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California and the Future of Load Management

image credit: Photo 158568749 ©

Californians are at risk of losing power again. Soaring temperatures this week pushed the California Independent System Operator (ISO) to issue a Flex Alert yesterday, encouraging customers to conserve energy from 3-10 p.m. Although I haven’t heard of any blackouts yet, besides the one around Santa Rosa in response to the ongoing glass fire, the fact we’re worrying about this in October is concerning. The weather conditions that lit the state on fire this year seem to becoming the new norm, so how can California’s grid operators and others around the country keep their customers safe without cutting service as the world gets hotter and dryer? 

First off, California’s summer should have taught us to not underestimate the consumption potential of residential customers. To this point, at least as I understand it, market-based demand response programs in North America have overwhelmingly focused on commercial consumers. Residential response programs have generally been left to the utilities, and they’re often half-baked. CAISO learned the hard way this summer that residential and commercial customers both deserve serious consideration from a load management standpoint. The operator was able to avoid cutting power thanks to a slew of underfed residential programs—but there were a lot of close calls. Moving forward, such programs should be beefed up. 

Beyond better demand response programs for residential customers, California and other fire prone states (all of the west) should rip up outdated regulations that bar or complicate the adoption of innovative demand flexibility tech. For example, smart thermostats that make slight adjustments during peak demand times should be rolled out, and fast. People can’t be expected to think too hard about their electricity consumption, which is why flex alerts only have limited success. So why not just take the customer out of the equation? 

While the changes listed above are relatively straight forward and plausible, the biggest takeaway from summer 2020 seems harder to tackle: Renewables are a load management nightmare. California has very ambitious clean energy targets, shooting for 100% carbon-free power by 2045. Over the past decade, the state has loaded up on renewables, which has drawn praise from the usual suspects—well intentioned but ignorant commentators who don’t understand how the grid works. CAISO was left scrambling for extra generation as demand soared this summer, and their renewable sources just didn’t always come through. This, at least when discussed hypothetically, is where renewable zealots tell you not to worry because battery storage has gotten so good. It’s true that batteries have gotten much better and cheaper, but they still aren’t there. Until they are, the reality is that renewables can’t be depended on. The actions I discussed above will help facilitate the adoption of renewables, but they don’t get us to the other side. 

To maintain, or rather recover, reliability while meeting climate change goals, places like California must embrace nuclear. It’s carbon free and can be scaled, period. America’s old, tired fleet isn’t always profitable—but so what? The market is great when it works in our best interests, but when it doesn’t the government should take matters into its own hands. Until renewables can be depended on, nuclear should be subsidized as a stop-gap measure. The cost might hurt now, but it will be well worth it in the long term.


 

Henry Craver's picture

Thank Henry for the Post!

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Bob Meinetz's picture
Bob Meinetz on Oct 4, 2020 2:11 am GMT

Henry, it's interesting to hear you describe America's nuclear plants as an "old, tired fleet."

Thanks to updates and improvements, every nuclear plant in the U.S. is more productive than the day it opened - and there is nothing unprofitable about operating one. Operating expenses are cheaper than any other source of electricity except hydroelectric dams. But when a federal law was repealed in 2005, it twisted the profit incentive for investor-owned utilities (IOUs). Instead of paying for electricity on their electricity bill, customers are now paying for the fuel used to generate it.

It began in the 1990s, when state governments embarked on a program of "decoupling" IOU profits from electricity rates. The argument was that they were encouraging customers to use electricity needlessly, wasting energy and increasing emissions. To be able profit for their shareholders, IOUs were instead permitted to charge customers a markup on the fuel they used to generate electricity.

"But wouldn't that encourage IOUs to burn as much fuel as possible, wasting energy and increasing emissions? And they get to decide what price to charge their captive customers...what's ethical about that?", you might ask. There's nothing ethical about it - in fact, it was illegal for 70 years. Nonetheless, billions of dollars in profit are now available on sales of natural gas, by IOU monopolies, to their electricity customers (it's the reason  why California has a utility named "Pacific Gas & Electric").

Of course, "Pacific Uranium & Electric" could charge customers for the uranium fuel that powers Diablo Canyon. But so little uranium makes so much electricity, and uranium is so cheap, they might as well be selling lemonade.

In a nutshell, that's the reason nuclear are plants are being closed across the country. It's not because they're uneconomical, it's because they're too economical - they don't burn enough fuel. Sure, California could subsidize Diablo Canyon by allowing PG&E to charge overblown rates for uranium, too, but there's a better way playing out right now in Ohio. If it doesn't succeed it won't be because it wasn't sustainable, equitable or fair, but because domination of electricity by natural gas, the #2 product of the most lucrative industry in the world, is being challenged. Stay tuned.

 

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