How High Did California’s Electricity Prices Get?
Wholesale electricity prices soared during California’s September heat wave.
Hot, hot, hot! What a way to start September, with record high temperatures across California, and what a test for the state’s electricity market. More California households have air conditioning than ever before, and it pushed electricity demand to an all-time record.
For today’s post, I want to look at what happened to wholesale electricity prices. Like many of you, I kept checking the CAISO price map throughout the heat wave, but now that temperatures – and prices – are back down, I wanted to look more carefully at what happened.
There will be time later to analyze the why, but the intention here is to begin unpacking the what. How high did prices get? How did prices vary across days? How did prices vary across hours?
September to Remember
Now in retrospect, the first 8 months of 2022 look pretty tame. The figure below plots average daily prices during peak hours. Each observation is a day, and I focus on prices from the day ahead market because those data were most easily available.
For the first 8 months of the year, California prices during peak hours averaged less than $100 per MWh.
Then it got hot. The September heat wave was historic, both in intensity and in length. Air conditioning pushed electricity demand to a new all-time record on September 6th (over 52,000MW!). Thus far during September, the average day-ahead electricity price during peak hours has been over $450 per MWh. Electricity prices have been well above normal levels for the entire month, but September 6, 7, and 8 experienced the highest prices.
Evening Peak
The figure above focuses on 4pm to 8pm. Why these hours? Because these early evening hours are now unmistakably the peak during late summer in California. The figure below plots average prices by hour-of-day. During the first nine days of September, day ahead prices peaked between 4pm and 8pm.
This makes sense. On these hot days, air conditioning continues to be used heavily in the afternoon and evening, even as solar generation fades. With good reason, CAISO tends to target 4pm as the starting point for Flex Alerts.
Soaring Price Statewide
During the heat wave, day ahead prices were similar in different parts of the California market. The figures above show prices for Northern California (NP15), but the patterns are very similar for Central California (ZP26) and Southern California (SP15).
Of course, it isn’t always the case that prices are the same in these different price zones. When transmission constraints within California bind, it is common to see large divergences. But – for this heat wave – the challenge was really the overall balance between supply and demand state-wide, as well as the ability to import electricity from out of state.
Amber Alert
Tuesday, September 6th at 5:48 PM, the California Office of Emergency Services sent an emergency text message to 27 million Californians urging them to reduce their electricity consumption. The text seems to have worked, with electricity demand dropping by 1,200MW between 5:50 and 5:55PM.
The text came as a complete surprise, so the impact would not be evident in day ahead prices. But, what is clear from day ahead prices is that Tuesday evening was a real challenge from an electricity market perspective. Both Tuesday (9/6) and Wednesday (9/7) wholesale prices reached $1200 per MWh, some of the highest prices in recent memory.
Quite a Test
All in all, this was quite a test for California’s electricity market. Facing extreme temperatures and an all-time record level of electricity demand, the market continued to work and the lights stayed on without the need for rotating outages.
Were prices high? Yes, absolutely. But this is exactly what is supposed to happen during periods of market scarcity. High prices create a strong incentive for generators to increase supply, and for consumers to decrease demand.
I only wish demand could have done even more. The impressive rally in response to the amber alert underscores the untapped potential of this side of the market. I don’t think anyone thinks the state should get into the habit of sending out this type of emergency text messages all the time, but it was striking to see what is possible with so many people acting together.
Between the CAISO flex alerts, the growing number of critical peak pricing programs, and demand response companies like OhmConnect, there are many smart people working to introduce more dynamic incentives for electricity consumers. It’s important that California continue to bring innovative demand flexibility to the market because this will not be the last heat wave nor the last stretch of extreme prices.
Keep up with Energy Institute blogs, research, and events on Twitter @energyathaas.
Suggested citation: Davis, Lucas, “How High Did California’s Electricity Prices Get?”, Energy Institute Blog, UC Berkeley, September 12, 2022, https://energyathaas.wordpress.com/2022/09/12/how-high-did-californias-electricity-prices-get/
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Lucas Davis View All
Lucas Davis is the Jeffrey A. Jacobs Distinguished Professor in Business and Technology at the Haas School of Business at the University of California, Berkeley. He is a Faculty Affiliate at the Energy Institute at Haas, a coeditor at the American Economic Journal: Economic Policy, and a Research Associate at the National Bureau of Economic Research. He received a BA from Amherst College and a PhD in Economics from the University of Wisconsin. His research focuses on energy and environmental markets, and in particular, on electricity and natural gas regulation, pricing in competitive and non-competitive markets, and the economic and business impacts of environmental policy.
Energy Institute Blog 
OhmConnect appears to be a pilot program to allow the utilities to shut off appliances in an effort to reduce demand during peak periods. I like this program, but there is a problem with it.
OhmConnect appears to be tightly connected to and controlled by the utilities. There is nothing to stop the utilities from turning on or off ones appliances in order to optimize their bottom lines, which probably isn’t in the best interest of the ratepayer.
There are those that may say the utilities would not be so unethical. My first experiences with unethical behavior was in the 1970’s when I worked worked for one of the utilities. Currently, the utilities are claiming that rooftop solar is impacting non-solar ratepayers. This is patently false. It is lower electric energy consumption and increased infrastructure construction that is causing the infrastructure-cost/kWhr to rise.
Finally, I have to ask, since CAISO prices are essentially set by the big energy suppliers and the the utilities (often one in the same), can the these prices be trusted? Here’s how it works. The utilities are guaranteed a profit on their investments and their expenses. The more expenses they have, the larger the absolute profit. The utilities have incentive to pay the highest price possible and a disincentive to pay less.
“The utilities are guaranteed a profit on their investments and their expenses.”
Utilities in California are allowed no profit on the recovery of expenses. On their investments, they’re guaranteed a return on equity – a percentage of the value of all the “stuff” they own – but no marginal profit on the sales of electricity.
“There is nothing to stop the utilities from turning on or off ones appliances in order to optimize their bottom lines, which probably isn’t in the best interest of the ratepayer.”
Agree, and you can be sure that the accountants at the big three utilities in California are doing everything they can to optimize their bottom lines to the limit of the law. And maybe, beyond.
In my opinion OhmConnect and any other form of “demand/response” amount to shifting the traditional burden of utilities to provide resource adequacy to the consumer. That, in any accounting, amounts to a cost in inconvenience, in discomfort, and even in health. They tell us we’re getting a 2% discount if we use electricity after 9PM, then raise rates by 3% across the board first. Not too difficult to understand they aren’t losing a dime, whether we participate or not.
“In my opinion OhmConnect and any other form of “demand/response” amount to shifting the traditional burden of utilities to provide resource adequacy to the consumer. ”
As you point out, utilities are optimizing their bottom lines by figuring out how to pass on costs to ratepayers. So the question is whether we want higher rates as the utilities pass the costs of providing the level of resource adequacy that you are suggesting should be provided, or should consumers take on more of that burden them selves at a lower cost overall in return for lower rates? It’s not that rates will stay unchanged between the two options. Consumers should be given the option of how to best control their bills rather than having some command and control entity dictate to them a level of reliability that has an exorbitant cost.
The lack of sustained high prices >$100/MWH during the episode is interesting. Earlier episodes showed longer periods of high prices. That shows substantial resilience and how ephemeral the benefit of Diablo will be once the supply chain catches up with the various impediments thrown at it by the federal government recently.
The spikiness of the prices, both across the year within the day illustrate another issue about how insignificant CAISO prices are to both generators and to retail customers. Sure there’s a few hours of the year with high prices, but these have almost no impact on customers’ average bills which are driven by average rates approaching 30 c/kWh ($300/MWH) and peak prices at nearly 50 c/kWh ($500/MWH) under all conditions. I’m on OhmHour out of a sense of community obligation, but even though I cut my usage by half or more, I saved less than 20 kWh total, so maybe $10 on my bill. Customers are unlikely to respond to hourly price changes on a large scale. It will require forms of direct load control combined with lump sum cash incentives to create the demand response for which there is substantial potential. But we’re going to have to quit acting as though customers want to be speculators in the electricity market.
For generators, the CAISO Market Monitoring Reports over the last two decades continue to show a large gap between revenues and total cost of plant ownership. In Texas, ERCOT had to come up with a kluge add on price of first $9,0000, then $5,000/MWH to try to create a financially viable hourly market, and even then it’s not clear that worked. Hourly markets alone will not produce the incentives needed for new generation.
http://www.caiso.com/market/Pages/MarketMonitoring/AnnualQuarterlyReports/Default.aspx
Look at the hourly load graph above and imagine how many EVs are getting plugged in during that 4 to 8 PM time slot. Fast forward 2, 4, 6 years… How many EVs are on the road in California? At some point in the not-too-distant future, we’re going to have to manage EV load. It’s simply too big and too synchronized. I’m a fan of using price signals to massage this load. Some of the engineers I work with think we should have a Kill Switch Button.
No Charging for you! Come back… One year.
Ahem… Ultimately, I think we need a combination of a market signal and failsafe firmware.
Imagining EVs being a problem during extreme weather is one thing ,but low-load days could also catch us by surprise. Let’s say it’s Thanksgiving weekend on a Friday. Let’s say it’s sunny and breezy. The combination of the mild weather combined with good RE would mean you’ve got a relatively high percentage of load being met by RE. But now imagine all the commuters and road-trippers plugging in their shiny new EV Silvardos, Titans, F-150s and Cybertrucks during that 4 to 8 time slot. The load spike could catch us flat-footed without enough gas capacity online.
Going along with what you said, I largely view load management as more of an obligation issue. There’s a non-zero chance that electrified water heating load will also have to be managed.
When I went to the CAISO web site, on the generation page, at the bottom, is battery storage and it shows charging the batteries at low-cost times and discharging at high-cost times. What they did, you can do also, with batteries. Even if you cannot install solar on your roof or in your yard, you can charge up the batteries from the utility during non-peak hours then power your house or at least part of your home from the batteries 4:00 PM to 9:00 PM every day using uninterruptable power supplies (UPS) connected to time clocks at your wall outlets. The larger 1,200 Mili-Amp units can power up to 800 watt of load for 10 minutes or 32 watts of load for up to 6 hours or long enough to run your table or floor lamp LED fixtures during Peak time on the internal 2 – 12-volt, 7-amp hour batteries alone. You can also add larger 12-volt batteries, like I did, with the 35-amp hour electric wheelchair batteries and run up to 160 watts up to 6 hours as well for the flat screen TV, Computers with monitors, printers and Fans. leaving only refrigerators and air conditioners on the grid power. The internal battery chargers will recharge the internal batteries in 8 hours after 9:00PM when prices are at their lowest. The pure sine wave and seamless switching over from grid to inverter and back to grid has been a hallmark of UPS units for 40 years since 1981 in offices, homes and even at industrial plants with rack mount units that can power so much more.
“…you can charge up the batteries from the utility during non-peak hours then power your house or at least part of your home from the batteries 4:00 PM to 9:00 PM every day. ”
You could do that, but don’t think you’re doing the environment any favors. By charging up your batteries during non-peak hours from a gas-heavy grid mix, you’re adding anywhere from .1 to .4 kg CO2e/kWh simply by storing it in your battery.
Bulk Energy Storage Increases United States Electricity System Emissions
“Although economically valuable, storage is not fundamentally a ‘green’ technology, leading to reductions in emissions. We model the economic and emissions effects of bulk energy storage providing an energy arbitrage service. We calculate the profits under two scenarios (perfect and imperfect information about future electricity prices), and estimate the effect of bulk storage on net emissions of CO2, SO2, and NOx for 20 eGRID subregions in the United States. We find that net system CO2 emissions resulting from storage operation are nontrivial when compared to the emissions from electricity generation, ranging from 104 to 407 kg/MWh of delivered energy depending on location, storage operation mode, and assumptions regarding carbon intensity. Net NOx emissions range from −0.16 (i.e., producing net savings) to 0.49 kg/MWh, and are generally small when compared to average generation-related emissions. Net SO2 emissions from storage operation range from −0.01 to 1.7 kg/MWh, depending on location and storage operation mode.”
https://pubs.acs.org/doi/abs/10.1021/es505027p
Public response below:
I have PG&E and East Bay community Energy as my energy supplier(s) and PG&E uses only 8.5 % natural gas in their energy mix and 49% renewables until the bewitching hours of 4:00 PM to 9:00 PM when imported fossil fuel energy can rise as high as 50%, after that, it drops to self-generated power. If batteries are charged from 8:00AM to 4:00 PM, you will get mostly renewables or nuclear power to recharge your batteries. Fortunately, my house is solar powered with batteries so I can charge up the UPS units with my own solar if it has been a sunny day but even if it was not, it is better to use 91.5% clean energy than the only 50% clean and more costly energy from 4:00 PM to 9:00 PM that is imported from other states that can be using coal as fuel. This is the best reason for Solar with batteries for a home because you know where that energy is coming from.
The cited article is at least 7 years out of date. The emission values are obsolete. Midday charging in California (and the West) is supplied largely by renewables. The marginal emission rate is the added generation plants to serve that load, not the hourly up and down of balancing the grid.
Here’s a more recent article by the same author that comes to a very different conclusion:
https://www.mdpi.com/1996-1073/14/3/549
Emissions Effects of Energy Storage for Frequency Regulation: Comparing Battery and Flywheel Storage to Natural Gas
With an increase in renewable energy generation in the United States, there is a growing need for more frequency regulation to ensure the stability of the electric grid. Fast ramping natural gas plants are often used for frequency regulation, but this creates emissions associated with the burning of fossil fuels. Energy storage systems (ESSs), such as batteries and flywheels, provide an alternative frequency regulation service. However, the efficiency losses of charging and discharging a storage system cause additional electrical generation requirements and associated emissions. There is not a good understanding of these indirect emissions from charging and discharging ESSs in the literature, with most sources stating that ESSs for frequency regulation have lower emissions, without quantification of these emissions. We created a model to estimate three types of emissions (CO2, NOX, and SO2) from ESSs providing frequency regulation, and compare them to emissions from a natural gas plant providing the same service. When the natural gas plant is credited for the generated electricity, storage systems have 33% to 68% lower CO2 emissions than the gas turbine, depending on the US eGRID subregion, but higher NOX and SO2 emissions. However, different plausible assumptions about the framing of the analysis can make ESSs a worse choice so the true difference depends on the nature of the substitution between storage and natural gas generation.
Your article “comes to an entirely different conclusion,” does it? Maybe, about an entirely different subject. Comparing generating public power to providing frequency regulation is like comparing the power needed to move a car to that needed to move its windshield wipers – insignificant, and irrelevant. Moreover:
1) The need to regulate frequency is, part and parcel, a symptom of introducing renewables. Get rid of windmills spinning freely in the breeze, and millions of non-standard solar inverters dumping electricity to the grid, and the problem goes away.
2) Both natural gas plants and ESSes charged by them increase CO2 emissions. The massive turbines spinning at nuclear plants are a key source of “grid inertia”- essentially, the master clock by which other dispatchable power plants are set. And the reactors turning them don’t emit an ounce of CO2.
With Diablo Canyon operating through 2029 and a few more nuke plants like it, all that lithium in grid storage could be recycled to store energy in electric cars – you know, to perform a useful purpose?
The two articles by Hittinger address the same issue: the change in emissions that arise from replacing natural gas with energy storage. You’ll need to be much more specific about why the 2021 study doesn’t supercede the 2015 version that you cited.
The inertia supplied by Diablo Canyon in a 200,000 MW grid is trivial. It is not located near a load center where that inertia might have more value. The system hasn’t failed when both units have been down.
“Midday charging in California (and the West) is supplied largely by renewables.”
No, it isn’t. The largest battery storage facility in the world, Moss Landing Energy Storage Center, charges from the direct output of Moss Landing Power Plant, California’s fifth-largest gas plant. No renewables at all.
Peak charging today occurred at 11:20 AM, and only 40% of the grid mix used to charge other storage facilities came from gas plants. But 100% of electricity stored at Moss Landing is gas-fired electricity, day or night, windy or calm. Depending on the percentage of energy stored at Moss Landing, I’d be amazed if total battery output wasn’t at least as dirty as a coal plant – especially with fugitive methane emissions of >2%.
Ah, one oddball example. What about the other 2,200 MW of battery storage?
The Moss Landing Power Plant is a natural gas-powered electricity generation plant located in Moss Landing, California, United States, at the midpoint of Monterey Bay. Its large stacks are landmarks, visible throughout the Monterey Bay Area. The plant is owned and operated by Houston-based Dynegy and currently has a generation capacity of 1020 MW (net) from its two combined cycle generation units. It was once the largest power plant in the state of California, with a generation capacity of 2560 MW, before its two large supercritical steam units were retired in 2016. With all of that current carrying capability and the large units shut down, it was only natural that a storage replacement be installed in and around the old supercritical steam units.
The Moss Landing battery storage project is a massive battery energy storage facility built at the retired Moss Landing power plant site in California, US. At 400MW/1,600MWh capacity, it is currently the world’s biggest battery storage facility.
Vistra Energy, an integrated retail electricity and power generation company based in Texas, US, developed the project in two phases under two separate resource adequacy agreements with Pacific Gas and Electric Company (PG&E).
The 300MW/1,200MWh phase one of the Moss Landing battery energy storage system (BESS) was connected to California’s power grid and began operating in December 2020. Construction on the 100MW/400MWh phase two expansion was started in September 2020, while its commissioning took place in July 2021.
The two smaller natural Gas units, that can still operate, using are Peaker plants and the storage batteries also act as Peaker supplies. With all the solar energy, placed onto the grid from 9:00 AM to 4:00 PM every day that much of it is curtailed, why would they not buy the curtailed energy cheap and store it until peak times then run both the storage and the Peaker plants to gain maximum profits? Your comments on the batteries only storing the energy from the remaining peaked plants seems counterproductive to profits and PG&E needs.
“Bulk Energy Storage Increases United States Electricity System Emissions” I am sure that is true today. But let’s keep an eye to a future where non-fossil sources of energy are dominant.
This brings up an import point. In California, the utilities control the source of energy (but not rooftop solar) The utilities are guaranteed a profit. Therefore, the utilities have every incentive to prioritize the most expensive source of energy, particularly if they are generating it.
Here’s an interesting thought game. A large utility (LU) that has many subsidiaries, one of which (SubS) which is a very expensive energy source. SubS cells its energy to SubB, an energy storage company. By law, it makes a profit on that sale. SubB sells the energy to SubD, a distribution company. It makes a profit on that sale, too. SubD sells to the ratepayer, and makes a profit on that. An independent solar farm company would like to sell energy, but LU has adjusted the grid so that very little of its energy gets to the grid.
This has been done.
Please provide an example within the last 20 years of where this has been done in California. I can’t think of a single case.
You’re right, the time that I know of for sure was more than 20 years ago, during the Ken Lay energy crisis period. When critical generators were taken offline for “maintenance”.
It is still fact that PG&E, SCE and SDG&E can control the energy flow and they can do this to optimize their bottom line at the expense of the ratepayers.
These utilities have a very long history of optimizing there bottom lines. How is it that electric energy from SDG&E cost the most in the nation? ~40¢/kWhr is the rate I am on.
Yes, we remember “DEATH STAR” from Enron. looking at those $1,154.00 to $2,034.00 energy prices on the wholesale market that CAISO was tracking on those evening at 5:34 PM, somebody was making a lot of money on the heat wave. Since “Peaker Plants” and battery storage come to mind when” fast and furious” energy needs to come online to maximize profits and that outsiders from Texas runs the ones at Moss landing, maybe we should be looking there for some answers.
We had a trivial amount of grid batteries (150 to 200 MW) on the system back in 2013. Your data must have been based on pumped hydro plants which have historically been paired with inflexible coal and nuclear units. I agree batteries would also exhibit a general increase in emissions but we wouldn’t see the sort of skew you found for at least two reasons.
1. Batteries are not being deployed in coal power areas.
2. The US got 1581 TWh of electricity from coal in 2013. We’ll get around 850 to 900 TWh of electricity from coal in 2022. In addition to the amount of coal electricity being far lower the emissions profiles of the remaining plants are much better thanks to things like MATS. SOx and mercury emissions are down by roughly 66%, and NOx is down by 55% since your paper.
Batteries are most definitely a miserable way to balance RE but I don’t think you’d see anything close to the additional emissions your paper identified.
A personal response, I received, is shared here to contemplate on where your electricity coming from:
You could do that, but don’t think you’re doing the environment any favors. By charging up your batteries during non-peak hours from a gas-heavy grid mix, you’re adding anywhere from .1 to .4 kg CO2e/kWh simply by storing it in your battery.
Bulk Energy Storage Increases United States Electricity System Emissions
“Although economically valuable, storage is not fundamentally a ‘green’ technology, leading to reductions in emissions. We model the economic and emissions effects of bulk energy storage providing an energy arbitrage service. We calculate the profits under two scenarios (perfect and imperfect information about future electricity prices), and estimate the effect of bulk storage on net emissions of CO2, SO2, and NOx for 20 eGRID subregions in the United States. We find that net system CO2 emissions resulting from storage operation are nontrivial when compared to the emissions from electricity generation, ranging from 104 to 407 kg/MWh of delivered energy depending on location, storage operation mode, and assumptions regarding carbon intensity. Net NOx emissions range from −0.16 (i.e., producing net savings) to 0.49 kg/MWh, and are generally small when compared to average generation-related emissions. Net SO2 emissions from storage operation range from −0.01 to 1.7 kg/MWh, depending on location and storage operation mode.”
https://pubs.acs.org/doi/abs/10.1021/es505027p
Public response below:
I have PG&E and East Bay community Energy as my energy supplier(s) and PG&E uses only 8.5 % natural gas in their energy mix and 49% renewables until the bewitching hours of 4:00 PM to 9:00 PM when imported fossil fuel energy can rise as high as 50%, after that, it drops to self-generated power. If batteries are charged from 8:00AM to 4:00 PM, you will get mostly renewables or nuclear power to recharge your batteries. Fortunately, my house is solar powered with batteries so I can charge up the UPS units with my own solar if it has been a sunny day but even if it was not, it is better to use 91.5% clean energy than the only 50% clean and more costly energy from 4:00 PM to 9:00 PM that is imported from other states that can be using coal as fuel. This is the best reason for Solar with batteries for a home because you know where that energy is coming from.
Great summary.
I would be helpful if everyone trids to emphasize the difference between wholesale and retail prices, as I think a lot of readers fail to realize the possibility that we could have much better retail prices.
The article said “High prices create a strong incentive for generators to increase supply, and for consumers to decrease demand.” which of course should be true, but since we have terrible retail prices, very few if any retail customers saw their prices change in a way that reflected the wholesale prices.
I am trying to introduce the term “Highly Dynamic Price” which would be a retail price which is:
-At least hourly and no faster than 5-minute
-Determined no farther in advance than the day before
-Different every day
The term RTP when applied to retail is usually considered to be a narrow calculation of a retail price from a wholesale one, which is of course possible and a subset of HDP, but probably not the best one for the grid.
The CPUC CalFUSE (formerly UNIDE) mechanism is an HDP, and takes distribution system conditions into account in addition to wholesale.
We need to have simple and universal standards for price communication, from retailers to customers and their devices. These need to establish clear bounds on what types of prices are OK to send, so that retailers don’t create tariffs/prices which can’t be communicated in a standard way, and so device manufacturers know what types of prices to expect.
Though CAISO is eager to take credit for preventing rolling blackouts last Tuesday, 11,000 customers had already lost power two hours before its Emergency Alert 3 was announced. It seems “flexibility” had already been imposed upon California electricity customers by an unreliable, renewables-heavy power grid. Who cares whether the outage is caused by a blown transformer in Campbell, or rolling blackouts ? When you flip the switch, the lights don’t go on either way.
Many have felt it would take power outages before CA politicians would understand the value of Diablo Canyon Power Plant and its reliable, baseload electricity. But we were wrong – on Sept. 1, at 1:30 AM, Senate Democrats bent to the will of Gov. Newsom and passed Senate Bill 846 extending Diablo Canyon’s lifetime – six days early.
That’s cutting it pretty close, but better than nine years too late. If California’s PUC hadn’t approved
SoCal Edison’s application to close San Onofre in 2013, there wouldn’t have been any outages this summer at all.
With 5.5 million plus customers, 11,000 customers who lost power, on any regular day, would not have even been in the news. Less than 1% of the customers lost power and that was from equipment failure or emergency fire shut offs. 1.3 million Rooftop solar customers provided as much power as the old San Onofre Nuclear power plant did by sheer numbers of homes covered and the excess electricity placed onto the grid by them. utilities claim that rooftop solar provides 4% of the energy we get, and the nuclear portion of the remaining single nuclear power plant is only 3.7%. In fact, they keep claiming that the cost shifting of the rooftop solar customers is costing California non-solar customers 2 billion dollars in cost shifting which is far more than San Onofre energy was worth. Maybe, we should not believe the numbers our privately owned, for profit and deregulated utilities are dishing out to the CPUC.
You’re right: If your power goes out, your immediate concern is just that; it’s not whether it was due to a rolling blackout or, as was the case in Campbell and other areas, an overheated transformer. But I don’t think the latter is directly related to a “renewables-heavy power grid.” I lived in Tucson for six years, and the high temperatures we experienced in NorCal last week are not uncommon there. But I don’t recall transformer outages there (or in even hotter Phoenix) anywhere approaching the scale of what we experienced. Transformers in low-desert areas are more heavy duty than in NorCal. It may well be that as temperatures get hotter here as part of the “new normal” we may need them here as well. And they aren’t cheap. But, again, I don’t see how this is directly related to a “renewables-heavy power grid.”
That renewables place added stress on power grids is well-documented by numerous studies. Existing power grids weren’t built to handle renewables – and there are two ways to look at the problem. Either:
A) Existing grids need to be hardened throughout to accommodate generation from thousands of different sources, located in thousands of different places, and overcome existing grid constraints. Or:
B) Dirty centralized power plants need to be replaced by clean ones. Existing grids need to only be hardened when and where it’s needed.
There are several advantages suggested by option B:
1. By adopting cleaner technologies and installing them at a few locations, we can clean up the carbon footprint of millions of customers en masse – instead of waiting for thousands of sources to be upgraded independently.
2. The more sources of a electricity, the more unreliable overall service will be. Or in engineer-speak: “Any increase in system complexity always results in a decrease in system reliability,” i.e., “Keep It Simple, Stupid”.
3. Centralized power stations guarantee access to electricity for all citizens, not just those living in large homes with solar arrays, in communities with microgrids, or in large cities.
4. Upgrading/maintaining the existing grid avoids spending the $4.5 trillion necessary to accommodate a 100% renewable electrical grid.
The problem isn’t the grid, it’s renewable energy.
You’re missing the third option: decentralizing the grid and adding generation at the locations that are most vulnerable. I submitted testimony in PG&E’s GRC that showed that microgrids can deliver similar levels of service for one-fifth of the cost compared to undergrounding. (An NREL study in Maryland showed that an islanded MG was still 96% reliable after a week of standalone operation with current technology.) Similarly MGs will be cost effective for most customers compared to PG&E’s projected rates by 2026. As others have repeated here, the current grid is aging so badly that it needs to be replaced anyway. Why not upgrade it to accommodate DERs to serve local loads. Interconnections will still exist to facilitate economically advantageous transactions, but we won’t need to rely on large scale centralized generation that represents a 2,200 MW threat to grid reliability. The opposite of what you say about the number of sources of generation and reliability is true. A system with 1,000 1 MW generators is more reliable than one with a single 1,000 MW generator. I’ve worked on the studies that prove this fact.
You are ignoring the fact that building large centralized stations, especially nuclear, takes many years, even decades. And that delivers one large lump of capacity all at once. Meanwhile rooftop solar can be installed in a matter of weeks (ours was done in less than 10 weeks from house purchase to energized) and incremental additions build over time. We get immediate environmental benefits. I expect the cumulative savings over time from the small additions are larger than from a deferred large addition.
Financing MGs to make them affordable can be done just as we finance distribution lines in rural areas. There’s no impenetrable barrier to creative solutions to equity concerns, and centralized generation doesn’t solve this problem automatically. In every case, it requires a conscious decision.
Of course what is not apparent in this discourse is that we have built a system where we rely on the “free market”, and the ones making $$$ are the fossil fuel fired plants that turn on between 4-8 and charge upwards of 40c/kWh, when their costs of production are likely at least an order of magnitude lower. With more storage and opening untapped demand-side markets to the wholesale markets-we could see a marked decrease in these prices. Behavioral conservation costs nothing to implement, other than non-energy benefits that may be foregone (or not—e.g., pre-cooling the refrigerator and then turning it off or setting its thermostat higher during the flex alert, and even larger opportunity once we get V2G to happen), so by fostering its full participation in “day-ahead” or even “minute ahead” markets via aggregators, we could easily resolve the high price issue. Why has it been so hard to open up these markets? Would be interesting to examine that aspect.
I’m an OhmHour user, and usually I will respond strongly to their requests for energy conservation. But as this long heat wave continued, I found my responses becoming smaller and smaller until they became negligible. Behavior like mine does not bode well for the value of OhmHour’s ability to make a difference in an ever-hotter future. I would respond better to the “stick” of very high retail electricity prices during critical times than the rather small “carrot” of OhmHour’s incentives. On my current rate plan, Summer On-peak electricity costs only about 25% more than off-peak kWh. As you show, the wholesale price difference was more than 800% on the hottest 3 days.
I did not join OhmHour because one of their restrictions was using a fossil fuel powered backup generators to power your home in an emergency. Although I do have back up solar power with batteries, there could be stormy winter days, or smokey summer days where power could go off and the limited solar energy would force me to use a backup generator. If the “Stick” gets big enough, most people will go “Off-Grid” and produce and use their own solar power in combination with batteries. 1.3 million Californians already have the solar, now it is just batteries that could make them independent power companies for their own homes. After market plug and play systems are already here. Some are even on wheels and just plug in to an outlet in the garage or can be taken on a camping trip.