Houston — Front of mind to the California Independent System Operator is resource adequacy, as it also works to adapt the market to the energy transition taking place globally, while continuing regional collaboration across the West, outgoing President and CEO Steven Berberich said.
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Berberich ended his 14-year tenure at the ISO with a summer that saw widespread wildfires, record high temperatures across the West, record power prices in California and Arizona and ISO-ordered rotating outages Aug. 14 and Aug. 15.
"We need to make sure we can reliably serve load," Berberich said about needed resource adequacy changes. "I certainly think decarbonizing and reliability are not mutually exclusive objectives. We can do that if we connect the dots better."
"I'm most proud of the last several years where we've had an explosive, reliable growth of renewables on the system," Berberich said. "The growth of renewables and distributed generation has been something to behold here in California and in our market. Being able to integrate that and harness it so we can have a good reliable system has really driven the market changes."
Cal-ISO was the top producer of renewable generation in Q3, averaging 238 GWh/d, which included the largest solar share in the US at 14.5% of its fuel mix, according to ISO data. Cal-ISO has more than 24 GW of renewable capacity.
"We had to begin to pivot, and I don't think the mission is over yet, to compensating and incenting capabilities that help us make a reliable grid, but also help integrate the renewables," Berberich said, adding the injection of renewables and zero-marginal cost energy has put traditional markets that are based on marginal costs on their head.
Role of energy storage
Energy storage will play a critical role in integrating more renewables, Berberich said, adding storage can provide necessary grid services as it is fast and responsive.
"We're banking on technology development, which we're seeing," Berberich said about achieving the goal of 100% clean energy by 2045 set by Senate Bill 100. "The advances you're going to get in storage are going to be critically important to smooth renewables but also to store them for use later."
"I think you have to bank on storage across all timeframes, including seasonal storage, long-duration storage, four-hour and eight-hour. All storage durations are going to be critically important. I think it will take some technology advances and perhaps breakthroughs to have the technology, but also to make it economic so the system doesn't become too expensive."
Storage will be essential to achieving SB100 goals, Berberich added.
"I would submit if we had a few more thousand megawatts of storage on our system, we might not have the issues that we had in August," Berberich said.
Summer outage lessons learned
The ISO ordered rotating outages Aug. 14 and Aug. 15 – the first time since 2001 – after two gas plants and 1,000 MW of wind generation across the state was lost and unable to serve load during a nearly week-long heat wave.
The root of the outages was unprecedented heat waves throughout the West, Berberich said about a preliminary analysis conducted by the ISO, California Public Utilities Commission and the California Energy Commission.
"We've had heat waves in California and sometimes you have them in the West, but infrequently you have them across the entire West," Berberich said, adding that it is critically important that the resource adequacy program in California adapt to the new realities of a renewable-based system.
"It's clear the sun goes down at night and you don't have solar into the evening. You need to make sure that you handle those evening loads," Berberich said.
"During Aug. 14 and 15, we still had very, very heavy evening loads with no solar on the system and we would usually fill that in with imports, but in this case, because it was so hot in the rest of the West, the imports weren't available either. The other adjunct balancing areas were struggling to meet their own loads."
The ISO was in an emergency state six times, while neighboring regions were in an emergency state at least once, if not multiple times, Berberich said.
"I think there's a lesson learned that those imports won't be there and resource adequacy has to be reformed to better handle all hours of the day and through the year," Berberich added. "I'm cautiously optimistic, but if something doesn't get done, we're going to be on the margin again next summer."
Energy Imbalance Market expansion
Under Berberich's tenure, the ISO management team created the Western Energy Imbalance Market, which is the vehicle by which entities outside of Cal-ISO's balancing authority area participate in the ISO's real-time market.
Utilities participating in the real-time bulk power trading market, launched in 2014, share resources more cost effectively across a larger geographic footprint, which significantly lowers the cost of delivering power to customers.
"Never in my wildest dreams did I think it would be as successful as it is," Berberich said, adding more than 80% of load in the West participates or is planning to participate in EIM stretching from New Mexico to the Canadian border.
Five entities are expected to join the EIM in each 2021 and 2022.
"The West is on a transition course toward more renewables and I think it's become abundantly aware that markets and the optimization that we can provide can provide outstanding help in integrating those renewables," Berberich said.
Next, the EIM is deepening into the day-ahead market, with market designs to take place in 2022 and participation starting in 2023, he said.
"We have to make sure we can harmonize resource adequacy across these areas, but also we have to figure out governance," Berberich said about finding a solution between ISO interests and rest of the West, which can benefit renewable integration while lowering costs to customers. "There's a win there and when there's a win surely good minds can come together to resolve the issues."