California has the most aggressive greenhouse gas (GHG) reduction goals in the nation. But the state also has more than 30,000 MW of existing natural gas-powered capacity that is part of our electricity grid. As we transition away from fossil fuels to GHG-free resources, what is the role of that gas fleet? My Commissioner colleagues and I are examining that question now as we work to determine how Californiacan deploy the existing fleet to help the state transition to a clean energy future, and at the same time seek to reduce the impacts of such plantson disadvantaged communities.
California’s first glimpse of the power supply of the future arrived onAugust 1, when the 44 load-serving entities under the California Public Utilities Commission’s jurisdiction filed their first-ever long-range plans optimized for greenhouse gas emissions reductions, reliability, and cost. Each one is looking to demonstrate how its new and existing energy resources will meet California’s 2030 greenhouse gas reduction goalsfor the electric sector.

Natural gas and 2030

The core issue we must grapple with is that even in our most aggressive emissions reduction scenarios, natural gas is very much present in our electric portfolio in 2030.
How do we know? My fellow Commissioners and I approved an Integrated Resource Planning Process in February of this year that defined an electric sector greenhouse gas ceiling of 42 million metric tons for 2030. As an illustration of how far we’ve come, that is a full 50 percent below the level emitted just a few years ago, in 2015.
We also identified a representative portfolio of energy resources that, if operating in the state in 2030, are capable of meeting that target. The resource mix shows that we will likely need approximately 10,000 MW of new renewable energy and 2,000 MW of new battery storage over and above the significant amounts of both that we already have planned. Andour modeling results show that while new natural gas plants were not needed by 2030, the existing fleet in California nevertheless remainspresent.
The other big-picture elements of 2030 include reducing our reliance oncarbon-intensive imports from other states, and building enough renewable capacity to meet demand during hours with low solar and wind availability. We know, too, that circumstances may change.Proposals to regionalize our grid operations beyond California’s borders that are presently before the Legislature could change our energy outlook and help with renewables integration. A 100% renewable electricity mandate, also under consideration by the Legislature, would further impact our planning. But given our need to act today to meet our 2030 goals, we are moving ahead assuming the current set of available resources.

Idle but ready

The grid will need resources that can provide a backup and balancing role for the next decade or so, filling in the gaps when the sun is belowits zenith and the wind is calm. Our integration need is rooted in California’s longstanding investment in renewable energy, starting with the first Renewables Portfolio Standard signed into law in 2002.
California’s renewable energy success, particularly solar, means that the sun’s free daily energy pouring into the panels we have installed across the state causes energy prices to drop to near zero in the middle of the day. It happens most often during the spring and fall, when need is also lower, and solar generation can cover a higher percentage of demand.

For owners of power plants fueled by natural gas, an efficient daily operation in response to this market, in reality, has meant ramping down to near zero during the middle of the day and being able to ramp up as the sun sets and their capacity is needed for late afternoon and evening loads.
This means that during times of abundant wind and solar, these plants have already been largely displaced and are no longer necessary for baseload power. Operating this way, they continue to meet the grid’s evolving needs by ramping up to fill in the gaps when renewable energy production is low. One important conclusion from our modeling results isthat for the natural gas fleet to perform this role would not compromise our greenhouse gas emission reduction commitments.

Environmental justice concerns

Yet while there are statewide cost and reliability benefits to maintainingnatural gas-fired plants, we cannot forget the fact that many are sited in disadvantaged communities and have negative local impacts. Members of these communities are right to question how often they must run, how necessary they actually are for reliability, how much it costs to replace them with resources that do not emit pollution and how California plans to retire them over the long term.
In some respects, the trends are already pointing in the direction that we want: the oldest and least efficient plants are running less often, while newer ones with greater flexibility tend to serve the grid’s renewable integration needs.
Meanwhile, a new transparency proposal in our Resource Adequacy proceeding has been prepared by our staff to answer some questions about daily operations of such plants, and in our Integrated Resource Plan proceeding we conducted early analysis of the locations and air pollutant output of California’s natural gas fleet.
The Commission is also committed to engaging with communities on their specific concerns. A new disadvantaged communities advisory board will help ensure that environmental justice concerns are brought forward in Commission activities, and our local government liaisons keeplines of communication open between the Commission and local leaders.

The interplay of short-term market design and long-range planning

When will it make sense to invest in more transmission lines and inutility-scale, zero-emission energy storage resources that can provide the same reliability function that natural gas plants do today, and allow more natural gas plants to retire?
Timing such investments is tricky. We don’t want our electricity supply to tighten too early through plant retirements — a topic I addressed recently for Utility Dive in an article on California’s resource adequacy market trends. Premature retirements could necessitate hasty and possibly more expensive resource investments to make up for gaps.What’s more, developments in electrification of vehicles and buildings — the next major policy and market challenges that will deeply impact our electricity demand — will again change the profile of what California needs from its resource fleet. At the same time, we do want to see fossil fuel plants retire, to the extent that they are truly no longer necessary for grid reliability at reasonable cost.

In California, our ongoing Resource Adequacy analysis will monitor near-term market conditions, while our Integrated Resource Plan planning analysis will examine the long-range picture every two years. With updated assumptions about the resource fleet, transmission improvements, technology advances, air pollutant outputs in local communities and costs, California can authorize new investments as their time comes.

The future

California has a political accomplishment to be proud of: today, we share a big-picture vision of what the electric sector can and should accomplish by 2050 — essentially, reducing its greenhouse gas emissions to near zero. Now it is our job to manage an affordable, reliable and equitable transition to the day when we not only use natural gas-fired plants less frequently, but when other carbon-free resources can completely replace them.


DISCLAIMER | The views expressed here are those of a single Commissioner, and the Commission takes action by majority vote. Statements made here do not necessarily reflect the position of the Commission as a whole.
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