California is more tense than ever with lingering fears of the threat of rolling blackouts for years to come.
Despite adding new power plants, building huge battery systems, and restarting shuttered fossil fuel generators over the past few years, California remains heavily dependent on energy from other states. increase.
Support may not appear as expected or may not appear at all. That was also the case this month when millions of residents received cell phone alerts urging them to reduce their energy use as the state neared power outages due to extreme heat.
The danger will only increase as climate change makes extreme weather events more frequent.
“Weather volatility wreaks havoc on the energy system,” says Evan Caron, a 20-year veteran in the energy industry as a trader and investor handling venture investments at Riverstone Holdings, a private equity firm in New York. said. “They have created a complex system that helps them try to find a way to balance demand, and that system is an imperfect system.”
Where once local power companies produced, transmitted and delivered electricity to customers, various players now coordinate their services across much of the country. There are power plant owners, energy merchants who buy and sell surplus power not included in contracts, utility companies who deliver electricity to customers, and grid managers who coordinate everything.
California’s power grid is connected by power lines to other western states and Canadian provinces, allowing imports and exports of electricity. Like any large market, this system has an advantage of scale and can redirect resources where they are needed. However, California’s experience has revealed many vulnerabilities in the design of the system and the region’s ability to generate electricity that create the potential for failure.
The transition away from fossil fuels is complicating energy operations. A growing share of electricity comes from solar and wind farms, which only produce electricity when the sun is shining or the wind is blowing, making available supply more volatile over a 24-hour period. It is
Part of President Biden’s strategy to reduce emissions and combat the effects of climate change is to increase the supply of clean energy from one region, state or region to another. This year’s Inflation Reduction Act and other measures require efforts backed by hundreds of billions of dollars.
But until these plans significantly increase energy generation and transmission, grid managers like the California Independent Grid Operator (CAISO), which operates 80% of You have to rely on and compete with your neighbors for what is sold in the market. That means California is at risk of shortages during peak demand periods like the one it experienced on September 6th.
With temperatures soaring across the West, CAISO faced higher prices in the regional markets where it buys and sells energy. As the demand for electricity continues to grow, so does the price, some nearly $2,000 per megawatt hour, compared to the usual price of under $100.
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Carrie Bentley, co-founder and CEO of Gridwell Consulting, which focuses on the energy markets, said, “The risk is that prices are well below the rest of the West. If you can’t raise it,” he said. West. “Prices in the southwest of the desert were a little higher, so we were competing with them. We were in short supply.”
Coping with crisis
As September 6 rolled around, CAISO Chief Executive Officer Elliot Mainzer found himself facing one of the toughest times in his organization.
The meteorologist, along with people from the National Weather Service, were predicting record heat. Overnight lows hit the 80s for much of the state, so it didn’t take long for temperatures to return to the 100s.
Just before Meinser and 100 people from utilities, small grid operators and emergency services called the office of Governor Gavin Newsom at 9 a.m., a CAISO forecaster said the system had seen so far. It forecast 51,276 megawatts, the largest demand among all. The peak set 16 years ago was 50,270.
“We expect a significant shortage,” Meinzer said. “Not just demand and heat, but wildfires, smoke and cloud cover were impacting the system.”
About 2,000 megawatts of natural gas units—enough to power about 1.5 million homes—were offline or operating at less than full capacity.
One problem was that the natural gas plant was overstrained in extreme heat. The Ormond Beach Power Station, an hour’s drive up the coast from Los Angeles, is a 51-year-old gas plant that was forced to shut down repeatedly early in a heatwave. Currently, the factory is not at 100% capacity, but it is almost at capacity.
The utility has started to start the backup generator.
None were good enough. At 4:57 pm, the power demand of CAISO’s system he reached 52,061 megawatts. This beats the record he beat by nearly 4%.
“The very high temperatures that were happening outside kept pushing the load up,” Meinzer said. “It was just going up and up. We are also facing the sunset.”
This meant that the supply of solar power was rapidly declining and grid operators were running out of backup tools.
At around 5:17 pm, the highest of the three emergency alert levels was declared, and CAISO instructed utilities to prepare to cut power to hundreds of thousands of customers.
At 5:40 p.m., Meinser said, CAISO notified Newsom that it was “in an emergency situation.” “That’s where we were, one step away from the rolling stop.”
Newsom took drastic steps and ordered emergency alerts to be sent to 27 million cell phones in high-demand areas like Los Angeles. The message urged people to avoid non-essential electricity use, keep thermostats above 78 degrees, he said, and charge electric vehicles only at night after demand has receded.
In a matter of minutes, we reduced our power usage by more than 2,000 megawatts, or the capacity of two large power plants.
Even when California was facing record demand, its transmission lines were sending power to other parts of the region, sometimes to fulfill contracts between producers and utilities. rice field. In a single moment of the day, more than 5,000 megawatts of electricity were exported through his CAISO system for hours at a time, said Tyson Siegele, an analyst with the Protect Our Communities Foundation, an energy advocacy group.
Even with exports, the state imported more electricity than it shared on that day, according to Gridwell Consulting’s Bentley, who never dropped below 4,000 megawatts.
Still, Meinzer recognizes that exports are taking place during these critical times.
“I think we are afraid that we will be criticized for exporting,” Meinzer said.
Search for solutions
In the summer of 2000, two years after California opened its wholesale energy market, the state’s retail electricity prices hit record highs and power shortages caused rolling blackouts. The problem was caused by manipulation of the system by market participants.
State and federal legislators and regulators have acted to prevent future manipulations, price volatility, and planned shutdowns, but these actions expose the uncertainties and risks inherent in financial markets, including wholesale energy markets. did not exclude.
What Meinzer describes as a system of neighbors who help each other in times of crisis is actually also a competition.
In a review of this month’s emergency by Gridwell Consulting, Bentley determined that California gets all the electricity it can buy from the Pacific Northwest and hydropower from British Columbia. Additional power had to be sourced from the Southwest, but California’s wholesale price restrictions made it difficult to compete with Arizona and New Mexico, where wholesalers could get more money for power. was.
“No other state had anything to offer us,” Bentley said.
John Wellinghoff, former chairman of the Federal Energy Regulatory Commission, believes CAISO and California regulators need to spend more time getting their forecasts right. Markets are the most efficient way to manage energy supplies statewide, but electricity bills can become too high without proper planning, he said.
“Yes, there were no rolling blackouts in California, but how much did it cost?” he said of the recent emergency. “What was the total cost for California consumers?” Still no reliable answer.
Even without an emergency, Californians have been severely impacted by rising electricity prices. This reflects regulatory requirements for utilities to do more to prevent equipment from causing wildfires and the need for more power plants and energy storage to meet growing demand. It reflects.A typical customer in California is about $290/month Electricity costs $154, compared to $154 for the average U.S. resident, according to the Energy Information Administration.
Wellinhoff believes some of California’s problems can be solved by changing the way electricity is managed in the West. CAISO operates energy trading markets in several western states, but only controls the California grid.
In addition to regional trading markets, Wellinghoff wants regional grid operators, rather than individual operators in separate states – CAISO’s board of directors is appointed by the governor of California, and is open to other states. This idea has been met with fierce opposition in the past, as the company does not want such a business.Outsize Neighbor Dicting Policy. Some California officials were unwilling to hand over control of grid operators to smaller states.
But Wellinhoff said regional grid managers could allocate resources better rather than relying solely on energy markets to distribute electricity from region to region.
“Broader powers will soon pay off,” Wellinghoff said. “We need to make the system more efficient. Yes, we could have been in a better position.”
Meinser said his staff would need to review data from the September 6 emergency for details on power plant performance and imports and exports, but California is working with other states. Similarly, it helped neighboring states affected by extreme heat, especially Nevada. Provided assistance to the State of California. A bigger concern, he said, is the need to adapt to the evolving demands that climate change is placing on power grids, including improving planning.
“We need to update stock forecasts,” says Mainzer. “The past is no longer a predictor of the future.”