The California ISO could see a net of 1,012 MW added to its grid this year, according to an analysis by S&P Global Market Intelligence, as a loss to retirement of 844 MW of gas-fired capacity and 19 MW of wind capacity is completely offset by solar additions and buoyed further by gas, renewables and other nonrenewable additions.
All of the retiring gas-fired capacity comes from NRG Energy Inc.'s Encina plant in San Diego County, Calif. Three of the five units at the plant are from the 1950s and the other two are from the 1970s. Unit one was retired in 2017 and the remaining four units at the plant are scheduled to be offline by the end of the year.
Solar leads planned additions at 957 MW, accounting for 51% of the 1,875 MW slated to come online in CAISO. Even with CAISO's 2016-2017 transmission plan identifying early retirement risks tied to economic factors of gas-fired plants in the region, gas powers 28% of the scheduled 2018 additions.
Of the scheduled additions for 2018, 80%, or 1,504 MW, are in the advanced stages of development, under construction or have already become operational.
With 70% of the year's scheduled additions coming from renewable resources, power producers in CAISO continue to move toward becoming less dependent on fossil fuels, and are reducing the amount of carbon dioxide emissions from power generation.
The largest planned renewable energy addition is the 252-MW Mount Signal Solar Farm III (Imperial Valley Solar 3), located in Imperial County, Calif., acquired last year by Capital Dynamics Holding AG. The plant is currently under construction and scheduled to be online by October, and its electrical output will be sold to a California utility.

Supply/demand analysis
Between 2012 and the end of 2017, CAISO saw a net increase in available operating capacity of 12,825 MW. During that time, the average peak load was 46,565 MW, with the highest peak, of 49,909 MW coming in 2017 and the lowest, 44,671 MW, in 2014. With capacity additions steadily outpacing retirements and peak load hovering between 44,000 MW and 50,000 MW, CAISO's supply-to-demand ratio increased from 38.65% in 2012, to 55.30% in 2017. The ratios were determined by calculating the difference in unadjusted total operating capacity per year and peak load reported by the ISO, and dividing that difference by the same peak load. The calculation is not meant to reflect discounted reserve margins.
If this trend continues and demand growth remains low, gas-fired generation throughout the region will continue to feel the pressure of increasing renewables penetration.

Commodities outlook
Around-the-clock monthly power forwards as of Jan. 29 at CAISO's NP15 and SP15 locations followed very similar trajectories for the upcoming year. The average price at NP15 for February through December was $32.99/MWh, while the SP15 average is just over a dollar below that, at $31.84/MWh. July and August represented the highest two monthly prices in the year ahead for both locations, with NP15 seeing prices of $35.83/MWh and $38.26/MWh and SP15 seeing prices of $35.99/MWh and $38.19/MWh, respectively.
Gas forwards at SoCal Citygate as of Jan. 29 for the year ahead show February and December having the highest prices, at $3.33/MMBtu and $3.34/MMBtu. Prices throughout the rest of the year fluctuate between $2.52/MMBtu in May and $2.95/MMBtu in August.
With gas and power prices maintaining the status quo as more capacity is built out, the pressure on gas-fired capacity in the region could continue.

About the data
S&P Global Market Intelligence guarantees comprehensiveness and accuracy on power projects on units over 1 MW and supplying more than 50% of power generated to the grid. Projects included in this article are those that will be dispatching power to the ISO once online.
Did you enjoy this analysis? Click here to set alerts for future power Data Dispatches. Check out spot power prices and load figures for ISO's in our Historical ISO Prices and Loads template. Follow unit level retirements by region in the Unit Retirement Summary template. |

