The state must dramatically expand its energy infrastructure and renewable energy sources to satisfy growing demand for electricity while meeting ambitious climate goals, according to California Independent System Operator’s Draft 2022-2023 Transmission Plan.

By Marc Campopiano, Joshua Bledsoe, Julie Miles, and Shawna Strecker

California has committed to ambitious carbon reduction targets and pledged to become carbon neutral no later than 2045.[1] However, to meet these lofty goals while providing reliable energy for millions, the state must commit to an unprecedented degree of renewable power and transmission line development.

The challenge is highlighted by the Draft 2022-2023 Transmission Plan (Draft Transmission Plan) published on April 3, 2023, by the California Independent System Operator (CAISO), the independent energy grid operator that serves approximately 80% of California and a small part of Nevada. As of 2018, California had about 80 gigawatts (GW) of total electric generating capacity.[2] CAISO predicts that California will need to almost double that total capacity in the next decade with new renewable generation and greatly expand the transmission grid in order to achieve clean power targets and vast electrification programs as California attempts to phase out fossil fuel usage. This scale of infrastructure buildout will require unprecedented investments, vastly expedited environmental permitting and review by regulatory agencies, and sustained political will to substantially incentivize and streamline priority projects.

This blog post examines the ambitious roadmap outlined in the Draft Transmission Plan, and CAISO’s long-term transmission planning more broadly, to advance California’s climate goals by undertaking 46 transmission projects and adding at least 40 GW, mostly from renewable sources, to the CAISO grid over the next 10 years.

By Michael Gergen, David Pettit and Christopher Randall

The CPUC’s market-shaping decision provides guidance regarding the “stacking” of multiple electricity system services.

A new decision from the Public Utilities Commission of the State of California (CPUC) has set the stage for improved economic viability for California’s energy storage industry. The January 17 decision — Decision 18-01-003 in Rulemaking 15-03-011 (the Decision) — establishes a set of rules to guide utilities on how to “promote the ability of storage resources to realize their full economic value when they are capable of providing multiple [or ‘stacked’] benefits and services to the electricity system.”

To advance this objective, the CPUC has adopted 11 stacking rules to govern the evaluation of multiple-use energy storage applications, as well as associated definitions of services and service “domains.” The agency also established a working group to develop certain issues further and directed the CPUC’s Energy Division to prepare a report in 2018 on the state of the energy storage industry.

By Michael Gergen, Tyler Brown, David Pettit and Christopher Randall

At the most recent meeting of the Board of Directors of the California Independent System Operator (CAISO) held on February 16, 2017, the President and Chief Executive Officer of the CAISO reported that because of the “bountiful hydro conditions expected this year and significant additional solar installations both in the form of central station and on rooftops” in California, the CAISO “expects to see significant excess energy production this coming spring.” As a result, the CAISO is forecasting that it may “need to curtail from 6,000 MW to 8,000 MW.”

Based on the CAISO’s Monthly Market Performance Reports, it doesn’t appear that there were any significant curtailments prior to a few isolated days in the Spring of 2015, the Spring and Fall of 2016, and this Winter. This stands in marked contrast to the scale of curtailments that appear to be expected for this Spring. Moreover, in 2014 the CAISO reported that by 2024 it expects maximum hourly curtailments of over 13,000 MW in California under a scenario where the Renewables Portfolio Standard (RPS) targets 40 percent of retail sales by 2024. (This RPS requirement was enacted in October 2015.)

CAISO Graphic depicting renewable curtailment by resource type

By Michael Gergen and David E. Pettit

On January 19, 2017, the Federal Energy Regulatory Commission (FERC or Commission) issued a new policy statement entitled “Utilization of Electric Storage Resources for Multiple Services When Receiving Cost-Based Rate Recovery” (Storage Policy Statement or Policy Statement), which clarifies that electric storage resources may receive cost-based recovery for certain services, such as transmission or grid support services, while also receiving market-based revenues for separate services, such as selling electric energy, capacity and ancillary services in the organized wholesale markets, so long as adequate protections are in place to address potential abuses. The Storage Policy Statement suggests potential new revenue opportunities for electric storage resources that can provide multiple or stacked services, some of which are cost-based and some of which are market-based.

Storage Policy Statement Clarifies Prior Precedent

The Storage Policy Statement specifically aims to clarify questions left open by FERC’s prior decisions in Nevada Hydro[1] and Western Grid.[2]  In Nevada Hydro, the Commission rejected a proposal by The Nevada Hydro Company, Inc. to treat an advanced pumped hydroelectric storage project as a transmission facility and allow its costs to be recovered through the California Independent System Operator’s (CAISO) transmission access charge. The company also proposed to have CAISO assume operational control over the project such that CAISO would have to determine when and how to charge and discharge electric energy from the storage project. 

By Michael J. Gergen and Marc T. Campopiano

On October 16, 2014, the Federal Energy Regulatory Commission (“FERC”) issued an Order on Tariff Revisions, FERC Docket No. ER14-2574, conditionally accepting, with two substantive modifications, tariff changes proposed by the California Independent System Operator (“CAISO”) to establish new flexible resource adequacy capacity (“FRAC”) and must-offer obligation (“MOO”) requirements intended to ensure that adequate flexible capacity is available to address the added variability and net load volatility associated with ongoing and expected future changes on the CAISO-controlled grid.  The FRAC-MOO requirements will be effective, subject to a compliance filing by the CAISO (due within 30 days of the date of the order), effective November 1, 2014, to allow load serving entities (“LSEs”) subject to the requirements time to make their first FRAC showings to the CAISO by November 15, 2014.

By Michael J. Gergen, Marc T. Campopiano, and Andrew H. Meyer

On August 14, 2014, the California Public Utilities Commission (“CPUC”) issued an Order Instituting Rulemaking (“Order”) to establish policies, procedures, and rules to guide California investor-owned electric utilities (“IOUs”) in developing their Distribution Resources Plan Proposals (“DRPs”) in accordance with the requirements of Public Utilities Code Section 769.  In particular, the rulemaking will evaluate the IOUs’ existing and future electric distribution infrastructure and planning procedures with respect to incorporating Distributed Energy Resources (“DERs”) into the planning and operation of their electric distribution systems.  DERs include distributed renewable generation resources, energy efficiency, energy storage, electric vehicles, and demand response technologies. 

By Michael J. Gergen and Andrew H. Meyer

On August 1, 2014, the California Independent System Operator (“CAISO”) filed proposed tariff changes at the Federal Energy Regulatory Commission (“FERC”) in FERC Docket No. ER14-2574 that would establish new flexible resource adequacy capacity (“FRAC”) and must-offer obligation (“MOO”) requirements aimed at ensuring that adequate flexible capacity is available to address the added variability and net load volatility associated with ongoing and expected future changes on the CAISO-controlled grid. In its filing, the CAISO proposes a November 1, 2014, effective date for the tariff changes establishing the FRAC-MOO so that they will apply to resource adequacy showings beginning in January 2015.  FERC has set Friday, August 22, 2014, as the due date for comments on the CAISO’s FRAC-MOO proposal.        

By Michael Gergen, Jared Johnson and Andrew Meyer

The California Independent System Operator (CAISO) has announced that it is starting a new “Reliability Services” stakeholder process.  In a January 14, 2014, Market Notice the CAISO said that the new stakeholder process would address three related issues: (i) the development of a replacement proposal for the backstop capacity procurement provisions of CAISO’s Tariff; (ii) the design of a market-based mechanism to replace the CAISO’s current backstop capacity procurement authority, and (iii) updates to the standard must-offer requirements for local, flexible, and system resource adequacy capacity. 

By Michael J. Gergen, Jared W. Johnson, and Shannon D. Torgerson

In an order issued December 16, 2010, the Federal Energy Regulatory Commission (FERC) conditionally accepted the California Independent System Operator Corporation’s (CAISO) proposed revisions to its Tariff (Docket No. ER10-1401) to implement a revised transmission planning process (RTPP) for the CAISO-controlled grid.  The CAISO had sought FERC approval of the RTPP proposal to facilitate the development of the electric transmission infrastructure necessary for California utilities to obtain 33% of their total energy supplies from renewable resources by December 31, 2020, as mandated under the California Air Resources Board (CARB) Renewable Electricity Standard and as proposed in legislation to modify the state’s Renewables Portfolio Standard (RPS).   

The RTPP introduces a three-phase approach to try to streamline identification of needed electric transmission projects for the CAISO-controlled grid, and clarifies the limited categories of transmission facilities in California that may be built and owned by non-incumbent transmission developers.