ANNUAL STATE OF THE GRID MOVING FORWARD

Transcription

1 ANNUAL STATE OF THE GRID MOVING FORWARD

2 LETTER FROM THE CHAIR & CEO The energy industry is very quickly transforming the way we make and move electricity all in an effort to convert to a less carbon-dependent power grid that will reduce climate change. We have a lot at stake. California s average summer temperature is nearly 2 degrees hotter now than in With more frequent and persistent heat waves expected, a multi-agency state study found that higher summer temperatures in California will continue to impact the delicate balance of electricity supply and demand. 1 Development of zero-emission power sources is key to slowing the progress of climate change. The California Independent System Operator Corporation (ISO) is integrating large volumes of solar and wind resources that will contribute to a new climate resiliency. Emerging technologies enable energy efficiency and demand response resources that defer the use of conventional generation. Powerful collaboration and resource sharing will also introduce new grid and market efficiencies. We see these types of benefits surfacing through an energy imbalance market (EIM) in which we partner with other areas in the West to make available a broad array of resources to cover real-time energy needs that help hold down wholesale costs while enhancing reliability. Video The new power grid landscape Bridging from yesterday s wires to tomorrow s technologies may not be simple, although it is certainly essential as we achieve a more secure and sustainable energy future. We look forward to working with our stakeholders, regulators, policymakers and the public as we discuss, debate and decide how best to move our industry forward. Bob Foster, Chairman Steve Berberich, President & CEO 1

3 TABLE OF CONTENTS Powerful Benefits Renewable Integration Advanced Reliability Protecting Competition Emerging Resources

4 POWERFUL BENEFITS Spirit of regional market benefits grows Integral to advancing clean and efficient power supplies is sharing a broader array of resources within the West to take advantage of geographic differences that produce new efficiencies. One of the largest utilities in the West, PacifiCorp, is the first to partner with the ISO in a resource sharing or energy imbalance market (EIM) that will optimize available energy supplies by providing frequent and automatic dispatching, taking into account resources across the entire region. 2 The EIM with PacifiCorp is set to launch October Additional utilities could participate as early as California ISO PacifiCorp The Federal Energy Regulatory Commission (FERC) has released a staff paper on the reliability benefits of EIMs that includes enhancing situational awareness, identifying and dispatching resources faster after a grid event as well as assisting with renewables integration. 3 Another independent study from the National Renewable Energy Laboratory shows that sharing resources saves over a billion dollars annually. 4 EIM partners use the ISO real-time energy service as they need, with no obligation to become a transmission member in the ISO. Participants pay a small usage fee as they go, which produces even greater cost-efficient returns when the alternative is to spend tens of millions of dollars to build a similar system from scratch. Currently, 38 balancing authorities (grid operators) serve utilities and their customers in the West. 5 A study commissioned by the ISO and PacifiCorp from consultancy group Energy+ Environmental Economics (E3) found an imbalance market can generate savings in four areas: interregional dispatch, intraregional dispatch, reduced flexibility reserves and reduced energy curtailments Examination of Potential Benefits of an Energy Imbalance Market in the Western Interconnection, NREL, March 13, 2013;

5 POWERFUL BENEFITS Hear from others We are encouraged by the decision of the ISO and PacifiCorp to pursue a partnership. We see this as a pivotal development that could spur more coordination and more effective grid management across the entire region to the benefit of all ratepayers. Susan Ackerman, Chair, John Savage, Commissioner, and Steve Bloom, Commissioner, Oregon Public Utility Commission With the dramatic increase of wind and solar resources in the West, a coordinated effort to reduce the quantity of required balancing reserves while improving reliability is critical. Iberdrola Renewables applauds PacifiCorp and the ISO for taking this important step forward to lead the region toward a more effective balancing solution. Kevin Lynch, VP External Affairs, Iberdrola Renewables, LLC The possibility of a real-time balancing energy market that further transcends the historical CAISO footprint is an exciting opportunity that may eventually include other neighboring balancing authorities in the western states and produce significant market efficiencies. WPTF applauds the CAISO and PacifiCorp for demonstrating leadership on this issue. Gary Ackerman, Executive Director, Western Power Trading Forum We look forward to realizing the benefits and highly encourage other balancing authorities in the western region to enter into similar relationships, creating a more efficient western transmission grid. Robert B. Weisenmiller, Chair, California Energy Commission and Michael R. Peevey, President, California Public Utilities Commission 2

6 POWERFUL BENEFITS Strength in numbers Most utilities plan and balance systems separately, facing costly hurdles when moving least expensive power to where it is needed. The ISO market uses an automatic and highly transparent system that leverages the strength of dispatchable resources as it reliably balances electricity supply with demand. Video ISO Overview 17 participating transmission owners City of Anaheim City of Azusa City of Banning City of Colton City of Pasadena City of Riverside City of Vernon City of Merced (pending) Valley Electric Association, Inc. Western Area Power Administration, Sierra Nevada Region Citizens Sunrise Transmission LLC Pacific Gas & Electric Company San Diego Gas & Electric Company Southern California Edison Company Startrans IO, LLC Trans Bay Cable LLC Trans-Elect NTD Path 15, LLC (as of 1/1/2013) 3

7 140 market participants 3 Phases Energy Services LLC ACES Power Marketing Arizona Electric Power Cooperative Inc. Arizona Public Service Company APX Power Markets Inc. Barclays Bank PLC BJ Energy LLC Black Oak Capital LLC BNP Paribas Energy Trading GP Bonneville Power Administration Bottle Rock Power LLC BP Energy Company Brookfield Energy Marketing LP California Department of Water Resources Calpine Energy Services LP Cargill Power Markets LLC Castleton Commodities Merchant Trading LP Citigroup Energy Inc. City of Anaheim City of Azusa City of Banning City of Burbank City of Cerritos City of Colton City of Corona City of Glendale City of Pasadena City of Rancho Cucamonga City of Riverside City of Roseville (Roseville Electric) Silicon Valley Power City of Vernon Cobalt Capital Partners V LLC Comision Federal De Electricidad Commerce Energy Inc. Commercial Energy of Montana Commercial Energy of California ConocoPhillips Company Consolidated Edison Solutions Inc. Constellation Energy Commodities Group Inc Constellation NewEnergy Inc. Covanta Delano Inc. CP Energy Marketing (US) Inc. Darby Energy LLP DC Energy California LLC Denver Energy LLC Direct Energy Business LLC DTE Energy Trading Inc. Dynegy Marketing and Trade LLC Eastside Power Authority EDF Trading North America LLC Edison Mission Marketing & Trading Inc. EDMS LLC EnerCal USA LLC Entegra Power Services LLC ETRACOM LLC Exelon Generation Company LLC Franklin Power LLC Freepoint Commodities LLC Galt Power Inc. GenOn Energy Management LLC GenOn West, LP Gila River Power LLC Glacial Energy of California Inc. Bear Valley Electric Service GridSpeak Corporation Iberdrola Renewables LLC Imperial Irrigation District Inland Empire Energy Center LLC J. Aron & Company J.P. Morgan Ventures Energy Corporation LCG Consulting Liberty Power Delaware LLC Liberty Power Holdings LLC Los Angeles Department of Water and Power Macquarie Energy LLC MAG Energy Solutions Inc. Marin Energy Authority Mercuria Energy America Inc. Merrill Lynch Commodities Inc. Midway Sunset Cogeneration Company Modesto Irrigation District Monterey CA LLC Monterey CAF LLC Morgan Stanley Capital Group Inc. Mountaineer Power LLC Mountain View Power Partners LLC NV Energy NextEra Energy Power Marketing LLC Noble Americas Energy Solutions LLC Noble Americas Gas & Power Corp. Northern California Power Agency NorthPoint Energy Solutions Inc. NRG Power Marketing LLC Occidental Power Services, Inc. Olivine Inc. Otter Tail Power Company PacifiCorp - Merchant PacifiCorp - Transmission Pacific Gas and Electric Company Pilot Power Group, Inc. Portland General Electric Company Power and Water Resources Pooling Authority Powerex Corp. Public Service Company of Colorado (Xcel Energy) Public Service Company of New Mexico Puget Sound Energy Rainbow Energy Marketing Corporation Royal Bank of Canada Sacramento Municipal Utility District Salt River Project San Diego Gas & Electric Company San Diego Gas & Electric Transmission Saracen Energy West LP Sempra Generation Sesco Caliso LLC Shell Energy North America (US) LP Sierra Pacific Power Company Solios Power LLC Southern California Edison Company Southern California Edison - TO Tenaska Power Services Company The Energy Authority Inc. Tios Capital LLC Trademark Merchant Energy LLC TransAlta Energy Marketing (U.S.) Inc. TransCanada Energy Sales Ltd. Tucson Electric Power Company Turlock Irrigation District Twin Eagle Resource Management LLC Valley Electric Association Inc. Viasyn Inc. Vitol Inc. Wellhead Power exchange LLC Western Area Power Administration Desert Southwest Region Western Area Power Administration Sierra Nevada Region XO Energy CAL LP XO Energy CAL2 LP ZGlobal Inc. 4

8 POWERFUL BENEFITS Benefits of ISO market A FULL NETWORK MODEL that analyzes generation and transmission schedules submitted a day in advance to better manage or avoid real-time bottlenecks. AN INTEGRATED FORWARD MARKET that provides a one-stop shop for trading and analyzing the electricity bids, transmission capacity and reserves needed to keep the grid in balance. LOCATIONAL MARGINAL PRICING that creates a highly transparent system that prices electricity based on the cost of generating and delivering it. Benefits of transmission membership When a transmission owner becomes a member of the ISO, it gains a range of benefits that helps it operate more efficiently. The ISO is an impartial grid operator that has no financial interest in any market segment and that ensures diverse resources have equal access to the transmission network and markets. The ISO handles about 27,000 market transactions every day to deliver electricity where and when it is needed. Most recently, two transmission owners decided to join the ISO; Valley Electric Association and the City of Colton became a part of the ISO grid in January. Merced Irrigation District started the process to become a participating generator owner in July 2014 and a transmission owner when certain system upgrades are in place in the next couple of years. Most often, transmission owners are utilities that also sell power to consumers and some, as in the case of Merced, own generation as well. ISO participating owners have full privileges and use of ISO systems, market products and scale of resources to make informed and cost-efficient business decisions that enhance their ability to reliably serve their consumers. Valley Electric Association is a member-owned cooperative headquartered in Pahrump, Nevada, making it the first utility outside California to leverage the benefits of the ISO when it joined in January Creates a cost-effective means of getting renewables to market. Several proposed solar projects are in Valley Electric s region and seeking efficient and cost effective delivery to California. The small network expansion will strengthen reliability in the corner of the ISO grid that overlaps with Nevada. The City of Colton is the eighth California municipal owned utility to join the ISO, effective December The city has operated its own municipal utility for its 19,000 customers. It also owns diverse generation resources in California, Arizona, New Mexico and Nevada. By joining the ISO, Colton will have transmission access to new renewable resources in California and the Southwest, which are necessary to meet California s green power goals. Merced Irrigation District eyes transmission member benefits: Resolve future transmission limitations for Merced Bring their generation into the market, which benefits Merced customers and adds flexible capacity to the system 5

9 RENEWABLE INTEGRATION Texas 12,212 MW WIND on the grid? What is RPS? As the ISO matches buyers and sellers of electricity, it is folding into the portfolio mix diverse, clean renewable resources such as solar, wind, small hydro, biomass and biogas the largest and most diverse green power in the nation. The American Council on Renewable Energy 6 reports that California is at the forefront in integrating renewables into the market. Among the notable policies and incentives were the California Solar Initiative, a renewables auction and a feed-in tariff. The report also called out the state s renewables research and development being led by the Lawrence Berkeley National Laboratory. In addition, California has about 80 percent of the nation s geothermal capacity. 7 Biomass and biogas are also steadily increasing. The Renewables Portfolio Standard is a California law that requires utilities use renewable resources for at least 33 percent of their retail sales by 2020 as measured in hours of use. For instance, if you have a 1000 watt microwave and you use it for an hour, then that would be 1000 watt-hours. If a building uses 1 gigawatt each hour, then that is 1 gigawatt hour. California utilities are on target to meet the 25 % Source: AWEA as of 1/30/13 California 5,549 MW Iowa 5,137 MW Illinois 3,568 MW Oregon 3,153 MW renewable contacts costs fell by more than 13 % from 2011 to 2012 Source: CPUC 8,9 by 2016 milestone as mandated by the 33% by 2020 RPS Source: CPUC

10 RENEWABLE INTEGRATION Environmental collaboration: Desert Renewable Energy Conservation Plan State and federal agencies, working with environmentalists, the ISO and other groups collaborated on a plan to protect endangered desert plant and animal species in the Mojave and Colorado Desert regions, while facilitating the review and construction of renewable resources. Several agencies are collaborating on carrying out the ground-breaking mission, including the primary funder, the California Energy Commission. Other participants are the California Department of Fish and Game, the U.S. Bureau of Land Management and the U.S. Fish and Wildlife Service. Collectively, the agencies are known as the Renewable Energy Action Team. The ISO is a non-stakeholder participant. While the group develops protection plans, it also is speeding permitting reviews for utility-scale renewable energy projects. 7

11 RENEWABLE INTEGRATION In 2011, nationally, California ranked: Major wind project hooks up to Sunrise Powerlink Sunrise Powerlink, a major transmission project energized in 2012 to move remotely located renewable generation to consumers, began carrying clean wind power in 2013 from the 176-turbine Ocotillo Wind project in Imperial County. The 315 MW facility powers almost 95,000 homes, 10 provides up to 20 permanent jobs and pumps millions of dollars in property taxes into the area. Five solar projects currently under construction will also feed into the 117-mile Sunrise Powerlink line. 3rd in hydroelectric 1st in other renewables 1st in geothermal electricity generation Source: Energy Information Agency 11 Improving accuracy: solar energy forecasting The California ISO, universities, utilities and commercial forecasters are partnering with the National Center for Atmospheric Research to predict with far more accuracy when cloud cover could reduce the amount of energy coming from the sun. Twitter - solar records set: The three-year, $4.1 million project calls for designing a system that would forecast solar irradiance and the power produced every 15 minutes at specific solar facilities. At this time, the ISO uses a two-hour forecast. If grid operators can more precisely predict the weather, they can line up megawatts well ahead of time instead of buying more expensive energy in the five minutes before it is needed. This saves money, much like buying an airline ticket in advance versus at the counter 5 minutes before takeoff

12 RENEWABLE INTEGRATION Progress in forecasting technologies One of the top goals of the ISO is to improve wind and solar forecasting capabilities. Grid operators need advanced tools to better predict when clouds will track over solar facilities or wind speeds will alter wind production. The experience the ISO has gained over the past several years managing thousands of renewable megawatts has provided a solid base for understanding the unique operating characteristics of wind and solar power. Tapping into smarter forecasting technologies provides a clear advantage in managing variable supply as well as smoothing fluctuations in consumer demand. By more accurately predicting weather conditions, the ISO positions resources to meet demand more efficiently. Modernizing the grid The ISO is working with market participants to update common market and business systems software and technologies that support renewables integration. One of the more important technology enhancements to ISO systems is implementing market software that enables resources such as storage devices to participate in the market. Slated for 2013 are new rules to comply with FERC Order No. 755 that will enable the ISO to incent fast starting resources by providing them with additional performance payments when they respond to automatic dispatch signals. Resources that respond with greater accuracy will receive higher payments. 9

13 RENEWABLE INTEGRATION Transmission Plan overview The ISO Board of Governors approved an annual transmission plan that includes two policy-driven projects that support the 33 percent by 2020 renewable goal. The projects will be open to competitive solicitations, resulting in lower costs. The projects, 2 of 41 approved, represent an estimated investment of $1.7 billion to strengthen the grid and give access to renewables. TRANSMISSION PLAN Reliability-driven transmission projects Total projects: 36 Total cost: $1,343 M Valley Electric Association no projects Pacific Gas & Electric 31 projects - $1,168 M March 20, 2013 Approved by the ISO Board of Governors Prepared by: Infrastructure Development Southern California Edison no projects San Diego Gas & Electric 5 projects - $175 M 10

14 ADVANCED RELIABILITY Summer 2013 mitigation plan Convert Huntington Beach units 3 & 4 to synchronous condensers to provide voltage support. Install capacitors, which also provide voltage support, at three Southern California substations. Reliability planning for summer 2013 The absence of the 2,200 MW from the San Onofre Nuclear Generating Station, now to close permanently, was first felt in the summer of A mitigation plan created jointly by the ISO, utilities, as well as state and federal agencies proved highly successful in producing a nearly uneventful summer, because it was relatively mild. The ISO peak demand last summer hit 46,675 MW and occurred on August 13, 2012 at 3:54 p.m. That was well shy of the all-time ISO peak of 50,270 MW that occurred July 26, A similar industry-wide mitigation plan is in place for summer New actions include a reliability must-run agreement, approved by FERC, that converts retired Huntington Beach generating units, owned by power company AES, into synchronous condensers. The voltage support devices enable more power to be imported into the local area. In addition, transmission upgrades, including shunt capacitors installed at three area substations, will also increase power flows to the section of the grid impacted by the shutdown of San Onofre. At the Barre-Ellis substation, two 220 kilovolt circuits have been split into four lines to better handle potential overloading conditions. Separate the two double circuits at Barre-Ellis substation into four separate circuits to better handle potential overloads. Use Flex Alerts and available demand response programs to conserve energy during high demand hours and days. 11

15 ADVANCED RELIABILITY Summer 2013 Systemwide, the ISO Summer Loads and Resources Assessment forecasts that under normal conditions our reserve margins will exceed the 15 percent resource adequacy requirement set by the California Public Utilities Commission (CPUC). 12 However, under 1-in-10 conditions, or extreme heat or high system outages, margins will be tighter. The summer peak is projected to reach almost 47,500 MW under normal conditions, which is about 800 MW more than the 46,675 MW peak set August 13, This reflects moderate economic growth over the 2012 summer. As requested by the governor, the ISO is joining with the CPUC and the California Energy Commission to recommend infrastructure upgrades and additions needed to support the grid in Southern California now that the San Onofre Nuclear Generating Station will be permanently retired. Grid enhancements may include transmission and generation options. Demand & Supply planning reserve margins 33.3% System wide 31.0% SoCal 38.8% NoCal Planning reserve margin is the total generation capacity available in the long-term to meet demand. Operating reserve margin is adjusted for expected generation outages, imports and generation standing by to meet real-time demand. Operating reserve margins 19.6% 21.4% 21.7% System wide SoCal NoCal Normal weather 9.6% System wide Including demand response and interruptible load. As of June % SoCal 7.7% NoCal Extreme weather 3% firm load shedding operating reserve cannot drop below this line

16 ADVANCED RELIABILITY Video Flex Alert TV commercial New Flex Alert conservation campaign launched The Flex Alert conservation campaign will be available for reducing the strain on the power grid during heat waves. Flex Alerts are public requests for voluntary conservation when the grid is challenged by extreme conditions. The alerts helped out significantly last summer during the shut down of San Onofre. Consumers turning down their air conditioners by just a couple of degrees can produce significant results on the grid that help protect reliability and keep costs down. Local demand response programs to help with the reliability concerns during peak periods are also deployed. 13

17 ADVANCED RELIABILITY Flexible grid The ISO and the CPUC hosted a joint forum in San Francisco, attended by 200 industry partners and others to talk about a forward capacity procurement framework that might ensure resource adequacy, including capacity with specific operating characteristics, available not just now but well into the future. The day-long event featured industry panelists with diverse opinions, as well as market experts from PJM Interconnection and eastern interconnection regulators. The current procurement framework administered by the CPUC directs utilities to buy resource capacity 1 year and 10 years in advance. However, to better address the new dynamics of maintaining grid reliability with a more diverse power mix, participants discussed potential changes to the procurement framework to ensure resource adequacy over a 3 year period. The ISO, energy agencies and stakeholders are continuing to identify potential options to solve the procurement gap. 14

18 ADVANCED RELIABILITY Nuclear generation backup studies Prior to the announced retirement of San Onofre, the ISO performed detailed analysis in the transmission planning cycle to determine the reliability impacts if both of the state s nuclear plants went off line for extended periods. Combined, the Diablo Canyon Power Plant (Northern California) and San Onofre Nuclear Generating Station (Southern California) could have produced about 4,300 MW. The ISO looked at scenarios in which the plants would not be generating in the mid-term ( ) and the long-term (2022). The studies also produced a backup plan that could be implemented by summer 2018, but did not assess greenhouse gas impacts on the overall system needs for replacement generation. The ISO analysis, which only focused on transmission impacts in the absence of nuclear power plants in California and showed potential mid- and longer-term requirements can be found in the Transmission Plan. Diablo Canyon Power Plant San Onofre Nuclear Generating Station (to retire) 15

19 PROTECTING COMPETITION Average annual cost $36.48 MWh $35.69 MWh Competitive market performance The ISO markets continued to perform efficiently in 2012, with wholesale energy prices over the year coming in about equal to the prices that the ISO Department of Market Monitoring estimates would result under highly competitive conditions. About 97 percent of the system load was scheduled in the day-ahead energy market, which contributed to the competitive market outcomes. Total estimated wholesale costs of serving load in 2012 were $8.4 billion or just under $36/MWh. This represents a decrease of about 2 percent in nominal terms. 13 Meanwhile, ancillary service (reserves) costs were about $84 million or about 1 percent of total energy costs, compared to about 2 percent in The standby reserves cost fell last year to $0.36/MWh from $0.63/MWh in The DMM 2012 annual report did not indicate any material negative impact to prices as a result of new renewables coming onto the grid. Meanwhile, the report noted that new wind and solar power increases the need for complementary flexible and fast-ramping resources dispatchable by the ISO to integrate intermittent energy efficiently and reliably. The report noted support for a longer-term procurement process and a well-designed centralized capacity market to foster flexible capacity. average annual gas price $4.06 MMBtu average annual gas price $2.91 MMBtu

20 PROTECTING COMPETITION Financial snapshot $ $198.8 $ $8, $787.5 GMC (MWh) $0.791 $0.793 $0.776 $0.755 Volume (millions of MWh) Revenue requirement (millions) $189.8 $195.1 $193 $191.6 GMC revenues (millions) $190.7 $195.7 $202.4 $194.8 Market participants Employees Market revenues (in millions) $7, $7, $6, $2, Total assets (in millions) $890.6 $931.7 $996 $

21 EMERGING RESOURCES ISO activities supporting vehicle-to-grid EV to grid opportunities Electric vehicles and renewable power may prove the ideal marriage, pairing advanced technologies to create new efficiencies. The ISO sees great value in aggregating electric vehicle fleets, such as those owned by large corporations and transportation businesses. The fleets could act as a potentially large-scale battery and earn revenue from that market participation as well as become another resource for grid operators to manage the grid in an efficient and flexible way. The ISO is working with stakeholders to develop a roadmap that will guide the way to effectively plug into the potential grid benefits of electric vehicles. Pilot project with the Department of Defense at the Los Angeles Air Force base Leadership role in the development of vehicle-to-grid roadmap for the Governor s office Zero Emission Vehicle Action Plan Engaging in California Public Utilities Commission s electric vehicle proceeding, which addresses charging issues, metering requirements, mandates for utilities to do load research and other related topics NEARLY 30% of all EV sales in the US will be made in California Source: CEC 30,000 approximate number of plug-in EVs purchased in California over the next 3 years Source: CEC 18

22 EMERGING RESOURCES Storage projects and pilots: 2.4 MW, 7 hour (14 MWh) sodium sulfur (NaS) battery located in Vaca-Dixon, owner: Pacific Gas and Electric 8 MW, 4 hour (32 MWh) lithium-ion battery located in the Tehachapi area, owner: Southern California Edison Funded through Department of Energy grants Storage In addition to electric vehicles acting as energy storage resources, the ISO is looking to other storage technologies to enhance grid operations and meet state environmental goals. The ISO believes storage devices, such as batteries and flywheels, could help maintain local grid voltages, which supports grid stability by providing a steady push of electrons across long-distance power lines. Recently, other more advanced forms of energy storage have come to the forefront, including compressed air energy storage. The ISO is positioning the market and grid to have the flexibility to interconnect these devices once they are proven. This effort is already underway with the ISO Board of Governors approving early last year a market modification that improves how storage operators can be compensated for their services. To better enable these types of alternatives to building new wires and plants, the ISO is exploring new telemetry requirements that reduce barriers to entry and provide a range of energy products. Additional storage project: Pacific Gas and Electric is also installing a 4 MW battery to test such things as telemetry and battery efficiency. 19

23 EMERGING RESOURCES Improved and updated Advanced Technology center The ISO Advanced Grid Tech Center located at our headquarters is using videos and animations displayed on touchscreen monitors as well as educational exhibits that bring home the progress the industry and the state are seeing in modernizing the grid. Presentations include such topics as the 2020 Grid, demand response, energy storage and microgrids. The Center also features our own new solar station forecasting system developed by UC San Diego for the ISO s solar PV production and shows the output of the ISO s carport and system solar panels that generate up to 750 kilowatts. Learn more: 20

24 EMERGING RESOURCES Microgrids The ISO is working with the California State University system to investigate the viability of using new smart grid technology platforms, including microgrids, which would serve as emergency grid backup resources and help balance wind and solar power fluctuations. The ISO Board of Governors, voted in May 2012 to approve filing tariff changes with federal regulators that streamlined the process for distributed generation to interconnect to the grid and provide their full value. This action means smaller renewable resources can achieve deliverability approvals in about half the time, allowing the generation to count toward the state s resource adequacy requirements, in addition to helping utilities meet their 33 percent RPS targets. At the ISO s request, federal regulators approved most of the tariff changes in time for them to take effect for the 2013 transmission planning cycle, although a small number of provisions underwent further refinement. Most market participants are satisfied with the approach and filed supporting comments with federal regulators. The ISO conducted the first annual distributed generation deliverability assessment in March 2013, which showed 1,400 MW available system-wide to assign deliverability status to distributed generation without requiring additional delivery network upgrades. Microgrid: any network of distributed energy resources that operates in concert as a system, and when necessary can disconnect from the larger grid. 21

25 EMERGING RESOURCES Pilots A University of California-San Diego microgrid was available last summer to help in a small way with addressing the supply shortage caused by the loss of the 2,200 MW San Onofre Nuclear Generating Station. Instead of creating a problem for the ISO as a resource that it cannot control or see, UC San Diego opened up its microgrid internal workings to the ISO. The 42 MW microgrid, one of the world s largest, provides enough power for a small city with 40,000 homes. As part of a pilot project with San Diego Gas & Electric and the ISO, UC San Diego installed technology on its campus that provides data about the status of power flows at more than 50 times a second and is sharing the data with the ISO and we are learning a lot. The most ambitious microgrid project in California is in the very early stages of development. General Microgrids is negotiating to develop a microgrid network that first focuses on the California State University system. Under this compelling vision, microgrids can protect and serve the larger grid and cooperate with adjacent microgrids, creating networks that epitomize the new grid paradigm. Moreover, these microgrids can work independently and aggregate their capabilities, thereby becoming solutions for both universities and the larger power grid. Microgrid 22

26 EMERGING RESOURCES DR Roadmap objectives: Enable alternatives for transmission or local capacity Support demand response and energy efficiency investments DR Roadmap The ISO and the state energy agencies coordination identifies alternatives to transmission or local capacity such as demand response (DR) to find the most cost-effective options to satisfy grid needs. Also, DR developers need solid information to make the best business decisions about their projects, so the ISO is supporting revenue certainty that encourages demand response investments. In addition, aligning wholesale and retail price signals will enable distributed resources to respond to grid conditions. The ISO is gathering input from stakeholders and creating a demand response roadmap that will help refine initiative efforts as well as the activities needed to prepare energy and demand response as resources that can offset the need for building new fossil-fired generation, defer investments in transmission and distribution assets as well as measurably reducing load. Integrate alternative resources in ISO markets to follow load, integrate renewables or avoid new capacity Align wholesale and retail signals to enable resources to respond to grid conditions Evolve and establish technology and regulatory framework to support all goals What is the difference between energy efficiency and demand? response? Energy efficiency means consumers need less electricity when using their appliances than previous, more energy needy models. Demand response is when consumers voluntarily reduce their electricity use to respond to price signals or reliability situations. 23

27 EMERGING RESOURCES Electricity consumption Pursuing efficiency: CPUC Efficiency Order The California Public Utilities Commission approved a new plan in 2012 to invest nearly $2 billion in 2013 and 2014 to fund energy efficiency programs. The commission created two regional energy networks to complement the utility programs the San Francisco Bay Area Regional Energy Network and the Southern California Regional Energy Network. This is a new innovation in which local governments can undertake energy efficiency activities that utilities cannot or do not intend to perform as well as create innovative pilots in areas without access to utility program offerings. rest of the US California s pioneering work in energy efficiency has paid off as the Rosenfeld Curve 14 shows. The state has kept per capita electricity consumption nearly flat over the past 40 years while national use jumped over 50 percent. California Governor Brown noted in his 2013 State of the State Address that energy efficiency has saved consumers $65 billion over 30 years. This is quite a feat considering California is the most populous state in the nation and its total energy demand is second only to Texas Source: EIA, SEDS database (2012) CA 14 Named for Dr. Arthur Rosenfeld, one of the fathers of energy efficiency and recent recipient of the National Medal of Technology and Innovation