People prefer simple answers. "It is renewables", "It is Climate Change" or "It is deregulation"
But here’s what they missed. Across California, more than 30,000 distributed batteries discharged between 3pm and 9pm, on August 14th, contributing 147 Megawatts of capacity to the grid.
This made the blackouts less severe. More than 530 Megawatts of distributed batteries exist on the grid, which is more than enough to make up for single point failures from our centralized fossil powered electricity grid.
The problem is that not all of these batteries were encouraged to discharge to the grid. This is a problem of market structures and inertia, not our state’s ambitious, climate change-fighting, renewable energy targets.
California Has Plenty of Electricity, It’s Just Not Being Used
By Jon Wellinghoff
September 20, 2020
California is struggling to fend off some of the largest wildfires in state history. On top of this, for the first time this year, PG&E turned off power to 171,000 customers, or more than 500,000 people to prevent powerline related fires last week. Last month, our state experienced our first rolling blackouts since 2001.
These problems are related, and can be solved if we move beyond our increasingly fragile and inefficient electricity system that was first built in the 1920s. We can make our grid stronger by integrating more resilient distributed resources such as flexible load, solar and batteries into California’s wholesale electricity markets. The best thing about distributed resources, used to support homes, business, and schools, is that they can also be truly secure power sources for communities and all users of the grid to rely on.
These are the kinds of problems that Tony Clark and I wrestled with when we served together at FERC. At RealClearEnergy, Tony recently attributed California’s electricity problems to California’s pursuit of renewable energy over fossil fuels and to many communities forming Community Choice Aggregators (CCAs).
He failed to mention that California’s forward-looking energy targets have been set so that we can fight climate change. The only unfortunate thing about these targets is that they have not been replicated at a national level. We’re in this mess because we’ve pumped more CO2 into the atmosphere in the past ten years “than in all of human history up to the election of JFK.”
But let’s talk about solutions. On Friday, August 14th, nearly 400,000 people in California lost power when a fossil fuel gas plant failed in the middle of a heatwave. In the weeks since, California’s grid operator, CAISO, has repeatedly warned of more blackouts and asked people to conserve power. Tony and others, including the Wall Street Journal, trotted out tired arguments, and rushed to criticize renewable energy as the culprit, ignoring the experts and evidence to the contrary.
But here’s what they missed. Across California, more than 30,000 distributed batteries discharged between 3pm and 9pm, on August 14th, contributing 147 Megawatts of capacity to the grid. This made the blackouts less severe. More than 530 Megawatts of distributed batteries exist on the grid, which is more than enough to make up for single point failures from our centralized fossil powered electricity grid. The problem is that not all of these batteries were encouraged to discharge to the grid. This is a problem of market structures and inertia, not our state’s ambitious, climate change-fighting, renewable energy targets.
It doesn’t make any sense that fossil fuel power plants continue to collect full capacity value for their resources, and yet behind the meter storage is still capped at customer load, and export to the grid isn’t valued when it’s needed most. An electron is an electron, a megawatt is a megawatt, we shouldn’t be forced to pay more for fossil powered electricity than that produced by solar powered batteries. To make sure we’re taking advantage of their contributions, we must recognize the full value of batteries to the grid. If we do this, batteries can displace fossil fuel power, and communities, hospitals and families will be able to keep the lights on when the grid goes out.
Consumers who were providing flexible load (deferring energy use or shifting it to times outside of peak use) were being penalized $6000 per megawatt hour if they were unable to provide those flexible load services. But new flexible load resources that were offered to the utilities during the recent crisis in California were only offered $100 per megawatt hour to participate. Clearly something is wrong with that picture. California needs to restructure its programs for paying consumers fairly for the services that they can provide to keep the grid operating.
If more people, businesses, schools, and government buildings across our state were adequately compensated for using flexible load to support the grid and had solar and batteries, especially those in isolated communities, we can avoid blackouts. We can aggregate distributed flexible load, solar and batteries to form microgrids or virtual power plants. If the main grid goes down, people could keep their lights on and food fresh.
The problems with our aging centralized grid are not just limited to California. In 2012, Hurricane Sandy knocked out power for 2.7 million people in New Jersey. Eight years later, Isaias, which was much weaker, caused blackouts for 1.4 million people. This was after years of investigations and purported grid improvements that cost ratepayers billions of dollars.
None of this is sustainable. Properly structured energy markets, overseen by the FERC and supported by California regulators can unleash a whole new level of flexible load and battery resources to support the grid. Just this week, in fact, FERC approved a groundbreaking rule that will allow distributed energy resources to compete in wholesale electricity markets. I commend FERC for taking this important step, for which I helped lay the groundwork as Chairman when FERC adopted Order 745 opening markets to demand response. Compared with our fossil fuel infrastructure, flexible load and batteries paired with renewable energy resources are quiet, don’t need to be refueled, and don’t emit the CO2 which makes our climate problems worse. It’s time for us all to let flexible load and batteries lead the way.
Jon Wellinghoff was the chairman of the Federal Energy Regulatory Commission, and the CEO and Founder of Grid Policy, Inc.
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