California utility regulators want to avoid a repeat of the rolling blackouts that hit during August's record heat wave. The trick is finding meaningful interventions in time for next summer.
That's a tight timeline given the pace of regulatory decision-making, but Thursday's order instituting rulemaking from the California Public Utilities Commission is asking utilities and other stakeholders to weigh in with ideas. Stakeholders will have a chance to propose rule changes and new programs, either to increase electricity supply or lower grid demand during the critical late afternoon and early evening hours by summer next year.
The CPUC isn't looking for a particular megawatt amount; that is up to participants to suggest.
“Californians deserve clean and reliable energy, and it will be our top priority to ensure that we bring to bear all of the supply- and demand-side resources possible before next summer to maintain that reliability,” said CPUC President Marybel Batjer in a statement.
However, the CPUC is already running against the clock. To allow for public comment and analysis, the CPUC expects to reach a proposed decision “no later than April 30” with a final decision “no sooner than 30 days after the Proposed Decision.” That means would-be grid saviors could have to wait until the end of May to have an approval in hand, at which point they will have to sprint to take effective action by August.
The CPUC is considering expedited procurement of resources, such as expanding the capacity at existing gas power plants. But the timeline effectively rules out new large-scale grid infrastructure, developers have noted. A couple of months is not enough time to secure permitting and interconnection, not to mention order, receive and install batteries and other materials.
One option the CPUC asked for input on is whether utilities can expedite projects they already contracted as part of the state's integrated resource plan procurement. That was the process in which the CPUC last year called for an extra 3.3 gigawatts of resource adequacy by 2023 to avoid power shortages.
About 2.4 GW of resources are scheduled to come online by August 2021. But state grid operator CAISO may need more than that to meet its federally mandated contingency reserve requirement during another “extreme heat event,” the CPUC noted. Projects that already have land, interconnection and permits could rush to finish construction early if the CPUC approves short-term contracts to pay them to help in the summer season.
Distributed energy solutions to meet a tight timeline
Otherwise, the rulemaking could create an opening for smaller-scale distributed energy options, which are faster to install, as well as demand-side flexibility.
“Unlike traditional centralized power plants, distributed solar and batteries on schools, businesses and homes can be installed quickly — hopefully before the next fire season — and can be targeted at locations with the highest reliability and resiliency challenges,” Walker Wright, vice president of public policy at leading rooftop solar installer Sunrun, said in an email Friday.
Sunrun has already installed 13,000 home battery systems, many of them in California. It currently dispatches them to optimize customer power bills according to California's time-of-use rates, while also preparing them to keep homes powered during grid outages.
The time-varying rate structure should, in theory, incentivize customers to minimize their pull from the electric grid during peak summer hours. However, an additional revenue stream for delivering emergency summer load reduction — which the CPUC explicitly contemplates — would further sweeten the deal for new customers. Sunrun could similarly adjust dispatch programs for its thousands of existing customers, accessing additional load reduction without the need for new construction.
Some of the demand-reduction proposals in the order are rather banal, like putting paid advertising behind the Flex Alert program, which asks residents to donate demand flexibility in order to avert blackouts. Voluntary reductions did help prevent more rolling blackouts this summer and fall, providing about 4 GW of relief from millions of customers cutting their electricity use.
But the CPUC also wants feedback on beefing up existing programs that compensate customers for reducing consumption. Those include existing large-scale demand response programs that cut power use at homes, farms and commercial and industrial sites. It also includes the state's Demand Response Auction Mechanism (DRAM) pilot, launched in mid-decade to allow aggregated batteries, electric vehicle chargers, smart thermostats and other sources of load flexibility to participate in California's power markets.
The CPUC has not scaled up DRAM's budget to play a larger role in the system, however. Demand-side providers previously argued that they could have done more to help in August, except for regulatory barriers that frustrated their participation.
One company that participated in DRAM, but graduated to qualifying as a non-generating participant in California's resource adequacy market, is OhmConnect. The startup pays people for reducing their household consumption at key times, sharing the revenue made from selling that aggregated capacity. OhmConnect eliminated nearly 1 gigawatt-hour of peak demand during the heat wave from August 13 to 20, paying its customers $1 million in the process, said CEO Cisco DeVries.
The new rulemaking opens the door to more aggressive implementation of demand response tools to fight California's summer peaks, he noted. That could add urgency to broader efforts to reform the state's resource adequacy regime for assuring grid reliability, which has come under scrutiny after this summer's grid emergency.
“Directionally, this is spot-on,” DeVries said. “We are preparing to make a big bet that we can grow right now on the promise that the PUC is going to make some of these changes.”
Now the stakeholder commenting can begin.
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