On August 30, 2021, the California Energy Commission (CEC) held a workshop on its Midterm Reliability Analysis and Incremental Efficiency Improvements to Natural Gas Power Plants. CEC Commissioners Gunda and Douglas were in attendance, as were California Public Utilities Commission (CPUC) Commissioners Rechtschaffen and Houck. CEC staff covered midterm (2022-2026) capacity needs, and potential thermal capacity needs, as well as permitted and potential thermal capacity additions. The workshop also included a panel discussing the deployment and performance of battery energy storage, including a discussion of the risks that could impact California’s planned reliance on large amounts of battery energy storage (over 14,000 MW by 2032 in the CPUC’s recently-released draft Preferred System Portfolio).
The CEC staff’s Midterm Reliability Analysis consisted of a loss of load expectation (LOLE) analysis of a variety of scenarios built around various assumed procurement portfolios, including the CPUC’s draft PSP and a scenario based upon procurement already ordered by the CPUC (1,505 MW NQC from D.19-11-016, and either 9,500 or 11,500 MW NQC from D.21-06-035). The Analysis focused on the May through October time frame, not the entire year. It also assumed that procured resources would show up. Finally, it did not evaluate the impact of extreme weather events.
The Analysis had two goals: (1) Determine if additional capacity beyond current procurement orders needed to meet the standard LOLE of one day with unserved energy every 10 years, or 0.1 days/year, and (2) determine if new gas capacity improves reliability compared to a portfolio of new preferred resources with equivalent NQC values. The Analysis showed that either the PSP or the procurement already ordered by the CPUC met the LOLE standard from 2023 through 2026. However, both portfolios were insufficient to meet that standard for 2022. Additional capacity procurement would be required for 2022 in order to meet reliability targets. The Analysis also showed that new gas capacity did not improve reliability as compared to new preferred resources.
With regard to permitted and potential thermal capacity additions, for summer 2021 reliability, the CEC Siting, Transmission, and Environmental Protection Division approved various efficiency upgrades and additions at eight project sites that resulted in the addition of 136 MWs. As directed by the Governor’s July 30, 2021 Emergency Proclamation, the CEC issued orders that provide for an expedited process for project change petitions, and for siting temporary gas-fired generation, and will vote on an order expediting new or expanded battery energy storage systems of 20 MWs or more that can discharge for at least two hours. That order is on the agenda for the CEC’s September 8 business meeting. CEC staff estimated that the potential capacity additions resulting from these orders would be between 50 and 200 MWs of capacity from efficiency upgrades in 2022-2023 and 200 to 1,000 MWs of additional capacity from new and expanded battery energy storage. CEC staff also noted that there is an additional 1,200 MWs of capacity from expansions at existing power plants that have not yet been built. However, staff also noted that these phases are unlikely to be built in the absence of an offtake agreement.
The workshop’s panel on battery energy storage consisted of Cody Hill (Rev Renewables), Dan Patry (Fluence Energy), Jin Noh (CESA), Gus Flores (SCE), and Gabe Murtaugh (CAISO). Gabe Murtaugh noted that the CAISO currently has over 1,600 MWs of battery energy storage on the system, and could reach 3,000 MWs by the end of the year. That battery storage is providing energy during net peak, consistent with what the expectation was for battery storage performance. The panelists did note, however, that numerous hurdles, including the time needed for the interconnection process, a fragmented permitting process, and potential supply chain challenges make it difficult for energy storage developers to meet the short procurement timelines coming from the CPUC, and increases developer risk.