CAISO Symposium: California Moving to a Future Focused on Renewables and Electrification, Experts Say
By Matt Williams and Barry Moline
At the CAISO Stakeholder Symposium on Wednesday in Sacramento, energy experts, industry executives and state officials said they are optimistic about California’s ability to adapt to — and take advantage of — marketplace transformations accelerated by the West’s big move into renewables, clean energy, the electrification economy and the prospects of creating a low-carbon grid of the future.
Optimistic talk was a recurring theme — and counterpoints were in short supply — during day one of the California Independent System Operator’s ninth-annual meeting , which brings together energy industry professionals for two days of discussions, panel sessions and networking.
“There’s no doubt our industry is going through significant, unprecedented transformation,” said Steve Berberich, CEO of the California ISO. “The changes are happening around the world, but they are no more pronounced than here in California, with the advent of new policies, growth in renewables and distributed generation, the rise of storage and other emerging technologies. But at the same time consumers are making more choices about how they procure and use electricity. The pressure is immense to all of us in this room, and it’s a call to action.”
Nearly all speakers marveled at California’s increasingly rapid adoption of solar, wind and other renewables. There have been a few hours in 2017, in fact, when renewables provided for two-thirds of California’s grid demand. Berberich said the significant growth of renewables continues: There are 10,000 MW of solar, 5,500 MW of wind, and thousands of megawatts of geothermal, biomass and small hydro in the CAISO system now.
Michael Liebreich, founder and chairman of the advisory board for Bloomberg New Energy Finance, said the energy market trends California is experiencing are being seen globally. Liebreich said the world-record prices for offshore and onshore wind, along with solar, have been cut in half in just the past two years — in the range of 2–3 cents per kWh — suggesting just how cost competitive renewables are becoming. There’s such momentum toward renewables now that the “Age of Gas,” as once projected, likely won’t happen, he said.
Another speaker, California Air Resources Board Chair Mary Nichols, also gave a positive outlook about the future, noting that utility-scale solar wasn’t even a word being talked about a decade ago, and electric cars and renewables were thought then to be cost prohibitive. Those aren’t big barriers in California anymore.
The cost of utility scale solar has dropped by 80 percent since 2010 and costs are comparable to conventional power sources, Nichols said. Renewable power generation is outpacing California’s RPS goals and sales of electric- and hydrogen-powered cars are above what the state required under its rules for zero emission vehicles.
All these data points reinforce the energy market is transforming rapidly, but is California ready to adequately support and advance this low-carbon grid? A panel of experts almost unanimously said yes, and they described ways California should support it and tackled several issues that stand in the way. But a straw poll of the audience was more tepid, “voting” in the range of 5–7 (on a scale of 1–10) whether California would be well on its way toward a low-carbon transformation within a decade.
Berberich urged continued collaboration, saying that CAISO is committed to building out and adding more functionality to the regional Western Energy Imbalance Market (EIM), and he said even more participants are interested in joining. That type of regional collaboration will help California reach its Renewable Portfolio Standard (RPS) targets in the decades ahead, he said.
Several speakers also touted the possible benefits of a proposal that would regionalize the California ISO to the entire West to “smooth out inefficiencies” across the grid. It’s a plan CAISO itself supports. During a panel discussion, technology and energy executives said the regionalization would be a complex project with political ramifications. Alternative viewpoints about regionalization weren’t discussed. For example, CMUA is advocating for a transparent process considering the potential impacts to consumers.
“I think it’s going to happen,” said Paul Thomsen, executive director of government and regulatory affairs for Ormat Technologies, said about regionalization. “The question is, do you want to kind of have it in an organized fashion under a rulemaking rubric, or do you want to get kind of cobbled and piecemeal together moving forward?” Thomsen said he thinks there are some conversations that should be had at the governor’s level about how to fix issues with the proposal, because an effective proposal could be profitable while reducing rates for customers.
The industry executives also agreed they aren’t terribly concerned about the so-called Duck Curve as a long-term barrier to integrating renewables. The problem is now better understood, they said. The well-known curve refers to the deep drop in conventional energy production in California during the midday, due to abundant generation of renewables, and the steep ramp-up of energy needs starting in the late afternoon as solar energy declines.
“There’s a lot of really smart people with creativity and intellectual horsepower focused on this [problem], and I’m optimistic and confident we will find a solution for it, and it won’t look anywhere near like it does today,” Mark Widmar, CEO of First Solar, Inc..
A panel of thought leaders, including Steve Chadima, senior vice president of external affairs for Advanced Energy Economy; Carl Zichella, director of Western transmission for Natural Resources Defense Council; and Mark Rothleder, vice president of market quality and renewable integration at California ISO; agreed they are confident about the prospect of California reaping a “dividend” from its investments in renewables.
The impact on consumers should be considered as changes to the grid evolve, Chadima said.
“How do regulators deal as [being] essentially the interface between the consumer and the grid operator, and the consumers’ interest in just living their lives normally with the with the grid operators and utilities’ desire to become much more efficient,” Chadima said.
If there was a group that shared their concerns most readily, it was the last panel discussion of the day featuring business and trade organizations.
California Farm Bureau members — agricultural producers whose energy use is tied to water pumping — are struggling with changes to the energy production landscape, said Karen Norene Mills, associate counsel for the Farm Bureau. Where time-of-use rates were once beneficial for them, they are now struggling with how incentives can line up with the oversupply and how to structure electricity rates appropriately.
Catherine Reheis-Boyd, president of the Western States Petroleum Association, said her organization will continue to innovate and participate in the conversation around transportation electrification for the foreseeable future, given California is one of the largest consumers of transportation fuels in the world, with 56 percent of California’s energy needs directed toward transportation.
In the big picture, it’s important to remember the move toward renewables and electrification will be disruptive, with very different impacts to each economic sector, said Jürgen Weiss, principal at The Brattle Group, Business is trying to see this shift in a very positive light and there certainly are opportunities, he said.
“But I think it’s nonetheless true that electrification will result in tremendous shifts and displacement, changes to employment and where wealth is deployed,” Weiss said.
Symposium presentations are available here.