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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Renewable energy projects and battery energy storage projects being developed in California have benefitted from state laws mandating cuts in greenhouse gas emissions and increased mandates to buy renewable energy. The California Public Utilities Commission (CPUC) (San Francisco, California) has been opposed to adding new gas-fired generation capacity, wary of becoming overly dependent on one type of fuel for electric generation.
Renewable energy and energy storage developers got another boost from the CPUC last year in the form of a November 7 order instructing utilities and other load-serving entities (LSEs), including community choice aggregators, to procure 3,300 megawatts (MW) of new, non-emitting, in-state generation between 2021 and 2023 in order to keep the lights on in the Golden State.
At least 50% of the new generating capacity must be online by August 1, 2021. By August 1, 2022, 75% of the new resources need to be operating. By August 1, 2023, all 3,300 MW of new generating resources must be online.
That extra boost could help developers trying to close deals for renewable generation or battery energy storage systems (BESS), as well as potentially reactivate projects that have been postponed or even cancelled.
Industrial Info is tracking 55 renewable energy projects under development in California that are scheduled to begin construction between January 2020 and May 2021 and that have either a "medium" or "high" probability of beginning construction according to schedule. The value of these projects is about $9.25 billion. In addition, another 16 renewable energy projects that are on hold, valued at about $4 billion, could come back to life with the CPUC order.
Industrial also is tracking 14 BESS projects scheduled to begin construction in California between January 2020 and May 2021. The value of those projects is about $2 billion. Some of those projects already are tied to renewable generation projects. The economics of a BESS project could be enhanced if it was paired with a renewable energy generation project.
In its November 7 news announcement, the CPUC said its decision to secure the new in-state non-emitting resources responds to its "staff and stakeholder analysis of impending potential electricity shortages in California. The analysis shows that current electricity supplies are tight and that reliance on imports will be increased beyond historical levels, creating uncertainty in electricity supply until more in-state generation is built by entities that serve load (utilities, community choice aggregators, and direct access providers)."
According to a report in the San Diego Union Tribune, CPUC Commissioner Clifford Rechtschaffen said, "There's no wiggle room. That's very clear. There's not going to be new fossil fuel plants built" in the state as a result of the panel's November 7 vote.
The regulatory panel said the expected "tight supply" is driven by several market trends, including the retirement of aging gas-fired power plants and a decline in reliable imported electricity to meet peak demand as other states increase their renewable generation. As well, electric demand peaks during the summer when the sun is going down, reducing the ability of solar generation to meet sharp increases in electricity use between 4 p.m. and 9 p.m. on weekdays.
In its decision, the CPUC said the state's electric needs makes "the contribution of solar resources without storage less valuable" while "the need for other renewable integration resources is more acute."
"The procurement ordered in this decision is an opportunity for our 40-plus load-serving entities to demonstrate their commitment to building the zero-carbon, reliable generation resources in California that our state needs now and in the long term," said CPUC Commissioner Liane M. Randolph, who is assigned to the proceeding. "Building such resources can also have the benefit of creating local jobs, spurring further innovation in the electric sector, and providing resiliency benefits, given our very recent experiences with wildfires and Public Safety Power Shut-offs."
The CPUC also asked a sibling regulatory agency, the State Water Resources Control Board, to extend by one to three years the compliance date for four generators in the Los Angeles area that have "once-through" cooling systems. Those generators were expected to be closed by the end of 2020. Those four plants have aggregate generating capacity of almost 4,800 MW.
These once-through cooling resources were identified by stakeholders as essential to reliable electricity for California between 2021 and 2023, Randolph said. "Once-through cooling units are not a resource we can continue to rely on going forward. It is our full expectation that those plants will close after these extension periods."
The California regulators are hoping to avoid what happened in Texas, which has had to sweat through a tight electric market for the last two summers. In the Lone Star State, strong economic growth, particularly among the Oil & Gas sector, coupled with the retirement of aging generators (most of which were coal-fired) and delays in bringing on new electric generation capacity shriveled the state's reserve margins to single digits during the summers of 2018 and 2019. The industry prefers to have reserve margins of 10% to 15%, to cover the unexpected surge in electric demand tied to hot weather and temporary unplanned outages of generators or transmission lines. For more on that, see May 14, 2019, article - Texans May Experience Electric Emergencies This Summer.
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.
Renewable energy and energy storage developers got another boost from the CPUC last year in the form of a November 7 order instructing utilities and other load-serving entities (LSEs), including community choice aggregators, to procure 3,300 megawatts (MW) of new, non-emitting, in-state generation between 2021 and 2023 in order to keep the lights on in the Golden State.
At least 50% of the new generating capacity must be online by August 1, 2021. By August 1, 2022, 75% of the new resources need to be operating. By August 1, 2023, all 3,300 MW of new generating resources must be online.
That extra boost could help developers trying to close deals for renewable generation or battery energy storage systems (BESS), as well as potentially reactivate projects that have been postponed or even cancelled.
Industrial Info is tracking 55 renewable energy projects under development in California that are scheduled to begin construction between January 2020 and May 2021 and that have either a "medium" or "high" probability of beginning construction according to schedule. The value of these projects is about $9.25 billion. In addition, another 16 renewable energy projects that are on hold, valued at about $4 billion, could come back to life with the CPUC order.
Industrial also is tracking 14 BESS projects scheduled to begin construction in California between January 2020 and May 2021. The value of those projects is about $2 billion. Some of those projects already are tied to renewable generation projects. The economics of a BESS project could be enhanced if it was paired with a renewable energy generation project.
In its November 7 news announcement, the CPUC said its decision to secure the new in-state non-emitting resources responds to its "staff and stakeholder analysis of impending potential electricity shortages in California. The analysis shows that current electricity supplies are tight and that reliance on imports will be increased beyond historical levels, creating uncertainty in electricity supply until more in-state generation is built by entities that serve load (utilities, community choice aggregators, and direct access providers)."
According to a report in the San Diego Union Tribune, CPUC Commissioner Clifford Rechtschaffen said, "There's no wiggle room. That's very clear. There's not going to be new fossil fuel plants built" in the state as a result of the panel's November 7 vote.
The regulatory panel said the expected "tight supply" is driven by several market trends, including the retirement of aging gas-fired power plants and a decline in reliable imported electricity to meet peak demand as other states increase their renewable generation. As well, electric demand peaks during the summer when the sun is going down, reducing the ability of solar generation to meet sharp increases in electricity use between 4 p.m. and 9 p.m. on weekdays.
In its decision, the CPUC said the state's electric needs makes "the contribution of solar resources without storage less valuable" while "the need for other renewable integration resources is more acute."
"The procurement ordered in this decision is an opportunity for our 40-plus load-serving entities to demonstrate their commitment to building the zero-carbon, reliable generation resources in California that our state needs now and in the long term," said CPUC Commissioner Liane M. Randolph, who is assigned to the proceeding. "Building such resources can also have the benefit of creating local jobs, spurring further innovation in the electric sector, and providing resiliency benefits, given our very recent experiences with wildfires and Public Safety Power Shut-offs."
The CPUC also asked a sibling regulatory agency, the State Water Resources Control Board, to extend by one to three years the compliance date for four generators in the Los Angeles area that have "once-through" cooling systems. Those generators were expected to be closed by the end of 2020. Those four plants have aggregate generating capacity of almost 4,800 MW.
These once-through cooling resources were identified by stakeholders as essential to reliable electricity for California between 2021 and 2023, Randolph said. "Once-through cooling units are not a resource we can continue to rely on going forward. It is our full expectation that those plants will close after these extension periods."
The California regulators are hoping to avoid what happened in Texas, which has had to sweat through a tight electric market for the last two summers. In the Lone Star State, strong economic growth, particularly among the Oil & Gas sector, coupled with the retirement of aging generators (most of which were coal-fired) and delays in bringing on new electric generation capacity shriveled the state's reserve margins to single digits during the summers of 2018 and 2019. The industry prefers to have reserve margins of 10% to 15%, to cover the unexpected surge in electric demand tied to hot weather and temporary unplanned outages of generators or transmission lines. For more on that, see May 14, 2019, article - Texans May Experience Electric Emergencies This Summer.
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.
