Every other Thursday, the California Public Utilities Commission (CPUC) gets together for a voting meeting, where Commissioners make official decisions. There’s usually a lot of routine, administrative stuff that gets approved without anyone batting an eye, but occasionally, something BIG happens. And today was one of those days.
Today, the Commission voted to approve a decision requiring the purchase of a massive amount of new clean energy resources in order to bolster grid reliability. While this procurement, which is part of the Integrated Resource Planning proceeding, will go a long way towards advancing California’s clean energy goals, there are many layers to this decision: mostly good, some bad, and some near misses too!
The good: TONS of clean resource procurement
The reason this decision is such a big deal is because it requires 11,500 megawatts (MW) of new resources to be brought online between 2023 and 2026. How much is 11,500 MW? It’s roughly enough capacity to power 2.5 MILLION California homes. Put another way, 11,500 MW is a whopping 25% of the California grid operator’s peak electricity demand (45,837 MW) forecasted for this summer. In summary, it’s a lot.
If you’re like me, you might be wondering what kinds of resources will ultimately be brought online. Solar, wind, geothermal, energy storage, biomass/biogas – there’s a long list of possibilities. But today’s decision is a requirement for non-fossil-fueled capacity. (Technically, it’s a requirement for “net qualifying capacity” or NQC, the kind of capacity that satisfies resource adequacy requirements.) As a result, energy storage is likely to play a huge role since its capacity value is so high. By themselves, variable renewables like solar and wind just don’t provide very much capacity in California anymore, so we’re likely to see lots of hybrid resources, like solar plus storage, going forward. We’ll also likely see a significant amount of stand-alone energy storage.
The decision also includes specific requirements for certain types of resources. For instance, there are requirements for 1,000 MW of long-duration storage resources (i.e. storage with a duration of eight hours or more) and 1,000 MW of firm zero-emitting resources (i.e. resources with at least an 80% capacity factor). These carveouts could help bring online more diverse resources, such as long-duration energy storage technologies beyond lithium-ion batteries or baseload renewable resources like geothermal.
Before I get to the bad part and the near misses, there’s one more good thing I want to highlight.
For the past few years, the Commission has been sticking with a target to reduce California’s electric sector global warming emissions down to 46 million metric tons (MMT) by 2030. Many groups, including UCS, environmental advocates, utilities, community choice aggregators, and even California’s grid operator, have argued that this emissions reduction target is not ambitious enough. The good news is that, within this decision, the Commission has given a strong signal that they will finally choose a more ambitious emissions reduction target: 38 MMT by 2030. It’s not official yet, so it’d be premature to pop the champagne, but it’s an encouraging sign that the Commission is continuing to move in the right direction.
The bad: a wasted opportunity
One of the main problems with this decision is that it’s actually not at all clear to what extent this procurement will reduce global warming emissions. If this decision brings online mostly hybrid resources that also generate clean energy, this procurement could make a big dent in emissions. But if it’s mostly stand-alone storage that only stores existing energy supplies, the emissions impact could be minimal. Because this decision is so narrowly focused on capacity to meet system resource adequacy requirements, both types of resources count towards the requirements.
At the urging of UCS and other groups, the Commission did acknowledge this issue and made some last-minute revisions to the decision. For example, the decision now requires 2,500 MW of “zero-emissions generation” to come online by 2025 in order to help replace the energy output of Diablo Canyon and prevent an increase in emissions due to its retirement. But aside from that requirement and the 1,000 MW carveout for firm zero-emitting resources, in theory, the remaining 8,000 MW could all be stand-alone energy storage. Another issue is that there are also no requirements to site these new resources in places where they would meet local reliability requirements or help achieve California’s air quality and environmental justice goals. This massive procurement order was a chance for California regulators to feed two birds with one scone, but they’re squandering the opportunity. Without layering on additional requirements to ensure California achieves its other goals, there is no guarantee we will get there.
The near misses: requirements for fossil-fueled resource procurement
This decision very nearly included requirements for utilities to add fossil-fuel capacity in the form of upgrades to existing power plants. However, days before the final vote, the Commission issued an update that removed this requirement entirely. (Phew! That was close.)
Needless to say, this was the right choice. Over the past few years in the Integrated Resource Planning proceeding, the Commission has been conducting extensive analysis to determine the types of resources that California will need to build to maintain grid reliability, reduce global warming emissions, and meet a plethora of additional goals. The results of this analysis: there is no need for further investments in fossil-fueled resources.
The last-minute removal of the fossil-fuel procurement requirement was a big win for the wide array of groups advocating against it, including UCS. But we’re not out of the woods quite yet. The Commission will be conducting additional grid reliability studies in the coming months to reexamine whether or not it would be prudent to invest further in fossil-fueled resources… So stay tuned!
A big step forward, but not without stumbling
Overall, today’s Commission decision authorizing 11,500 MW of procurement is a big step forward. If all goes well, these new resources will go a long way towards reducing global warming emissions and advancing the transition to clean electricity, all while ensuring grid reliability. This is especially true given the 11th hour change that eliminated the fossil-fuel procurement requirement in keeping with state climate goals. However, the Commission could have (and still should!) layer on additional requirements to guarantee that this procurement reduces global warming emissions, minimizes air pollution, and advances California’s environmental justice goals. There’s still more work to do, and UCS will continue to engage to ensure California transitions smoothly to an equitable and decarbonized electric grid.