California plans to reach 60% renewables by 2030 and a zero emissions economy by 2045 as its investor-owned utilities (IOUs) face wildfires and bankruptcy, new and unproven electricity providers proliferate and customers demand a decentralized energy system. What could go wrong?

The key to success is eliminating natural gas as an electricity resource, stakeholders told Utility Dive. To do that, the state must make one fundamental change at the local level and another at the transmission system level.

Together, these changes will remake California's power sector. And its implementation could be a national guiding force on cost-effectively transitioning from natural gas dependence.

Expanding access to low-cost renewables via "an optimized western regional grid" is key to the transmission system change, electricity system consultant Lorenzo Kristov recently wrote, but it faces political resistance. And local level change will come from coordinating state and local utility planning with broader power system planning to expand distributed energy resource (DER) access, but there is disagreement over how to do it.

These changes could lead to the unprecedented levels of renewables, demand response and energy efficiency California will need after 2030, stakeholders said. But the challenges they face may require new power sector architecture, Kristov wrote, one that uses an intermediary between the transmission system and local power providers for coordination and efficiency.

Going big at the system level

Moving away from natural gas at the system level will be easier if the California Independent System Operator (CAISO) expands its market's reach from the Pacific to the Rockies, according to some stakeholders.

State policymakers worked aggressively from 2016 to 2018 to create a regional electricity market by eliminating barriers between CAISO and the 38 independent systems across the West. But the plan was rejected in 2018 by opponents who said it would risk California jobs and could subject the state's climate ambitions to hostile federal regulation.

Advocates said regional cooperation would reduce electricity costs by expanding access to low cost renewables and eliminate building redundant infrastructure. Regionalization remains "critical to achieving deep reductions in greenhouse gas emissions," Assembly Member Chris Holden, who led the 2018 legislative effort, emailed Utility Dive after his bill's defeat.

California’s renewables and emissions goals represent "an extremely daunting challenge, and if we try to achieve them without a regional electricity market, we will regret it." Carl Zichella Director for Western Transmission, Natural Resources Defense Council

"There is no way to get to a zero-carbon electric sector without a broader regional market," Independent Electricity Producers Association (IEPA) Executive Director Jan Smutny-Jones told Utility Dive. "To keep prices down, California needs to be able to sell clean energy to, and buy it from, other states."

California's renewables and emissions goals represent "an extremely daunting challenge, and if we try to achieve them without a regional electricity market, we will regret it," Natural Resources Defense Council (NRDC) Director for Western Transmission Carl Zichella said.

This idea is becoming increasingly realistic as the priorities of Western energy are changing, EDF Renewables Director for Regulatory and Legislative Affairs Virinder Singh told Utility Dive. After the November 2018 elections shifted the region's politics, many Western states have enacted, or are planning, renewables mandates as ambitious as California's, putting the region on a similar energy path.

Many legislators who voted for renewables and emissions goals but against regionalization now see the Western grid as a necessary step. They also see that voters may turn against the climate goals, and the lawmakers who supported them, if electricity bills start rising because of limited access to low-cost renewables.

Regionalization links balancing authorities Western Electricity Coordination Council

Timing the natural gas transition

Even with a regional market, timing the transition away from natural gas will be critical.

"It would be a mistake to prematurely close down the state's natural gas fleet because electrifying transportation and buildings will increase electricity demand," IEPA's Smutny-Jones said.

Yet California's nuclear plant, which supplies about 10% of the state's power, will close in the mid-2020s, and climate change-driven drought is threatening the 15% of its hydropower.

"Planning documents show natural gas generation will probably be needed for reliability services well beyond 2030," Smutny-Jones said. If those plants close too early, "significant electricity disruptions or cost increases could turn the public against California's goals and that would be bad."

It would also be a serious mistake "to rely on natural gas for too long and make new investments in existing infrastructure that could be phased out," Union of Concerned Scientists (UCS) Senior Manager for Western States Energy Laura Wisland told Utility Dive.

The solution is "sequencing" the transition to transportation and building electrification with the availability of renewables and zero emissions technologies, CAISO VP for Market Quality and Renewable Integration Mark Rothleder told Utility Dive. A "just right sequencing" can "use demand response, time-of-use rates and direct price signals to help maintain reliability."

California can balance reliability and the transition from natural gas by giving electricity providers "the opportunity to invest in carbon-free technologies to provide reliability services," Wisland said.

For example, community choice aggregator (CCA) East Bay Clean Energy and Pacific Gas and Electric (PG&E) partnered to replace an inefficient diesel generator in Oakland with zero emissions resources. And Southern California Edison did the same thing with a 262 MW Moorpark natural gas plant.Both projects will use extensive battery storage.

The Oakland project, which has ample transmission and local solar to access electricity for charging batteries, is proceeding. The Moorpark project, which serves the transmission constrained Goleta load pocket, needs rethinking to avoid necessitating new natural gas generation, according to SCE's April 22 filing with the California Public Utilities Commission (CPUC).

That complication might have been avoided by coordinated planning, stakeholders told Utility Dive.

Limited service to Goleta Clean Coalition

Better planning at the local level

To move California from the dependence on natural gas that now faces the Moorpark region, local communities must be part of the planning process, Kristov, a former CAISO and California Energy Commission (CEC) official, told Utility Dive. SCE and clean energy advocates agreed.

Two "duration" concerns have emerged with the Moorpark region plan, SCE VP for Power Supply Colin Cushnie told Utility Dive: Having energy that will last long enough to power the region while it recovers "from a series of contingency events" and powering Moorpark's Goleta subarea "at the very end of our system."

If power lines to Goleta go down, batteries could discharge to serve peak load, SCE's filing said. But "there may not be enough energy in the off-peak hours to simultaneously recharge energy storage and serve the Goleta load," making "additional generation" from natural gas or solar necessary.

"We are now working with local constituencies to align local building codes and ordinances with clean energy development because they recognize they cannot reject natural gas without a viable option." Colin Cushnie VP for Power Supply, Southern California Edison

SCE solicited proposals for zero emissions resources like solar and demand response, but only received competitive bids for storage, Cushnie said. Local building ordinances, permitting requirements and agricultural land protections narrow available sites so severely and add so much time and expense to the development process that building new solar in the region is "cost prohibitive," developers told Cushnie.

Storage met local limitations because of its smaller footprint, he added. "We are now working with local constituencies to align local building codes and ordinances with clean energy development because they recognize they cannot reject natural gas without a viable option."

At the same time, solar project siting challenges in land-constrained areas need to be rethought, Large-scale Solar Association Executive Director Shannon Eddy told Utility Dive. Local environment protections are important, "but they pale in comparison to the climate crisis," she said.

SCE expects to have energy storage in place to meet Moorpark's reliability needs by mid-2021, and "resources need to be available to charge the batteries," Cushnie said. "California needs to manage this type of challenge if it expects to limit natural gas generation. And, after 2030, this type of challenge could be system-wide."

The opportunity

SCE's Moorpark solicitation "exposed deficiencies in our planning," Center for Energy Efficiency and Renewable Technologies (CEERT) Executive Director V. John White told Utility Dive. "It shows the battle for zero emissions may be won or lost, not in Sacramento or at the CPUC, but by how the pieces are fitted together at the local level by municipal and CCA leaders."

Building a new natural gas plant to rectify this problem would be "the opposite of the orderly transition," White added. "We need to be more creative."

CCAs are well-positioned to take on this challenge, as the EBCE-PG&E partnership to replace the Oakland peaker plant with solar and batteries shows, he said, adding the Clean Power Alliance (CPA) CCA could do something similar in Moorpark.

CCAs' connection to local governments can be catalysts for driving on-the-ground events, EBCE Deputy General Counsel Melissa Brandt and CPA Executive Director Ted Bardacke agreed, and their participation can make local permitting easier, said Bardacke.

IOUs have positive and negative history with local governments, while CCAs have "a clean slate," said Bardacke. A lot can be accomplished through "cooperation between local governments, CCAs and IOUs," he said.

A layered architecture Kristov presentation

The layered architecture solution

The system level and local level changes that will move California to zero emissions can work together in a "layered architecture," that will allow CAISO control at the system level and bring local communities into system planning, Kristov said. "The key is coordinating."

Local governments are required to do a general growth and climate action plan, which gives them "a significant role in many things that affect emissions, like transportation, land use, zoning and building codes," he said.

This is "a complete break from the past, in which the distribution system only moved central station power one way, from the transmission grid to the customer," he said. "Now there are energy flows in different directions, which complicates the roles of the CAISO and the IOUs operating the distribution system."

"Some say it will take a World War II-style transformation. We also need that level of public collaboration and support, with everyone united behind a shared vision and collective action to combat climate change. If we polarize, we all lose." Shannon Eddy Executive Director, Large-scale Solar Association

With a layered architecture, CAISO would be connected to local level activity at the interface between the distribution and transmission systems, Kristov said. An independent entity would act as a distribution system operator (DSO) to coordinate between them. This would allow CAISO to focus on balancing supply and demand at a system level.

The DSO is for collaborating "downward into the system," CAISO's Rothleder said. "It is definitely on our radar and part of our distributed energy resource coordination effort."

"IOUs now run California's distribution system and should be given the opportunity to act as DSOs," Kristov said. "It would be less disruptive than creating a new independent entity and would allow the local level and system level changes to begin sooner."

The IOUs would, however, "need to open up distribution system planning," he added. In public meetings, the DSO must make thorough system information available. Local governments, their CCAs and DER providers could then propose solutions for distribution system needs that could be transparently evaluated for how well they align local and state objectives and transmission system needs.

"SCE's Moorpark project creates an opportunity to try the DSO concept," CEERT's White said. "An independent DSO would be another conversation that could be had separately, but Moorpark requires near-term action and SCE is an existing institution that is thinking along these lines. Let's find out how it does."

The enormity of California's goals will require difficult decisions, Large-scale Solar Association's Eddy added. "Some say it will take a World War II-style transformation. We also need that level of public collaboration and support, with everyone united behind a shared vision and collective action to combat climate change. If we polarize, we all lose."