Sun, wind and now water are flooding the grid with energy when nobody needs it—and grid operator CAISO has to balance it out.
Last month, the California Independent System Operator
quietly announced that it could face a record-breaking need for
curtailments -- paying, or forcing, generators to stop pumping electricity into
a transmission grid that just doesn’t have the demand for it at the
time.
“With the bountiful hydro conditions expected this year and
significant additional solar installations both in the form of central station
and on rooftops, we expect to see significant excess energy production this
coming spring,” CAISO CEO Stephen Berberich wrote in a memo to
the grid operator’s board of directors. “Currently, the forecast is that we
could have the need to curtail from 6,000 [megawatts] to 8,000 [megawatts].”
Managing oversupply conditions isn't new to CAISO,
spokesperson Steven Greenlee said. But, he added, “We haven’t had this
potential amount of excess supply on the grid before.”
The biggest contributor is the heavy rain and snow that has
helped California fill its depleted reservoirs. Many of them are now so full
that they’re likely to go into "spill" mode this spring, Greenlee
said. And “when they’re in spill and they’re generating electricity, we have to
take that electricity, because they can’t turn their generators off."
California hasn’t had so much hydro power coming on-line
since 2011, he said. And that was years before solar power became a significant
contributor to the state’s midday energy mix. “We didn’t really start adding
solar until 2014,” he said. But CAISO has added about 2,000 megawatts per year
since then, totaling 9,792 megawatts in June of last year. “We expect it’s
going to [bring on-line] another 2,000 megawatts from 2016 to 2017,” he
said.
All of this solar has led to what CAISO
calls the “duck curve” -- a deep dip in demand during solar-saturated
midday hours, followed by a steep ramp as solar fades away. And this
supply-demand pattern is happening even faster than CAISO first predicted in
2013, he said. An analysis by energy consultancy ScottMadden found that
California is about two years ahead of CAISO’s duck curve schedule, in terms of
the lows it’s hitting on certain sunny, mild spring days, when solar power
surges and air conditioners aren’t being turned on to soak it up.
Add must-take hydro to the mix, and California is looking at
a combination of clean energy resources at volumes it hasn’t faced before,
Greenlee said.
CAISO’s curtailment plan: From "decremental" bids
to "exceptional dispatch"
Curtailment is generally the last step in a long process
governed by CAISO, as manager of a commodity market that has to be kept in
perfect balance at all times. First of all, when supply of power of any kind
exceeds demand, prices drop, and generators can reduce output in response, if
they have the flexibility and economic incentives to do so, Greenlee said.
Of course, most of CAISO’s oversupply is coming from
generation resources that lack that flexibility, which has led to an increasing
incidence of negative pricing.
CAISO’s next step is to offer generators the opportunity to
make money by reducing their power output, he said. “Once we go into an excess
or oversupply condition, our market first goes out and sends signals to the
generators that say, ‘How much would you take, bid in as a price, to reduce or
quit producing?’”
That’s called a "decremental" bid, as opposed to
an incremental bid that pays generators to increase production, and through it,
“The market solves that oversupply almost in every instance,” he said.
If all of these market measures fail to bring supply in
balance with demand, “We will go in and start manually intervening in the
market,” he said. “We will cut self-schedules, and if that hasn’t worked, we
will ‘exceptionally dispatch’ units to go offline.”
These manual "exceptional dispatch" interventions
do occasionally happen, he said. But they’re very rare. Out of the 240 million
megawatt-hours or so that CAISO delivered in 2016, it curtailed about 308,000
megawatt-hours, almost all of it through decremental bids. Self-scheduled cuts
and manual interventions made up 1 percent or less of that total, he
said.
But “unless we take actions to mitigate the excess supply,
the times we’ll have to manually intervene in the market will increase,” he
said. "We’re seeing our oversupply earlier than what we have
forecasted. We’ve got to keep pressing on and implementing
new solutions."
Looking for solutions: Flexible solar farms, broader grid
markets, time-of-use pricing
CAISO has far fewer levers to pull on the demand side of the
equation, Greenlee noted. California does have hundreds of megawatts of demand
response, of course. But that doesn’t really help solve the oversupply problem,
since it’s set up to get customers to reduce their power use. A demand-side
effort to solve curtailment would instead encourage people to use
more electricity, he said.
That could happen through time-of-use
pricing schedules or special
tariffs that offer exceptionally low prices, or even direct payments,
during periods of oversupply. California is in the midst of shifting all of its
big utilities to time-of-use rates by 2020, and CAISO is working with the
California Public Utilities Commission to “develop the rate tiers to
incentivize people to use excess energy when we have it, which is now in the mid-mornings
to mid-afternoons,” Greenlee said. “That’s kind of a flip -- it used to be that
the rates would disincentivize use during that time.”
CAISO is also increasingly relying on its links to the
broader U.S. Western grid, he noted. In 2014, it expanded its Energy
Imbalance Market to include Rocky Mountain state utility PacifiCorp,
as well as Nevada utility NV Energy. This real-time market is useful to find
demand for excess energy, in what CAISO calls “avoided curtailment,” he said.
This chart shows that most of the transfers are happening during the same
midday hours that solar is generating at its peak, indicating the source of the
megawatts being exported.
CAISO also wants the California legislature to pass a law
allowing it to expand its balancing authority, said Greenlee. “Then we could
optimize all of those resources in the day-ahead timeframe, rather than dealing
with excess supply through our real time Energy Imbalance Market,” he said.
Day-ahead markets are a lot easier to participate in than real-time markets,
opening up a broader potential customer base. CAISO’s
plans were put on hold during last year’s busy legislative session,
but Senate Bill 350, the omnibus energy bill passed last year, requires that
the state explore it as part of its renewable energy goals.
While solar farms are the main driver of the duck curve,
they don’t have to just be passive providers of power, he added. Last year,
CAISO joined First Solar and the National Renewable Energy Laboratory (NREL) in
a project to prove that PV farms can shape
and shift energy output through advanced inverter controls, in ways
that could rival natural-gas-fired speaker plants, at least in terms of
fast-acting frequency response.
But as more solar comes on-line, curtailments are likely to
increase, which could create an “economic limit to deployment” for solar power
in California, as NREL
noted in a recent study on the state’s 50 percent by 2030 renewable
portfolio standard goals. “If we have to start turning renewables down or off,
it undermines the effort to reach the goal that the renewable portfolio
standard sets,” Greenlee said.
CAISO has predicted that it will see 13,000 megawatts of
solar power on the grid by 2020, giving the state “thousands and thousands of
megawatts we’re going to have to deal with,” he added. “We’re already being
proactive in looking for solutions,” such as launching the country’s first
market opportunity for distributed energy resource providers, or DERPs, to
aggregate solar, demand response, energy storage, electric vehicles or other
flexible loads into resources for its energy market.
At the same time, CAISO’s role has its limits, Greenlee
said. It doesn’t track demand by end user -- “All we do is get a schedule in
that says to deliver 100 megawatts of electricity to four hours to a particular
substation.” That means it doesn’t directly track what’s going on with rooftop
solar on the distribution grid, besides seeing it as a reduction of load.
“That’s behind the meter, and we’re still wholesale.”
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