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California Increasing Gas Capacity on Road to Decarbonization

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As California marches toward its goal of having 100% of its electricity provided by carbon-free resources by 2045, questions about the policy's wisdom and about the evolving role natural gas might play in the effort have been brought to the fore. The answer might be seen in a move that belies efforts to eradicate gas-fired power at every turn: California plans to spend $171.5 million in emergency response funds on 150 megawatts of temporary, quick-ramping, gas-fired generating units to reduce the risk of rolling blackouts and shore up a power grid beset by drought, wild fires and heat waves. “The announcement that was relatively quietly made is significant,” California state assemblyman Jim Patterson, who is vice-chair of the Committee on Energy and Commerce, said while addressing constituents via zoom on Aug. 20. “California has been gambling that we can have a grid that can supply the fifth-largest economy on the planet primarily with wind and solar.” Patterson noted the California ISO, which operates the transmission grid that supplies 80% of the state’s power, has issued six flex alerts, or calls for voluntary electricity conservation, so far this year. If those appeals fail and there isn’t enough power to meet demand, the grid operator directs investor-owned utilities to rotate power outages within their service territories. To bolster reliability, the California Department of Water Resources (DWR) plans to install five 30 MW units at three locations in California by mid-September, with two of the units to be installed in Roseville and two to be installed in Yuba City. The state agency is studying a location for a fifth unit after sites in Fresno County fell through due to the project’s tight timeline, a DWR spokesman said. Once installed, the units will be available through 2023 for dispatch by the California ISO. After 2023, the DWR may decommission the units and move them to another location, if needed. The short-term fix comes after California Gov. Gavin Newsom issued a proclamation at the end of July that streamlined the generation siting process on an emergency basis and in spite of the agency’s own carbon-reduction goals. Through the State Water Project, the DWR operates five hydroelectric dams and four pumped storage power plants, making it both the state’s fourth-largest producer of energy and largest single consumer of electricity in California, with a pump load of between 6 million and 9.5 million megawatt hours. Its current generation portfolio consists of 65% carbon-free resources, and it plans to increase that proportion to 75% by 2030 and 100% by 2045. Path to Decarbonization Former California Gov. Jerry Brown signed Senate Bill 100 into law in 2018, sending California on its current path to clean energy. A joint report published in March by California's Energy Commission, Public Utilities Commission and Air Resources Board found that in order for California to meet its goals, the rate of solar and wind capacity additions to the state’s power grid would have to triple, and battery storage capacity would have to climb eightfold. The study found the state’s 100% clean electricity goal is “technically achievable,” but it will come at a cost. It projects annual electric system costs will increase by 6%, or $4.6 billion by 2045, versus the state’s renewable portfolio standard requiring 60% clean energy by the end of 2030. In the short run, state officials expect California’s renewable capacity growth will fall short of what the state needs to stay on track. California has built 1,000 MW of solar and 300 MW of wind on an annual average basis, and state officials expect California to add roughly 2,666 MW per year of clean energy resources over the next three years. Also, California has yet to study whether its clean energy goals align with state grid planning requirements that ensure reliability for all hours of the year, leaving natural gas with a role to play as planners address these issues. “Natural gas capacity is the most economic option to provide capacity for reliability needs with current resource assumptions and demand scenarios,” the study said. But increased renewable penetration of California’s market clouds the picture. “Cost reductions and innovation in zero-carbon firm resources and storage may reduce the amount of gas generation needed” and stakeholders should study the “costs associated with maintaining an aging gas fleet operating in a high-renewables system,” the study said. What is playing out elsewhere in the Southwest is illustrative of this point. Arizona utility Salt River Project (SRP) intends to incorporate 400 MW of battery storage capacity by 2023, among the most of any utility in the nation, but it is adding 820 MW of gas-fired generation to support that effort (related). The project “will provide a proven, quick-start generation resource while SRP obtains operational experience and evaluates the longer-term performance of battery storage technology,” SRP CEO Mike Hummel said Tuesday. Everett Wheeler, Washington

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