Senior decision-makers come together to connect around strategies and business trends affecting utilities.

Post

California Heat Wave Finds CAISO Unprepared

Fereidoon P. Sioshansi, Ph.D.'s picture
President, Menlo Energy Economics

Dr. Sioshansi is President of Menlo Energy Economics, a consulting firm based in San Francisco, California, advising clients on the rapid transformation of the electricity sector and emerging...

  • Member since 2004
  • 44 items added with 55,467 views
  • Aug 22, 2020
  • 2520 views

The grid operator fails to meet peak demand 
 
On Saturday 16 Aug, Death Valley, California hit an astonishing 129.9 degrees Fahrenheit (54.4°C) at 3:41 p.m., amongst the highest temperatures ever recorded anywhere to date, according to the National Oceanic & Atmospheric Administration (NOAA). The rest of California, while not as hot, was nevertheless hot, breaking many records. 

In the midst of the pandemic, with people encouraged to stay home, the grid operator, the California Independent System Operator (CAISO) announced that it did not have enough juice to keep everyone’s air conditioners humming. On Friday 15 Aug, it did what all grid operators must do to avoid a total catastrophe by instituting rolling blackouts. 
 
A very hot day in the life of CAISO 
Monday 17 August 2020 
Available resources to meet demand 51,046 MW 
Expected peak demand 49,504 MW 
Spare capacity 1,542 MW; 3.1% of peak demand 
All time CAISO peak 50,270 MW on 25 July 2006
Source: CAISO 
 
CAISO was aware of the heat wave and began planning – but for a number of reasons now under investigation – it failed to have sufficient resources to meet the load. Temperatures turned out to be hotter than expected, cloud cover in the desert – where the bulk of the utility-scale solar power plants are – reduced solar generation. Making matters worse, neighboring Western states were also impacted by the same heat wave with little surplus power to sell. On top of it all, it didn’t get much cooler after the sunset, which meant that AC units were running into the night when there is no solar output. It was the perfect storm. 
 
A visibly annoyed Gov. Gavin Newsom acknowledged that the state had failed to predict and plan for the energy shortages. He said, “I am not pleased with what’s happened," adding, "You shouldn’t be pleased with the moment that we’re in in the state of California,” adding that he would ask the California Public Utilities Commission (CPUC) and the CAISO to investigate. 
 
“These blackouts … are unacceptable and unbefitting of the nation’s largest and most innovative state. This cannot stand. California residents and businesses deserve better from their government.” 
 
Steve Berberich, the retiring CEO of CAISO, said he had warned the CPUC about a resource gap. 
 
“We have indicated in filing after filing after filing that the resource adequacy program was broken and needed to be fixed," adding, “The situation we are in could have been avoided.” 
 
Not exactly what the governor wanted to hear. The state’s three biggest utilities --- Pacific Gas & Electric Co (PG&E), Southern California Edison Co (SCE) and San Diego Gas and Electric Co(SDG&E) – turned off power to more than 410,000 homes and businesses for about an hour at a time until the emergency declaration had passed.The ISO instituted a second, but shorter, rolling outage on Saturday evening that cut power to more than 200,000 customers. The utilities, however, want to make sure the customers don’t blame them for the outages (box). 
 

PG&E to confused customers: Don't blame us 
 
California’s 3 large utilities are mostly out of the power generation business, they no longer dispatch plants or manage transmission congestion. When not distracted by wild fires or lawsuits brought on by the victims or fighting with the regulators, they maintain and operate the transmission and distribution lines. 
 
During the recent heat wave, they have had to resort to rotating outages as directed by CAISO, whose job is to make sure the grid does not fail. Customers, however, have no idea who is who and why their AC stops working when it is triple digits and they are stuck at home. It’s been a PR fiasco for everyone, from the Governor down, and everyone is pointing at someone else for the blame. 
 
PG&E, for example, sent an electronic message to all its customers pointing out that
 
“Due to extreme heat across all of California, the California Independent System Operator (CAISO) that runs the state's electric grid, may require PG&E and other electric utilities to turn off power for short periods of time called rotating outages. These outages may last between 1 to 2 hours for most customers. These are not Public Safety Power Shutoffs due to extreme fire danger, and are not related to any issues with PG&E's equipment or its ability to deliver energy locally. Other power utilities in the state may be directed to conduct similar rotating outages. These outages are called by CAISO to keep energy demand from exceeding supply, and prevent larger outages on the grid. 
 
Based on the weather forecast, these potential rotating outages could occur during peak periods of approximately 3 pm to 10 pm each day, starting Monday, August 17th and continuing through the evening of Thursday, August 20th. A decision on whether to do them will be made by CAISO each day.” 
 

 
Ahmad Faruqui, a principal at the Brattle Group and an expert on utility tariffs, blames the rotating outages on the state’s failure to integrate the demand and supply sides of the market. He noted, “When California had its energy crisis in 2001, retail and wholesale markets were disconnected. Wholesale prices shot through the roof while retail prices did not move at all.” A number of economists, Faruqui included, called for dynamic pricing as the default tariff at the time. This year, after years of deliberations, California’s investor-owned utilities will begin rolling out simple, static, time-of-use (TOU) pricing as the default tariff in California. According to Faruqui “It’s a classic case of too little, too late. What California needs now is to make dynamic pricing the default tariff.” 
 
There are no shortages of advice, sought or not. The American Wind Energy Association of California (AWEA-California) issued a statement that pointed out another obvious flaw in the current system. It said (with minor edits), 
 
“Right now, California has a renewable energy system that is heavily reliant on the sun, and solar resources are performing exactly as (they) should: … producing huge amounts of energy (when the sun is shining), but the State needs a better plan for providing clean energy in the evening period when the sun sets.” 
 
Hm. With all the talk about the famous “duck curve” since 2012, why didn’t CAISO prepare for this earlier? Sun always sets at the end of the day, does it not? 
 
With the finger pointing is just starting, the proponents of the California’s green agenda are keeping their fingers crossed that the light will stay on and CAISO will survive a major meltdown. If the lights go out again for any extended period, the naysayers will be able to claim that I warned you this was going to happen sooner or later. That’s what happened in So Australia after its blackout. 
 
It was the first time in 19 years that CAISO had to resort to mandatory rotating outages. The last time there were outages during the 2000-01 California electricity crisis, it did not endear the then-Governor Gray Davis to voters. Davis, a Democrat, lost in a recalled election in October 2003 and was replaced by Arnold Schwarzenegger, a Republican. 
 
Newsom does not want a similar fate. 

Discussions
Richard Brooks's picture
Richard Brooks on Aug 23, 2020

Very informative - thanks for posting. In January 2019 I suggested that the industry consider developing a new risk factor EPRR, which may have helped in this situation: https://energycentral.com/c/em/factoring-behind-meter-generation-demand-forecast-algorithm-iso-new-england-and

Matt Chester's picture
Matt Chester on Aug 24, 2020

Introduce the need for an “Estimated Peak Ramp Rate” (EPRR) as a risk factor representing the rate at which the loss/addition of Solar supply can impact demand and the corresponding requirement on Grid Resources ramping response (both increase and decrease) over a defined period (perhaps 5 minute grain) to maintain balance and system frequency

Really interesting to read this suggestion from back then in light of what's been happening recently. What sort of response did you get to this suggestion?

Richard Brooks's picture
Richard Brooks on Aug 26, 2020

Thanks for asking Matt. IMO, there is a broad understanding of how to solve these problems, TECHNICALLY. The stumbling blocks seem to be largely political in nature with wrangling over market rules to ensure that everyone gets their place at the trough. If the objective was purely focused on a technical, reliability solution this would have been solved long ago.

Matt Chester's picture
Matt Chester on Aug 24, 2020

A number of economists, Faruqui included, called for dynamic pricing as the default tariff at the time. This year, after years of deliberations, California’s investor-owned utilities will begin rolling out simple, static, time-of-use (TOU) pricing as the default tariff in California. According to Faruqui “It’s a classic case of too little, too late. What California needs now is to make dynamic pricing the default tariff.” 

Part of the risk, I suppose, of CA trying to be so far ahead of the curve on these type of issues is that their missteps are magnified and can be devastating. Hopefully the real needs can be seen now in time for them to course correct before it happens again (looking at you, Summer 2021)

Michael Keller's picture
Michael Keller on Aug 25, 2020

Time-of-use, dynamic pricing: just a method to inflict massive economic damage on the poor and middle class as a result of the incompetent regulation of electricity. 

The government attempting to emulate free markets for a commodity that is inherently monopolistic is just plain irrational, although the generators and suppliers can make a hell of a profit.

Odd, the municipal power operations did not have any problems. These organizations are also outside the control of the CAISO and the centralized bureaucrats. The municipals answer to their customers.

John Simonelli's picture
John Simonelli on Aug 31, 2020

I struggle with some of the notions presented in this article. It implies CAISO did not have sufficient resources to meet load. It completely ignores the fact that there were several unplanned unit trips during this event that eroded some of the reserve capability. While temperatures did run higher than the forecast, most system operators plan on that and have their reserves staged accordingly. Those unit trips seriously eroded critical reserves.  The article does correctly point out that this was a region wide heatwave and therefore CAISO was unable to purchase the usual amounts of energy they count on from their neighbors. Maybe counting on your neighbors for 30% of your energy needs is not the best policy especially as the greater west coast continues to grow. AWEA touched on the issue of putting all CA’s eggs in the renewable solar basket and that was a contributor to this event but when it’s 100+ out, there usually is little to no wind.  Using meteorological data, one could reconstruct a likely dispatch scenario which would show what might have occurred had more wind resources been installed but again, I do not think that would have saved the day. It was indeed the perfect storm. There was also an assertion that time of day rates can prevent this type of event. I tend to disagree, when the temperature is 100+ degrees most customers are not likely to turn down/off their AC. Society has proven comfort trumps cost in most instances. So, while it may provide some relief, I do not think it would have provided enough relief. The duck curve in California is going to continue to get steeper as more and more solar comes online, i.e., mandatory solar on all new construction. What the state really needs is an aggressive large-scale storage program that can take inexpensive surplus during the day, store it, and bring it on rapidly during the evening peak ramp. It's going to require a mix of small-scale storage like batteries, large-scale storage like pumped storage, and other storage as newer technologies become available.

Matt Chester's picture
Matt Chester on Aug 31, 2020

What the state really needs is an aggressive large-scale storage program that can take inexpensive surplus during the day, store it, and bring it on rapidly during the evening peak ramp. It's going to require a mix of small-scale storage like batteries, large-scale storage like pumped storage, and other storage as newer technologies become available.

What's the trajectory of this looks like in your opinion, John? If CA had to prioritize its efforts mainly in one direction, would it be in installing and rolling out energy storage projects today or investing in R&D so that those same energy storage projects in a few years would be that much more efficient and cost-effective (rather than locking in the less optimal tech of today)?

Michael Keller's picture
Michael Keller on Sep 1, 2020

What the state really needs is for power production to be outside the clutches of the looney-toon political class. 
The inane reliance on so much green energy leads directly to the recent problems inflicted upon the grid and hapless consumer.

John Simonelli's picture
John Simonelli on Sep 3, 2020

The way I see it there's no time to wait for exotic technologies to mature or for the cost of some of the existing technologies to decrease, the need is now. If I were to just take a high level swag at it, I would think they need 3000 to 4000MW of pump storage with variable speed pumps, at least 2000 MW of utility battery storage, conversion of the natural gas fired turbines to run on hydrogen with the accompanying hydrogen production facilities being built and, in some of the more arid regions of California, I would go with desalination plants. All of these can take advantage of cheap pricing and then contribute to covering the extreme evening ramp.

Michael Keller's picture
Michael Keller on Sep 4, 2020

California politicians could decide not to shut down the Diablo Canyon nuclear plant. California politicians could decide to stop shutting down combined-cycle natural gas plants. The solution is staring the incompetent pinheads in California right in their faces.

Fereidoon P. Sioshansi, Ph.D.'s picture
Thank Fereidoon P. for the Post!
Energy Central contributors share their experience and insights for the benefit of other Members (like you). Please show them your appreciation by leaving a comment, 'liking' this post, or following this Member.
More posts from this member

Get Published - Build a Following

The Energy Central Power Industry Network is based on one core idea - power industry professionals helping each other and advancing the industry by sharing and learning from each other.

If you have an experience or insight to share or have learned something from a conference or seminar, your peers and colleagues on Energy Central want to hear about it. It's also easy to share a link to an article you've liked or an industry resource that you think would be helpful.

                 Learn more about posting on Energy Central »