To stave off a future power shortage, California utility regulators have ordered electricity providers in the state to secure an extra 3.3 gigawatts of low-emission generation resources by 2023.
Half of those resources will need to be in place by 2021, according to the decision adopted Thursday by the California Public Utilities Commission.
CPUC cited tightening electricity supplies and uncertainty created through historically high reliance on imports. The regulatory body also pointed to an increased amount of wind and solar — which aren’t always available during peak times — as well as the retirement of older natural gas plants.
CPUC said the actions are needed to support grid reliability “while keeping the electricity sector on a path to meeting the state’s clean energy goals.”
The agency approved a prohibition on putting new fossil-fueled resources toward the 3.3 GW requirement, a constraint that had been suggested by multiple environmental groups.
“Any new development of fossil-fuel-only resources, at sites without previous electricity generation facilities, will not be considered to count toward any of the procurement obligations outlined in this decision,” the final proposal said.
The forecast generation crunch comes as California regulators continue to investigate potential links between recent wildfires and electricity infrastructure owned by the state’s largest utility, Pacific Gas & Electric Co. PG&E is in bankruptcy reorganization as it faces an estimated $30 billion in liabilities for deadly 2017 and 2018 fires that may have been sparked by its equipment.
PG&E, Southern California Edison Co. (SCE), San Diego Gas & Electricity Co. (SDG&E) and the Clean Power Alliance of Southern California are among the entities responsible for the largest share of new generating capacity called for by CPUC.
The commission ordered PG&E, SCE and SDG&E to conduct “all source solicitations” to meet their obligations, directing them to consider existing as well as new resources. CPUC’s decision left the door open to expanding capacity at older fossil fuel plants in certain conditions, or pairing battery storage with new natural gas facilities to count toward the 2023 requirement. The Sierra Club called those provisions “a major step backward” in a statement.
Robert Laffoon-Villegas, a spokesman for SCE, said the company was supportive of CPUC’s action and of requiring all load-serving entities to be responsible for their share.
“The increase in the procurement requirement from 2,500 [megawatts] is appropriate given the relatively tight supply situation that is occurring in California,” Laffoon-Villegas said in an email, referring to an earlier proposal by CPUC in September.
Anne Gonzales, a spokeswoman for the California Independent System Operator (CAISO), said its analysis projected a larger 4.7 GW capacity shortfall by 2022.
“This would be when solar production is falling off because the sun goes down, but the electricity demand still remains high, especially around hot evenings that we have here in the summer,” Gonzales said, describing that as an average — not worst-case — scenario.
Gonzales said CAISO was “supportive of any procurement” when asked about the 3.3 GW ordered by the commission. CAISO said the industry is in the midst of a transformation owing to four conditions: a shift of the peak load to later in the afternoon, gas power plant retirements, changing import conditions and a rapid shift to solar power.
Because “solar penetration has increased much faster than anticipated, the effective load carrying capacity has been decreasing because each new MW of solar is less effective,” CAISO said in an analysis, adding that the same is happening for wind.
The commission’s decision also recommended that the California State Water Resources Control Board, part of the California EPA, extend the compliance dates of some coastal generators by up to three years.
Many of those natural gas generators, which use seawater for cooling, were expected to retire at the end of 2020 and are considered environmentally damaging by some green groups.
The California Community Choice Association (CalCCA) advocacy group said it supports CPUC’s action to address the identified reliability needs and is ready to pursue new resources in order to maintain stability across the state’s electricity market.
“CalCCA remains deeply concerned, however, with the magnitude of the procurement order — an increase that is not attributed to any specific analysis and is not clearly justified by the record,” CalCCA said in a statement. “Exacerbating this shortcoming is the rapid phase-in of the assigned procurement despite the Commission’s intent to seek the extension of the retirement dates for certain [once-through-cooling] generating plants.”
Commissioner Liane Randolph said the once-through-cooling resources were deemed “essential” and that she is not seeking the extensions lightly.
“The CPUC recognizes that once-through-cooling units are not a resource we can continue to rely on going forward,” Randolph said in a statement. “It is our full expectation that those plants will close after these extension periods.”