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California ISO sees grid changes, renewables reaching two-thirds of mix: paper

By 2030, renewables will supply about two-thirds of California's electricity, natural gas-fired generation will be in the process of being phased out and the West will have regional grid operators, according to a draft paper released Wednesday by the California Independent System Operator.

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The paper -- Electricity 2030, Trends and Tasks for the Coming Years -- outlines the ISO's expectation for a changing power sector and will be used as part of the grid operator's strategic planning process.

The paper highlights steps that can be taken to foster ongoing trends, which the ISO said are driven by efforts to decarbonize, decentralize and regionalize the power sector.

The ISO said it would work with policymakers, agencies, stakeholders and other states to "further develop a clear and broadly supported view of a clean energy future."




ISO EXPECTS ORDERLY GAS-FIRED PHASEOUT


Among the key trends in California's power sector is a decline in gas-fired generation so that by 2030 renewables and distributed resources will provide the majority of electricity most of the time, according to the paper.

"An exit strategy and phase-out timeline for gas generation retires the least flexible resources first, and minimizes risk of newer, more valuable fossil assets becoming stranded," the paper said.

The phaseout can be partly managed by offering incentives for early retirements, upgrades or replacement with non-fossil fuel-fired resources, according to the paper.

By 2030, the wholesale energy market will ensure the financial viability of needed gas-fired generation. "Appropriate pricing of non-energy essential reliability services and removal of price caps help gas-fired generators that operate only a small number of hours to remain financially viable," the paper said.

At the same time, gas-fired power plants will increasingly be converted so they can burn biofuels, according to the paper.

The ISO expects that regional sharing of flexible resources will reduce the need for gas-fired generation.

The grid operator called for developing a plan for reliably operating the grid with a majority of non-fossil fueled-fired resources. The ISO could "embed this plan in [integrated resource plan]-based procurement, in order to minimize the risk of conventional generating assets becoming stranded," the paper said.


ISO SEES REGIONAL GRID OPERATORS


By 2030, the ISO expects there will be regional system operators in the West that will more efficiently manage the grid, driving down costs and greenhouse gas emissions, according to the paper.

"A significant number of western balancing authorities [will be] consolidated into RSOs, improving operational control of generation and transmission region-wide and eliminating seams between different balancing areas," the draft said.

Regional markets will improve liquidity, drive down costs and make it easier to access a range of resources, according to the paper.

"Competitive market bidding results in the most efficient resources and lowest prices for meeting system needs in every hour, as demonstrated by the Energy Imbalance Market," the draft said.

Resource procurement decisions would be made by individual states, according to the paper, which called for strengthening and expanding the EIM and implementing a regional emissions tracking and accounting system.


RENEWABLES DOMINATE POWER SUPPLY


In another key trend, the ISO expects that wind and solar will dominate California's power supply, with midday oversupply by solar resources being handled by a variety of measures, including exports, market bidding by renewables, storage and increased electric use in the transportation and building sectors.

The ISO called for a speeding up of the implementation of time-of-use rates and demand-response programs to better align electricity use with renewable energy output and reduce system flexibility needs.

New power purchase agreements will require renewables to bid into the market and be paid for providing essential reliability services such as primary frequency response, regulation and voltage support, according to the paper.

The grid operator said the IRP planning process, which is being developed by the California Public Utilities Commission, will focus on "least-cost, least-regrets, cross-sectoral GHG reduction."

In another shift, the ISO expects that by 2030 about a quarter of the state's electricity will be supplied by local resources. At the same time, at least half of California residents will get their power from community choice aggregators, which will get about 70% of their supply from renewable resources, according to the paper.

The draft will be discussed at an October 19 stakeholder meeting and the ISO plans to take comments on it.

--Ethan Howland, newsdesk@spglobal.com

--Edited by Keiron Greenhalgh, keiron.greenhalgh@spglobal.com