Leadership of the California Independent System Operator this week approved modifications to the way the ISO processes interconnection requests, as a staggering amount of renewable and energy storage projects in its queue overwhelming the process.
In addition to the interconnection queue changes, CAISO approved new rules for hybrid resources, demand response resources and a reliability must-run agreement for the Agnews Power Plant in San Jose.
The interconnection queue changes come as CAISO is being flooded with interconnection requests, which is becoming problematic because most of the projects won't actually be built. This leads to a great amount of interconnection study work for projects that will never enter operation.
"This has really been a problem for, what, 20 years?" CAISO President and CEO Elliot Mainzer told the ISO's Board of Governors at their July 15 meeting. He said that the ISO needs to find a way to get projects onto the grid more efficiently. "The whole process quite honestly needs to be reimagined—nobody is happy with it."
Mainzer said CAISO really needs to be shaping the queues, instead of having transmission planners react to what is in the queues. The issue of superclusters and queuing is a problem across the country, he said, noting that the Federal Energy Regulatory Commission on the same day began a proceeding on transmission planning and the interconnection process.
CAISO has nearly 246 GW of combined renewable and energy storage capacity in its queue, with about 37 percent of that in the study process that is due to be finished by November. About 98 GW of that consists of new, stand-alone and hybrid or co-located projects. About 148 GW of energy storage is in the queue, consisting of the energy storage, about 144 GW in battery projects and nearly 4 GW of pumped storage and 44 MW of "rail gravity," which is technology that raises the elevation of mass against the force of gravity and then recovers the stored energy as the mass is returned to its original location.
Between June 2020 and this month, the amount of renewable capacity in the queue grew by 29.5 GW. That change came from about 53 GW of new capacity that entered into the "cluster 14" interconnection process window, which closed on April 14, and 23.9 GW that exited the queue through project withdrawals, reaching commercial operation, project downsizing and other modifications, according to CAISO materials.
Some projects include more than one generation technology and in a number of cases, the total project capability is greater than the capacity requested at the point of interconnections, CAISO said. These projects are usually configured so that the capacity at the point of interconnection matches the capability of the largest technology component of the facility.
CAISO Board Chairwoman Angelina Galiteva said that the inefficiencies are built into the interconnection queue process, such as interconnection studies. "We know that only a fraction of these are going to go forward," she said.
At the meeting, the board approved changes to the cluster 14 interconnection process, having received an outsize number of interconnection requests in the annual interconnection request window in April, known as cluster 14. Over the past decade, CAISO has received an annual average of 113 queue cluster interconnection requests, but this year received 373 requests seeking to be studied in cluster 14. The grid operator responded by extending the overall study process by one year while allowing faster studies, if possible; only requests that reach the second phase will set binding interconnection customer cost caps. Interconnection customers will be eligible for a full refund of initial financial securities that are posted if the Phase 2 study costs go up more than 25 percent or if a timeline is exceeded by more than a year from their Phase 1 results and the project developer withdraws before its second interconnection financial security is due.
In a separate action, the board approved new rules regarding the hybrid resource aggregate capability constraint, to address concerns raised by stakeholders about the impacts of previous changes to hybrid-resource rules.
"Stakeholders recently raised concerns that the aggregate capability constraint functionality, approved through phase 1 and phase 2 of the hybrid resources initiative, would be insufficient to manage co-located projects coming on-line in the next few years due to certain contractual provisions that provide off-takers with rights to separately schedule shares of the hybrid resource," Anna McKenna, CAISO's vice president, market policy and performance, said in a July 7 memorandum to the board.
Some specific contractual provisions prohibit resources from generating above the contracted share of their approved generation capacity, so CAISO management proposed a new constraint to enforce those individual contractual restrictions, that can be relaxed by the market software when reliability is threatened, she said.
The changes to the hybrid resource model allow for the usage of multiple aggregate capability constraints at a single generating facility, and introduce subordinate aggregate capability constraints that are subordinate to the master aggregate capacity constraint that observes a generating facility's total interconnection service capacity limit, the memorandum says. The new rules would allow multiple resources and off-takers at a generating facility that is comprised of co-located resources. This will allow the ISO to model each set of co-located resources to its maximum contractual operating level, but limit the awards and dispatch instructions to the portion of the interconnection service capacity represented by the subordinate aggregate capacity constraint. The constraints prevent off-takers from exceeding specified contractual limits under normal operating conditions, the memorandum says. CAISO management expects the subordinate capacity constraints will be used very infrequently.
The board also approved a CAISO proposal that variable-output demand response resources be exempt
from the resource adequacy availability incentive mechanism, or RAAIM, if their resource adequacy qualifying capacity as determined by the local regulatory authority is established using a methodology that meets two principles: it assesses the resource's contribution to reliability across all hours of the year or seasons as a variable-output resource; and it assesses the resource's interactive effects with other similarly-situated resources. Those principles can be met using an effective load carrying capability counting or a similar "contribution to reliability" methodology that assesses a demand response resource's capacity value.
Additionally, the board approved a reliability must-run agreement for Calpine's Agnews Power Plant natural gas-fired facility in San Jose. Calpine had requested to retire the unit, but CAISO determined it is needed for local reliability. The sub-area local capacity requirement is 998 MW, and there are 848 MW of total available resources in the sub-area, including the Agnews plant unit.
Calpine Vice-President Mark Smith commented to the board that the RMR prevents the company from redeveloping the site with energy storage. A CAISO representative said demand in the area is being driven by a new data center.