Redondo Beach plant because of grid reliability concerns. But maintaining such aging facilities is a big challenge.

Source: Mitch Diamond / Photodisc via Getty Images

A series of punishing heat waves and a ferocious start to wildfire season are exacerbating concerns over power supplies in the severely drought-stricken western United States, especially in California, which has been hard-pressed at times over the past two months to keep the lights on in the world's fifth-largest economy.

The Golden State's primary transmission grid operator, the California ISO, narrowly avoided resource shortfalls on five days in June and July, thanks in large part to statewide conservation efforts. But unplanned outages at several natural gas-fired power plants, which account for the lion's share of California's summer peak capacity, only made the job harder. On July 12, for instance, as the grid operator wrestled with the unanticipated loss of essential hydropower imports from the Pacific Northwest due to the Bootleg Fire in Oregon, where more than 2,000 MW of gas capacity was experiencing "plant troubles" and was unavailable during evening peak demand, according to a CAISO outage report.

"These gas plant outages jeopardize grid reliability and thus underscore the urgency of getting more clean energy capacity online as soon as possible," said Mark Specht, a senior energy analyst at the Union of Concerned Scientists. "We are in a precarious transition period where we need all the capacity we have, and at the same time, we must accelerate the development of clean energy resources."

As it strives to cover 60% of its retail power sales with renewable energy resources by 2030, California is in the throes of a challenging grid decarbonization balancing act. Rising volumes of variable wind and solar generation and falling production at hydroelectric dams have been driving greater dependence on gas generators, primarily when the sun goes down. A major resource reshuffle is planned for the mid-2020s, featuring 11.5 GW of new clean energy resources that state energy regulators recently ordered to come online between 2023 and 2026 to offset a host of retiring assets, including gas plants and Pacific Gas and Electric Co.'s 2,240-MW Diablo Canyon nuclear power station — California's single-largest power plant.

Over the next few years, however, gas appears poised to continue its recent comeback. Gas generation reached 92,309 GWh in 2020, its highest mark since 2016 and more than California's gas fleet produced in 2011, according to the California Energy Commission. While a new fleet of lithium-ion battery stations is emerging as a gas alternative, the need to integrate more renewables is likely to further increase demand for gas generation in the near term, an agency analyst said during a July 9 meeting on gas reliability issues.

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'Little blips along the way'

But recent breakdowns are exposing risks associated with the state's dependence on natural gas generation.

One major gas-fired facility in the San Francisco Bay Area, Calpine Corp.'s 648-MW Russell City Energy Center, has been completely offline since a steam turbine exploded in late May, worsening the state's power predicament and forcing CAISO to squeeze the region for any last-minute capacity. While investigations into the cause are ongoing, the Energy Commission voted July 15 to allow Calpine to temporarily bring back the eight-year-old plant at roughly half capacity for peak demand in the late summer and fall when wildfires and heat waves are typically most menacing and generation margins are thinnest.

Ahead of the vote, Energy Commission Chair David Hochschild called the turbine accident "unacceptable" but said there was little risk in allowing the Calpine plant to bypass the damaged steam unit and to rely on two unaffected combustion turbines to contribute much-needed capacity during a period of "enormous stress" on the electric grid.

Still, officials in the city of Hayward, where the plant is located, remain skeptical of Calpine's ability to operate the Russell City facility safely. "If it was impossible to happen to the steam turbine, but it did, then what about the ... combustion turbines?" Hayward Fire Chief Garrett Contreras asked at the July 15 meeting. "What is the lack of preventative maintenance done to those?"

Older gas plants, meanwhile, appear to be showing wear and tear, with numerous units completely or partially unavailable during recent heat waves. The biggest losses have been at GenOn Holdings Inc.'s 1,490-MW Ormond Beach Generating Station in Oxnard — the state's largest gas generator, according to S&P Global Market Intelligence data. More than 80% of the 50-year-old plant's capacity was unavailable during peak demand July 9-12, a period when CAISO issued three so-called Flex Alert requests for residents to conserve electricity.

A GenOn official acknowledged that the facility's unit 1 was completely out during that period, while unit 2 was operating at only one-third of its capacity. The company did not respond to requests for information on what caused the outages during the heat wave. After the event, unit 1 underwent maintenance and was no longer listed in CAISO's outage report July 18, while 250 MW was still unavailable from unit 2.

Other gas plants also experienced hiccups in June and July because of high heat and technical problems, including AES Corp.'s gigawatt-sized Alamitos facility and 841-MW Redondo Beach generating station.

"Maintaining 100% of our output on 50- to 60-year-old units is a great challenge," Mark Miller, AES's market business leader for California, said in an interview. One unit at AES' Redondo Beach plant, for instance, was down 130 MW during peak system demand July 12, a highly stressed day for CAISO.

During the four prior days, however, AES' older plants, including the Redondo, Alamitos and Huntington Beach generating stations, had a combined 88% availability, Miller said. "We do recognize there will be little blips along the way, but when we look at the general performance and the capabilities of our [once-through-cooling] fleet ... those three sites continue to deliver to a great capability."

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AES installed a major battery facility next
to its Alamitos gas units.

Source: AES Corp.

'Natural progression'

Ormond Beach, Redondo Beach, Huntington Beach and Alamitos were all originally scheduled to close at the end of 2020 as part of California's policy of phasing out older plants that use aquatic cooling systems harmful to marine life. Following rotating outages in August 2020, the California State Water Resources Control Board effectively allowed Redondo Beach to continue operating through 2021 and gave the other three facilities through 2023.

Now the board is considering extending Redondo Beach's compliance date through 2023 as well, a move the city of Redondo Beach, the Union of Concerned Scientists and others oppose.

"If the state needs us, if the system needs us to run on our current schedule ... everything is in place to support that window," Miller said.

But ultimately, even as AES prepares to meet the anticipated need for more gas generation in the next few years, the company is positioning itself long term for a "zero-carbon model," according to Miller. That includes exploring the expansion of a 100-MW, four-hour battery-storage station at its Alamitos site and a new battery adjacent to the Huntington Beach plant.

"The footprint that we have in the LA Basin is particularly important for the needs of the system," Miller said. "So I think it is a natural progression to look at energy storage as a large building block in the overall strategy for the transition to zero carbon."

California is looking to such new clean energy resources to help accelerate natural gas retirements through its upcoming 11.5-GW procurement. That could create "wiggle room for California's least reliable gas plants to shut down permanently," according to Specht of the Union of Concerned Scientists.