As a leader in the global energy transition, California is putting some of the highest levels of solar and wind on its grid in the world to date. And while the state’s grid operator has made some progress, the integration of these resources is currently limited not by physics, but by market rules and operational practices.
May 26 was a big day for renewable energy in California. Utility-scale solar output on the California Independent System Operator (CAISO) grid peaked at just under 10 GW, and this was buoyed by nearly 4 GW of wind. This led to large-scale wind and solar peaking at 64.6% of demand shortly after 2 PM, a new record.
During the middle of the day, the state’s gas plants ramped down significantly, falling to around 1 GW of total output. Even with this, as much as 1 GW of solar and wind was curtailed, for a total of 7 gigawatt-hours (GWh) of wind and solar power wasted over the course of the day. It is likely that prices also dipped into the negative, as during the month of May negative prices were experienced during 9.5% of 5-minute intervals, the highest portion in 2018 so far.
As all this was happening, the CAISO grid was still showing a net import of electricity, even during the hours of maximum solar and wind output.
A similar dynamic was seen a month earlier, when large-scale wind and solar set its previous record of 63.8% of all power. These were exceptional days, as weekend days in the Spring bring a combination of low overall power demand and high solar generation. But they were not the days of highest solar output, as large-scale solar now peaks at over 10 GW regularly. And this does not count the multiple GW of rooftop and other “behind-the-meter” solar, into which CAISO has no visibility.
Recurring negative power prices and curtailment of wind and solar are both realities on the California grid. And while negative power prices can be a healthy market signal, curtailment is wasted power, and increasing rates of both show the difficulty that California is having integrating large penetrations of renewable energy. This challenge will only get more significant as the state moves to meet its 50% by 2030 renewable energy mandate.
It is not enough to simply add wind and solar to a grid with physical and market structures designed for the characteristics of conventional power. In order to integrate wind and solar with minimal curtailment, changes must be made.
Researchers have been working on this issue for decades, and there is a significant body of technical literature describing how this can be done. There are many ways to skin this cat, including deploying energy storage, more rapid trading of electricity, and enhanced forecasting – all of which have been the subject of reports by the U.S. Department of Energy’s National Renewable Energy Laboratories (NREL) that look at California and the Western United States.
And while deploying massive volumes of batteries and building hundreds of miles of transmission is an expensive undertaking, many of the other measures to enable this transition are not.
This point was underlined in a 2017 report by the Climate Policy Initiative: Flexibility, the key to low cost, low carbon grids. This report found that grids with “near-total” renewable energy could operate at a lower overall system cost, as long as activities and resources were optimized towards the goal of maximum flexibility in the rest of the system. This flexibility is needed not only in the region where renewables are added, but also in the import and export of electricity from neighboring grids.
Unfortunately, there can be a lot of distance between these academic discussions of flexibility and the actual practice of how grids are operated, particularly in California.
Local flexibility, or lack thereof
In looking at the situation of curtailment and negative prices, writers including Vox’s David Roberts have concluded that California has “too much solar power”. This is an intellectually lazy take on a complex problem, as it fails to consider the role of other resources on California’s grid.
CAISO has been working to make the operation of in-state resources more flexible, with a mixed degree of success. In some cases, there are limitations with specific resources. The least flexible is California’s last remaining nuclear power plant, Diablo Canyon. Diablo Canyon runs at its full output of around 2.3 GW 24/7 until it shuts down for maintenance, refueling or emergencies, and does not respond to price signals including negative power prices.
Diablo Canyon is hardly unique. pv magazine has written in detail about why nuclear power plants are not flexible in practice, even when they have the technical ability to ramp. Not only does the high capex / low opex nature of nuclear power provide a powerful disincentive to produce at less than 100% output, but more importantly such ramping puts wear on the systems of these plants. At best this leads to increased maintenance costs and downtime. Diablo Canyon is scheduled to shut down in 2025, which will remove this problem.
California’s hydroelectric fleet is also showing limited flexibility in practice. Even on days of the highest solar and wind penetrations, the fleet is ramping only by about 1/3, rising from 2.4 GW during mid-day to 3.9 GW during the evening peak on May 26.
This is counter-intuitive given the experience of other nations and regions such as Scandinavia, Uruguay and Costa Rica, where the flexibility inherent in hydroelectric dams has enabled some of the world’s highest penetrations of wind and of renewable energy overall.
However, the majority of California’s fleet is not comprised of large hydro dams, but of smaller dams and run-of-river hydro plants. CAISO notes that the latter has a “fixed generation profile”, and is not dispatchable.
Given the relative inflexibility of these other two resources, California’s fleet of fossil fuel plants, which is almost exclusively natural gas generation, helps to fill the gaps. These gas plants are particularly critical for the evening ramp when net power demand is at its highest.
Over time California has dramatically increased the flexible operation of its gas fleet. On May 26 fossil fuel output on the CAISO grid fell to only 800 MW from 1 to 3 PM, to rise again to 4.2 GW from 8 to 9 PM.
CAISO has created a system of payments for flexible generation. However policy research firm Energy Innovation argues that the system is not working as designed, noting that many of the units that receive payments don’t end up being committed, as they need too much advance warning to be useful in meeting larger than expected evening ramps. Instead, Energy Innovation’s Eric Gimon alleges that this system has become a form of subsidy for gas generation, including older, inflexible units.
Imports: problems and solutions
According to Gimon, it is not the state’s gas plants which are doing the heaviest lifting in terms of providing flexibility, but instead its imports of power. This was borne out on May 26, when imports went from only around 200 MW during the mid-day solar peak to nearly 10 GW from 9-11 PM.
Imports and exports of power have been an area of significant work by CAISO, which created a new multi-state marketplace – the Energy Imbalance Market (EIM) – to allow for more rapid trading of electricity with other grids. Since its founding in 2014, five other regional utilities have joined EIM, and CAISO estimates that EIM had provided $330 million in economic benefits for customers of participating utilities to date as of Q1 2018, as well as enabling the use of 66 gigawatt-hours of electricity from wind and solar that would otherwise have been curtailed during the first quarter alone.
Along with this, CAISO says that EIM has reduced the need for ramping of in-state resources, lifting some of the burden from California’s gas fleet.
But while EIM continues to expand geographically, there are limitations to the benefits that it can provide. EIM operates in the real-time dispatch and fifteen-minute markets, and is thus limited to addressing the difference between day-ahead forecasts and actual load.
This means that EIM has no bearing on the much larger volume of electricity that is traded via the day-ahead market. And here is where the problems lie. Even with EIM, California still shows a net volume of imported electricity during hours of peak solar generation, while it curtails solar and wind.
Every expert pv magazine spoke to stated that the optimal function of California’s import-export balance is being hindered by a number of inflexible bilateral contracts between the state’s “big three” investor owned utilities – Pacific Gas & Electric Company, Southern California Edison and San Diego Gas & Electric Companies – and out-of-state generators. Even CAISO alluded to this problem, noting that “there are some contractual-based imports that do schedule and do not provide the ability to reduce them.”
Unfortunately, it has been impossible to find out who these contracts are signed by, under what terms, or for what resources, as the contracts are deemed proprietary business information. Advocates further note that California Public Utilities Commission, which approves these contracts, has declined to provide meaningful aggregate data.
The closest that pv magazine was able to get is an estimate in a 2017 report by Energy Innovation which suggests that “roughly half of CAISO’s power imports are on fixed schedules and do not participate in economic dispatch” – which in turn cites a CAISO report from 2010.
The most immediate problems that California is facing in terms of its ability to make its electricity system more flexible to make use of more wind and solar are not due to physics or the characteristics of these resources. There is ample flexible capacity, both inside and outside of California, to accommodate current and near-term future ramping needs. The problem is market rules.
If California’s big three utilities are interfering with the ability to integrate more renewables by signing inflexible contracts, it is because they are allowed to. The same report by Energy Innovation notes that New York’s grid operator requires all units to submit offer curves.
The firm has issued a clear recommendation: “To address the flexibility and grid operation challenges created by self-scheduling, grid managers should require all resources, including variable generators and imports, to participate in economic dispatch unless the resource has a verifiable physical incapability of adjusting output.”
This is far from the only area where current structures are leading to inflexibility. According to Utility Dive author Herman Trabish, current market rules prevent out-of-state hydro resource from providing flexibility, but this could be solved by requiring these resources to bid into the day-ahead market. This would give them time to adjust flows so as to minimize impacts to wildlife.
Another area that has been identified as a problem is transmission access and costs. Carl Zichella, the director of western transmission for Natural Resources Defense Council (NRDC), notes that electricity from renewable energy resources in other Western states may have to cross several grid boundaries to get to CAISO or other markets, resulting in the “pancaking” of transmission charges.
This is to assume that such a resource has access to transmission at all, given that transmission access is often limited by resources with a mandate to run – including the same inflexible contracts that are already a problem.
There is a solution which advocates say will address the limitations of the EIM, transmission access and pancaked transmission charges, as well as bilateral contracts: the creation of a regional grid operator in the Western United States, to balance supply and demand across multiple states through a wholesale market.
NRDC’s Carl Zichella argues that there are “world-class renewable energy resources around the West”, that can’t currently be utilized due to the ‘balkanized system’. He further states that the long-term contracts which are causing problems would likely be phased out under such a system. “Whenever you have an RTO, long-term contracts get phased out as quickly as possible” Zichella told pv magazine.
This concept has been endorsed not only by NRDC and the majority of other clean energy advocates but by also CAISO, even though a regional grid would mean that the organization would be dissolved.
However, not everyone agrees. Clean Coalition and Sierra Club both oppose the creation of a regional grid, with Clean Coalition arguing that California’s flexibility needs can be better served with better utilization of local resources.
Energy storage and EVs
Even with the current limitations in California’s market, all of the advocates who pv magazine spoke with have noted that flexibility issues could also be solved with deployment of large volumes of energy storage, a resource that California is already beginning to deploy on a mass scale.
The capacities needed here are not insignificant. California ISO estimates that the state currently has 140 MW of storage, but would need “hundreds to thousands of megawatts” for this to be an effective alternative to other measures. Batteries are also a more expensive option than creating a new grid operator or changing market rules, but Energy Innovation’s Eric Gimon says such deployment would not be prohibitively expensive.
Additionally, there is the potential for mass rollout of electric vehicles to address grid needs. As has been explored in a previous article (pv magazine 03/2018, p76) if the proper market signals were provided to EV charging networks, they could be incentivized to operate during the day, soaking up solar generation and lessening ramping needs. Additionally, fast-charging stations that include stationary energy storage could provide both EV charging, ramping and ancillary services.
A solvable problem
There are plenty of actions that could be taken to allow California to integrate more solar and wind. This will not necessarily involve any great cost, as the most direct, actionable and inexpensive way to integrate higher levels of renewables will be to reform the market to allow for the more optimal participation of resources, both inside and outside the state.
And while there appears to be strong potential for CAISO to make better use of in-state resources, this does not address issues with inflexible imports.
CAISO is currently taking steps towards addressing issues with imports and exports through an expanded EIM, and perhaps more centrally by moving the day-ahead market to 15-minute intervals and introducing a new flexibility product for this market.
But these are incremental and piecemeal measures, and may not be enough as penetrations of solar and wind increase. As this article was being written, a bill was making its way through the California Assembly to clear the way for the state to participate in a regional wholesale market.
This has the potential to not only aid in making better use of solar and wind on the CAISO grid, but better use of renewable energy including hydro throughout the West. Furthermore, proponents note that this would bring a level of transparency to grid operations that is currently missing, particularly as regards bilateral contracts.
As demonstrated by multiple studies, there are solutions to California’s integration challenges, and much higher levels of solar and wind can be deployed and utilized effectively. But whether it is through the creation of a regional grid in the West or other measures, California and the West will need strong, decisive actions to reform their electricity markets if they are to make this a reality.
Source PV Magazine