New Resources Table 0827

Proposed new-resource buildout to meet a 38-MMT greenhouse gas reduction target by 2032.

As California works to build out a generation portfolio to meet the state's future electric-supply needs, state regulators have laid out a proposed resource portfolio through 2032 that is based on meeting the state's 38-million-metric-ton greenhouse gas target.

The lengthy and detailed proposal submitted for public comment by a California Public Utilities Commission administrative law judge Aug. 17 is in the CPUC's integrated resource plan proceeding [R20-05-003]. The proposal includes extensive analysis by CPUC staff and notes that IRP plans submitted by load-serving entities in September 2020 are expected to fall short of meeting GHG and reliability targets "due to a collective insufficiency of planned new capacity."

But updated analysis and modeling from CPUC staff using assumptions from recent commission procurement decisions on midterm reliability [D21-06-035] and rounding out the last two years of the 10-year planning horizon should "largely achieve" the commission's reliability and GHG goals for 2030, the ruling by ALJ Julie Fitch says.

In crafting the proposal, CPUC staff aggregated the LSE plans, combining several datasets to create a baseline of planned resources to come on line in the future. The datasets include an updated baseline of resources that are on line or in development with executed and approved contracts; existing and "in development" resources from the reference system plan, updated with projects that have achieved commercial operation; additional resources with executed and approved contracts as of June 30, 2020; and new resources, both in development with contracts executed and approved after June 30, 2020, and planned for future development.

The order notes that Gov. Gavin Newsom on July 30 declared a state of emergency directing the CPUC, the California Energy Commission and the California Independent System Operator to accelerate the development and deployment of new clean-energy resources. Newsom's order also requires the CPUC to accelerate and expand approval of demand response and energy storage to ensure California has adequate electricity supply through Oct. 31, and to ensure increased clean-energy capacity by Oct. 31, 2022.

The ALJ's decision notes that while Newsom's order focuses on electricity needs by 2022, there are concerns for 2023 and beyond. So, the ALJ proposes to revisit whether procurement of capacity counting toward the 11,500 MW of net qualifying capacity in a previous CPUC order should be accelerated to 2023, instead of 2024 or 2025, and whether additional capacity is needed.

One option would be to require that up to 4,000 MW of incremental NQC resources be on line by June 1, 2023, instead of the current requirement for 2,000 MW of NQC in 2023, the document says. The CEC has conducted reliability analyses for the next several years, and most of the implications of those analyses—particularly for 2022, and including the possibility of accelerating procurement already ordered in previous CPUC decisions—will be addressed in the CPUC's summer reliability rulemaking [R20-11-003]. In this proceeding, comment is sought on shifting or increasing midterm reliability procurement for 2023 and beyond, the ruling says.

Also, the CPUC and CEC are studying the reliability of the system to see whether new fossil fuel plants might be necessary. The CPUC in previous decisions has also asked whether additional fossil fuel capacity might be necessary, citing concerns over battery storage performance as more is added, and risk of overreliance on batteries. Also being considered is the ability of certain natural gas facilities to be expanded to mitigate project-development risk of other new resources.

"Most capacity expansion modeling to date in IRP shows the need to retain most thermal capacity throughout the planning period. Therefore, new capacity may be needed to maintain the continued reliability of the natural gas and combined heat and power (CHP) fleet at current capacity as older units retire," the ruling says. Existing natural gas capacity in California is using the best available technology and most of it was built since 2000, it notes.

After upcoming planned retirements, the state's gas fleet will still contain up to 7 GW that is more than 20 years old and could have challenges with respect to economic viability, operational reliability, or environmental impacts during the next 10 years.

California's projected capacity shortfall for September 2022 is more than 5,200 MW (see CEM No. 1654).

An individual involved in renewable-energy project development told California Energy Markets in a phone conversation that the near-term procurement targets for the next several years will be hard to hit. This is because of the usual obstacles such as regulations, interconnection studies, contracts, large-generator interconnection agreements and, with COVID-19, supply chain issues.

"There is just a real lack of things coming together to make particularly that 2024 time frame possible," the person said. He said trying to procure for 2022 at this point in time is "comical," but he thinks the midterm procurement to replace the Diablo Canyon nuclear plant is doable. He added that he is an environmentalist, but closing Diablo Canyon isn't smart, and emissions are likely to increase.

"The pace at which things happen in California is slow, and always has been," he said, adding that "2024 is a hard date to hit." However, he noted that the IRP is a planning document and "it's not designed to be a perfect version of reality."

The ALJ ruling says the CPUC will hold a workshop in late August to explain the analysis and recommendations and answer questions on the proposal.

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