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Calif. ISO warns capacity shortfall could hit 4,700 MW in 2022

The California ISO is warning that the state could be facing a capacity shortfall of 4,700 MW in 2022, a deficiency nearly twice as large as the grid operator previously thought.

The new estimate considers historic, rather than projected, generation profiles for renewables and hydro, a change that highlights the reliability impact of California's growing variable energy fleet as well as the potential need to keep key gas-fired plants running in the near term.

The grid operator's comments respond to an assessment by California Public Utilities Commission staff that the state will face significant system reliability concerns by 2021.

The ISO agreed with the PUC's concerns, and in July filed an analysis that found there could be a 2,000-MW capacity shortfall in 2021 and a 2,500-MW capacity deficiency by 2022. The analysis focused on the evening hours, when loads remain high but solar production rapidly decreases.

Southern California Edison Co. did its own system resource adequacy analysis, focusing on the single peak hour. SCE, an Edison International subsidiary, estimated a system resource adequacy shortfall of 1,443 MW in 2020, 5,517 MW in 2021 and 4,458 MW in 2022.

New analyses

In response, the ISO on Aug. 12 submitted to the PUC two new analyses: one to test SCE's findings, and one to take a deeper dive into how renewables might actually perform in the evening.

When it tested SCE's analysis, the ISO came up with a 500-MW system resource adequacy deficiency in 2020, which increases to 2,300 MW in 2021 and 2,200 MW in 2022. The differences between the SCE and ISO analyses are because of different assumptions for hydro, gas-fired resources and batteries, the ISO said.

But while the ISO's resource adequacy analysis was less dire than the estimates SCE submitted, the grid operator's operational analysis painted a gloomier picture. The operational analysis aims to more accurately reflect the available generation from solar, wind and hydro during post-system peak hours, the ISO said.

Updated profiles

In July, the ISO did its operational analysis using a projected 2030 generic resource profile. In the study submitted Aug. 12, the ISO used historic data from September 2015 through 2018 to calculate median generation per hour for solar, wind and hydro.

The change to using historic data was needed because the generic 2030 solar generation profile assumed a larger penetration of solar resources with tracking capability than currently exists, the ISO said. For consistency, the grid operator also updated the wind and hydro profiles to reflect historic data.

The ISO's updated operational analysis projected a deficiency of up to 2,300 MW in 2020, 4,400 MW in 2021 and 4,700 MW in 2022.

"These results almost double the reliability gap described in [the ISO]'s opening comments yet may still be considered conservative," the ISO said, noting that the updated analysis still does not account for the significant range of wind generation actually observed during the evening hours.

The PUC should develop a procurement plan for 2020-2022 to meet reliability needs, the ISO said. The grid operator urged the commission to help extend the deadline to comply with state once-through cooling rules for gas-fired resources that are needed to maintain near-term reliability.

At a minimum, the PUC should work toward extending the once-through cooling compliance date for three units at AES Corp.'s gas-fired Alamitos power plant in Los Angeles County, Calif., which provide both local and system reliability benefits, the grid operator said. Three of the plant's six units, units 1, 2 and 6, are scheduled to be retired by the end of this year to accommodate new capacity due online next spring, and the other three are set to be retired by the end of 2020.

Kate Winston is a reporter for S&P Global Platts. S&P Global Platts and S&P Global Market Intelligence are owned by S&P Global Inc.