Reports related to this article:
Project(s): View 6 related projects in PECWeb
Plant(s): View 6 related plants in PECWeb
Released August 26, 2024 | SUGAR LAND
en
Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--California's transmission grid manager has sharply increased its estimate of investment in transmission assets needed in the state over the next 20 years. To comply with state law mandating that 100% of electricity delivered in the state come from renewable and zero-carbon resources by 2045, the California Independent System Operator (CAISO) (Folsom, California), in a July 31 study, projected that $45.8 billion to $63.2 billion of new transmission investments would be needed in the state over the next 20 years.
CAISO's previous 20-year study, released in 2022, estimated that $30.5 billion in new transmission assets would be needed over two decades to meet the state's renewable portfolio standard (RPS). The new estimate is at least 50% higher than the grid manager's prior estimate. For more on CAISO's 2022 study, see February 15, 2022, article - About $30 Billion in Transmission Project Spending Needed to Meet California's Clean Energy Mandate.
What changed? A lot, CAISO said in its 113-page 20-Year Transmission Outlook Update. The state's 100% RPS mandate was signed into law in 2018, so that has not changed since the earlier CAISO transmission assessment. But the grid manager said "the continuing electrification of transportation and other industries" is one of several factors driving the increased need for more transmission investment. Other drivers identified by CAISO include:
Industrial Info is tracking about 80 electric transmission projects being developed in California, with aggregate value of approximately $4.45 billion. Subscribers to IIR's Global Market Intelligence (GMI) Power Project platform can access a list of those project reports by clicking here.
"In summary," the CAISO report said, "the anticipated load growth to 2045 and the expectation of major offshore wind generation are driving the higher estimated cost for future transmission needs from approximately $30.5 billion over a 20-year timeframe identified in the first Outlook (2022) to the estimated $45.8 billion to $63.2 billion over the next two decades, with offshore wind development the primary driver of these higher projected costs."
The grid manager added that "the range for future project cost estimates over this timeframe varies significantly due to detailed design requirements and uncertainty in permitting timelines, routing decisions and equipment and labor costs. Also, the high-level analysis to determine feasible transmission alternatives included a bulk system power flow assessment for a range of load and resource scenarios. These costs do not include transmission that has already been approved by the ISO and is under development, but not yet in service."
CAISO recognized that the additions it called for "are significant investments," particularly because of the long lead times and uncertainties associated with transmission project development. "Further, for a number of these additions, lead times of eight to 10 years are reasonable or even optimistic," it observed.
The size and scope of the transmission buildout challenge, and the related uncertainties, are reasons why transmission developers and regulatory agencies need to begin working together as soon as possible so that long-term decisions can be made expeditiously.
The 20-Year Transmission Outlook Update report not only identified what new resources are needed to meet forecast loads in 2045, it also reflected a projected reduction of 15,000 MW of natural gas-fired generation from in-state generators being retired "while also providing an effective trajectory to achieving 2045 state greenhouse gas reduction objectives. The reduction in natural gas-fired generation enabled analysis of not only system-wide needs, but also the local need of major load centers dependent on natural gas-fired generation for reliable service today, and the retirement assumptions focused on age and proximity to disadvantaged communities."
To meet the state's future electric needs, and comply with state law, CAISO's 2045 resource portfolio includes:
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
CAISO's previous 20-year study, released in 2022, estimated that $30.5 billion in new transmission assets would be needed over two decades to meet the state's renewable portfolio standard (RPS). The new estimate is at least 50% higher than the grid manager's prior estimate. For more on CAISO's 2022 study, see February 15, 2022, article - About $30 Billion in Transmission Project Spending Needed to Meet California's Clean Energy Mandate.
What changed? A lot, CAISO said in its 113-page 20-Year Transmission Outlook Update. The state's 100% RPS mandate was signed into law in 2018, so that has not changed since the earlier CAISO transmission assessment. But the grid manager said "the continuing electrification of transportation and other industries" is one of several factors driving the increased need for more transmission investment. Other drivers identified by CAISO include:
- An updated 2045 load forecast and resource portfolio that grew by 3,521 megawatts (MW) from the previous outlook, to about 77,430 MW in 2045 from 73,909 MW by 2040 in the original outlook.
- A doubling of offshore wind generation, to 20,000 MW by 2045 compared to 10,000 by 2040. CAISO said forecast offshore wind capacity in the North Coast area more than tripled from the prior study, to 14,700 MW from 4,000 MW. This new estimate aligned with last month's updated wind energy strategic plan from the California Energy Commission (CEC) (Sacramento, California), which called for up to 25,000 MW of wind energy from the California coast, onshore and offshore, by 2045. That CEC assessment was mandated by another law, Assembly Bill (AB) 525, enacted in 2021.
Industrial Info is tracking about 80 electric transmission projects being developed in California, with aggregate value of approximately $4.45 billion. Subscribers to IIR's Global Market Intelligence (GMI) Power Project platform can access a list of those project reports by clicking here.
"In summary," the CAISO report said, "the anticipated load growth to 2045 and the expectation of major offshore wind generation are driving the higher estimated cost for future transmission needs from approximately $30.5 billion over a 20-year timeframe identified in the first Outlook (2022) to the estimated $45.8 billion to $63.2 billion over the next two decades, with offshore wind development the primary driver of these higher projected costs."
The grid manager added that "the range for future project cost estimates over this timeframe varies significantly due to detailed design requirements and uncertainty in permitting timelines, routing decisions and equipment and labor costs. Also, the high-level analysis to determine feasible transmission alternatives included a bulk system power flow assessment for a range of load and resource scenarios. These costs do not include transmission that has already been approved by the ISO and is under development, but not yet in service."
CAISO recognized that the additions it called for "are significant investments," particularly because of the long lead times and uncertainties associated with transmission project development. "Further, for a number of these additions, lead times of eight to 10 years are reasonable or even optimistic," it observed.
The size and scope of the transmission buildout challenge, and the related uncertainties, are reasons why transmission developers and regulatory agencies need to begin working together as soon as possible so that long-term decisions can be made expeditiously.
The 20-Year Transmission Outlook Update report not only identified what new resources are needed to meet forecast loads in 2045, it also reflected a projected reduction of 15,000 MW of natural gas-fired generation from in-state generators being retired "while also providing an effective trajectory to achieving 2045 state greenhouse gas reduction objectives. The reduction in natural gas-fired generation enabled analysis of not only system-wide needs, but also the local need of major load centers dependent on natural gas-fired generation for reliable service today, and the retirement assumptions focused on age and proximity to disadvantaged communities."
To meet the state's future electric needs, and comply with state law, CAISO's 2045 resource portfolio includes:
- 48,813 MW of battery energy storage
- 4,000 MW of long-duration storage
- 5,000 MW of generic clean firm or long-duration storage
- 69,640 MW of utility scale solar
- 2,332 MW of geothermal, and
- over 35,000 MW of wind generation, split between out-of-state and in-state onshore, and in-state offshore resources. The bulk of the in-state wind resources consist of offshore wind.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
