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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--California, having turned its back on electricity generated from coal or nuclear plants, recently took a step away from gas-fired generation and toward battery storage, distributed generation and customer load-management programs when it ordered Pacific Gas & Electric Company (PG&E) (San Francisco, California) to not use power from three gas-fired units to meet customer demand and system voltage requirements.
PG&E, a unit of PGE Corporation (NYSE:PGC) (San Francisco, California), is scheduled to return to the California Public Utilities Commission (CPUC) by April to report on the results of its solicitations for these preferred non-emitting energy resources. The three gas-fired units PG&E will not be using are operated by Calpine (NYSE:CPN) (Houston, Texas). They total about 700 megawatts (MW) in capacity.
The state has a surplus of renewable generation, particularly solar power. That surplus has been estimated at about 7,000 MW. For several years, regulators have grappled with that surplus, which is large enough to drive electric prices to zero for significant portions of the day during summer peak hours.
The CPUC on January 11 approved PG&E's plan to close its two-unit Diablo Canyon Nuclear Power Station when the licenses for those units expire in 2024 and 2025. The utility plans to replace that 2,240 MW of lost generation with a variety of non-emitting resources. For more on that agreement, see July 26, 2016, article - Diablo Canyon Proposal: A Turning Point for the U.S. Nuclear Industry?
The Golden State long ago closed its in-state coal-fired generation. Several years back, the state instructed utilities not to renew contracts for coal-generated electricity with out-of-state generators when those contracts expired. California utilities had owned stakes in a slew of out-of-state coal-fired power plants, and that rule forces a series of asset sales of ownership in coal-fired plants in the West and Southwest, including the Navajo, Four Corners and San Juan power stations.
Now, with a higher renewable portfolio standard (RPS) requiring 50% of electricity be generated by renewable plants, and a more recent commitment to cut greenhouse gas emissions from power plants by 50% by 2030 compared to a 2015 baseline, California is starting to turn against gas-fired power in favor of renewables, battery-storage and customer programs.
Industrial Info is tracking about 230 MW of battery-storage projects under development in California, valued at about $680 million. Another 15 projects in the state--totaling 557 MW of storage capacity and valued at about $560 million--have been announced, but not confirmed by Industrial Info.
At its January 11 meeting, the CPUC instructed PG&E not to rely on three gas-fired power plants owned by Calpine and instead procure a variety of "clean energy resources," including battery storage, distributed energy resources and customer energy programs, to meet load and reliability needs in Northern California.
In a blog post, Edward Randolph, the director of the CPUC's Energy Division, said the move was one of several "amazing" things that took place at that meeting. The CPUC's decision was a "continuation of the commission's commitment to reduce greenhouse gases in the state and lower customer costs... What amazes me about this decision is the fact that directing PG&E to look for non-fossil alternatives is even an option... It is amazing that it is even possible to suggest that the utility may be able to find storage and other clean resources that are more cost-effective than fossil. We have come a long way in clean energy options."
Analysts have estimated California has about 7,000 MW more generation capacity than it needs, largely because the state's renewables build-out has roughly doubled the amount of non-emitting generation over the last decade. Roughly 36% of the state's electricity was generated from natural gas in 2016 compared with 42% a decade ago, according to the state. During that time, electricity generated from renewable resources rose to about 25% from 11%.
Bloomberg New Energy Finance data shows the price of lithium-ion battery packs has fallen 79% since 2010. Many firms have forecast broader deployment of electricity-storage projects, which are expected to further lower the per-MW cost of those projects, in the same way that broader deployment of wind and solar generation has pushed down the costs of those generation options. It appears the CPUC is trying to use the next few years to accelerate commercialization of electricity storage.
Michael Ferguson, the director of U.S. energy infrastructure at S&P Global Ratings, a unit of S&P Global Incorporated (NYSE:SPGI) (New York, New York), told Bloomberg: "California is going to create a blueprint for the coming years. Renewables proliferated where there was supportive regulation, and that caused the costs to decline. I would expect to see the same thing to happen with battery storage."
Britt Burt, Industrial Info's vice president of research for the Global Power Industry, made this comment: "The Power industry is closely watching developments in California, as it should. In many ways, it is the proving ground for electricity storage, the same way it was the proving ground for electric vehicles and renewable generation. Stay tuned."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
PG&E, a unit of PGE Corporation (NYSE:PGC) (San Francisco, California), is scheduled to return to the California Public Utilities Commission (CPUC) by April to report on the results of its solicitations for these preferred non-emitting energy resources. The three gas-fired units PG&E will not be using are operated by Calpine (NYSE:CPN) (Houston, Texas). They total about 700 megawatts (MW) in capacity.
The state has a surplus of renewable generation, particularly solar power. That surplus has been estimated at about 7,000 MW. For several years, regulators have grappled with that surplus, which is large enough to drive electric prices to zero for significant portions of the day during summer peak hours.
The CPUC on January 11 approved PG&E's plan to close its two-unit Diablo Canyon Nuclear Power Station when the licenses for those units expire in 2024 and 2025. The utility plans to replace that 2,240 MW of lost generation with a variety of non-emitting resources. For more on that agreement, see July 26, 2016, article - Diablo Canyon Proposal: A Turning Point for the U.S. Nuclear Industry?
The Golden State long ago closed its in-state coal-fired generation. Several years back, the state instructed utilities not to renew contracts for coal-generated electricity with out-of-state generators when those contracts expired. California utilities had owned stakes in a slew of out-of-state coal-fired power plants, and that rule forces a series of asset sales of ownership in coal-fired plants in the West and Southwest, including the Navajo, Four Corners and San Juan power stations.
Now, with a higher renewable portfolio standard (RPS) requiring 50% of electricity be generated by renewable plants, and a more recent commitment to cut greenhouse gas emissions from power plants by 50% by 2030 compared to a 2015 baseline, California is starting to turn against gas-fired power in favor of renewables, battery-storage and customer programs.
Industrial Info is tracking about 230 MW of battery-storage projects under development in California, valued at about $680 million. Another 15 projects in the state--totaling 557 MW of storage capacity and valued at about $560 million--have been announced, but not confirmed by Industrial Info.
At its January 11 meeting, the CPUC instructed PG&E not to rely on three gas-fired power plants owned by Calpine and instead procure a variety of "clean energy resources," including battery storage, distributed energy resources and customer energy programs, to meet load and reliability needs in Northern California.
In a blog post, Edward Randolph, the director of the CPUC's Energy Division, said the move was one of several "amazing" things that took place at that meeting. The CPUC's decision was a "continuation of the commission's commitment to reduce greenhouse gases in the state and lower customer costs... What amazes me about this decision is the fact that directing PG&E to look for non-fossil alternatives is even an option... It is amazing that it is even possible to suggest that the utility may be able to find storage and other clean resources that are more cost-effective than fossil. We have come a long way in clean energy options."
Analysts have estimated California has about 7,000 MW more generation capacity than it needs, largely because the state's renewables build-out has roughly doubled the amount of non-emitting generation over the last decade. Roughly 36% of the state's electricity was generated from natural gas in 2016 compared with 42% a decade ago, according to the state. During that time, electricity generated from renewable resources rose to about 25% from 11%.
Bloomberg New Energy Finance data shows the price of lithium-ion battery packs has fallen 79% since 2010. Many firms have forecast broader deployment of electricity-storage projects, which are expected to further lower the per-MW cost of those projects, in the same way that broader deployment of wind and solar generation has pushed down the costs of those generation options. It appears the CPUC is trying to use the next few years to accelerate commercialization of electricity storage.
Michael Ferguson, the director of U.S. energy infrastructure at S&P Global Ratings, a unit of S&P Global Incorporated (NYSE:SPGI) (New York, New York), told Bloomberg: "California is going to create a blueprint for the coming years. Renewables proliferated where there was supportive regulation, and that caused the costs to decline. I would expect to see the same thing to happen with battery storage."
Britt Burt, Industrial Info's vice president of research for the Global Power Industry, made this comment: "The Power industry is closely watching developments in California, as it should. In many ways, it is the proving ground for electricity storage, the same way it was the proving ground for electric vehicles and renewable generation. Stay tuned."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.
