How to Reform California’s Inadequate Resource Adequacy Regime

Greentech Media

California’s heatwave-driven rolling blackouts last month, and the threat of more to come, have focused state political leaders and energy regulators on how to fix the California Public Utilities Commission’s resource adequacy (RA) program, the state’s primary tool to ensure grid resources to meet peak demands.

After nearly two decades of incremental changes, it’s becoming clear that RA may be unsuited for the state’s increasingly clean-powered and battery-backed future grid.

The CPUC’s decision this year to centralize local RA procurement with utilities to try to reduce market power problems has also undermined CCAs’ ability to earn money from locally procured behind-the-meter assets. And the CPUC’s new requirements on import capacity, meant to increase visibility into what out-of-state resources are being relied upon, were opposed by CCAs on the grounds that they undermine existing contracts.

More radical options for restructuring are also in discussion. Most notable is a proposal from the state’s only electric-only utility, Southern California Edison, and backed by CalCCA, the trade group representing the state’s CCAs, that would essentially rebuild RA from a “bottom-up” approach.

That’s because the SCE-CalCCA proposal would move away from today’s “top-down” assessment of RA needs which then splits them up amongst individual LSEs. In a state with dozens of CCAs, that’s “no longer sufficiently accurate to ensure reliability,” the proposal says.

Instead, it envisions each LSE building its own “load duration curve,” or forecast of loads for every hour of every month, and then combining them to yield a system-wide set of requirements. That’s a far more accurate way to determine “system needs as California transitions to an electrical grid with 100 percent of retail sales served by zero-carbon resources,” Eric Little, SCE’s wholesale market design manager, said in an email.

To help solve the “net peak” problem, SCE and the CCAs propose subtracting the contribution of solar and wind resources to each hour of each day.

“We are moving to what we now call a net peak load,” said Beth Vaughan, CalCCA’s executive director, or a measure of reliable capacity that’s “more honest” than the systems now used by RA, such as “effective load carrying capacity,” that attempt to estimate the average capacity value of renewables that can’t be dispatched.

“This is a big paradigm shift, and we’re not going to get there overnight,” CalCCA’s Vaughan said. The example of last month’s heatwave highlights the need for getting started now.

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