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'You have to rethink these old ways': Parting advice from CAISO's retiring CEO

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'You have to rethink these old ways': Parting advice from CAISO's retiring CEO

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The Solar Star project in Southern California is part of the state's growing fleet of variable renewable energy resources.
Source: SunPower Corp.

After more than a decade of directing power flows across one of the world's largest and most dynamic economies, California ISO President and CEO Steve Berberich is leaving the state's primary wholesale grid operator at the end of September amid enormous uncertainty over how California will keep the lights on as it accelerates its transition toward an aspired zero-carbon energy future.

In August, the Golden State experienced its first rolling blackouts since the 2000-2001 energy crisis as a record heat wave smashed through California's thin capacity reserves, followed in September by catastrophic wildfires and high winds that knocked out power for millions across the West. One of Berberich's last official acts at CAISO will be to hand Gov. Gavin Newsom a root-cause analysis of the conditions that forced the ISO to order statewide rotating outages Aug. 14 and Aug. 15. Understanding exactly what happened will help guide the state as it reorients its approach to ensuring electric reliability with ever-higher levels of variable renewable energy resources.

"There doesn't have to be a tradeoff between reliability and decarbonization," Berberich said in a sprawling Sept. 22 panel discussion with incoming CAISO CEO Elliot Mainzer, former head of the Bonneville Power Administration, and John Prescott, chair of the governing board of the real-time Western Energy Imbalance Market, or EIM. "What caused the [August blackouts] was a lack of putting all the pieces together. ... You have to rethink these old ways of doing things, and I think that's what didn't happen."

Berberich's parting advice to Mainzer, California and the region as a whole was to immediately redesign California's out-of-date resource adequacy program, harness massive amounts of energy storage and more deeply integrate power systems throughout the West.

Western grid integrates slowly but surely

While Berberich's pursuit of a full regional transmission organization for the West stumbled over political hurdles related to governance, it remains "critically important" for grid operators to collaborate and share resources, he said. In the near term, that likely means augmenting the EIM with day-ahead trading.

The CAISO-managed EIM uses transmission capacity that is left over after day-ahead bilateral trading is done. "The big issue is how you deal with transmission," Mike Florio, a former member of the California Public Utilities Commission, said in an interview.

"They will have to work out how to use transmission to support a day-ahead market," added Florio, now a senior fellow at Gridworks, a decarbonization advocacy group based in Berkeley, Calif. "I think there is a pretty good chance that will happen."

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Even solely as a real-time market, the EIM has saved participants more than $1 billion since it launched in 2014 and has given a diverse set of stakeholders a shared sense of purpose.

"If nothing else, the EIM has done a lot to build that trust between all the entities in the West," said Prescott, a former executive at Seattle City Light and Idaho Power Co., two of the 11 active market participants. With membership set to almost double in the next two years, the incoming CAISO CEO will have the opportunity to oversee an expansion of those benefits and potentially elevate regional cooperation to the next level.

"Certainly the issues inside California clearly have unique elements, but the broader challenges of climate change and resource adequacy, technology innovation and affordability ... they're shared across the broader West," Mainzer said. "And I do think they lend themselves to more integrated market solutions where that geographic and resource diversity of the region can be leveraged in the service of reliable, effective decarbonization."

While many still see it as unlikely, advocates of a full RTO formation in the West see this summer's extreme weather and widespread outages as a potential opportunity to reinvigorate the effort.

"It was a reminder of everything that needs to be done so we are not constantly living with the threat of rolling blackouts," Ralph Cavanagh, energy co-director of the climate and clean energy program at the Natural Resources Defense Council, said in an interview. The western grid is "badly fragmented," with power deliveries scheduled through 38 balancing authorities, Cavanagh said. "We don't coordinate reserves as well as we could."

Florio also acknowledged that an RTO would help western electricity interests withstand the impacts of extreme wildfire and weather events that occur with increasing severity and frequency due to climate change. But "giving up control to an unknown future entity is a tough sell everywhere in the West," he cautioned.

Reliability reboot

The CPUC's resource adequacy program, which includes obligations for regulated utilities, local government-run community choice aggregators and other load-serving entities, is in desperate need of an overhaul, Berberich said.

"The resource adequacy program in California is now not matched up with the realities of working through a renewable-based system, and in a nutshell ... needs to be redesigned," the outgoing CEO said. "And I don't mean a one- to two-year regulatory litigated process. It better happen pretty damn fast or we're going to have these same issues next summer, and I don't want Elliot to have to deal with the same crap I've had to deal with over the last 30 days."

Although the CPUC ordered the procurement of 3,300 MW of new capacity resources by 2023, spurring a wave of new energy storage projects, regulators failed to heed the independent system operator's warning of a 4,700-MW capacity shortage, partially starting in 2020. Moreover, as battery storage emerges as a potential major peak power asset, California must make sure to properly align charging and discharging to manage the so-called net peak period of the early evening, according to Berberich.

This is when the state's more than 20,000 MW of solar resources drop offline, leaving a gap now plugged largely with natural gas generation. The August blackouts occurred during that net peak, an already challenging period exacerbated by surging air conditioning use, record temperatures, the failure of two natural gas-fired power plants and a sudden drop-off in wind generation. But those events alone should not have led to blackouts, according to Berberich.

"We can't be operating so close to the edge," he said.

"We just absolutely need to know that our markets are built on solid [resource adequacy] foundations and that reliable decarbonization remains goal No. 1," added Mainzer.

Homecoming amid crisis

Leading a suddenly precarious power system amid a pandemic and intensifying climate change may prove a challenging homecoming for Mainzer, who grew up in San Francisco and attended the University of California-Berkeley. But the incoming CEO is well aware of what he is getting into.

Mainzer started his energy career at Enron Corp. during California's energy crisis two decades ago, where he established the ill-fated company's renewable power desk in Portland, Ore. When Enron collapsed, he moved to the Bonneville Power Administration, ultimately ascending to chief administrator of the federal agency in charge of operating a multi-state transmission system in the Northwest and marketing power from 31 federal hydroelectric projects. Under Mainzer, the Bonneville Power Administration also agreed to join the EIM in 2022, building on the agency's longtime export of hydropower to California.

Despite the complexities of his new job, Mainzer's philosophy for success is simple: "harnessing the incredible intellectual capital of folks in our industry and just get solutions identified and brought right into the heart of operations," he said.