Some Remarks on California’s SB350 Energy Bill
California’s 2015 Senate Bill 350 began an ambitious effort to expand energy efficiency and increase the use of renewable energy sources. The legislation requires that by 2030 half of the electricity consumed in California must come from renewable sources. One of the lesser-noted provisions in the law was a requirement that the California independent system operator (CAISO) conduct a study of the impacts of expanding the CAISO electricity market beyond the state’s boundaries. The 700-page final study report was released in July, 2016.
Background (and terms)
The US doesn’t have a single electric grid, it has three almost completely independent grids. The Western Interconnect consists of (with some minor cases along the eastern boundary) Arizona, California, Colorado, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, Wyoming, and the area around El Paso, Texas (also British Columbia, Alberta, and a bit of Baja California). For the purposes of this essay, “regional” means the US portion of the Western Interconnect.
Independent system operators (and related regional transmission organizations (RTOs[/efn_note] are part of the currently preferred federal policy for coordinating, monitoring, and controlling portions of the electric grid. ISOs operate wholesale markets for electricity, transmission, and other aspects of the grid operation. “Independent” indicates that the ISO does not own the grid that it is managing. The California ISO was created on the recommendation of the Federal Energy Regulatory Commission (FERC), began operation in 1998, and currently manages about 80% of the electricity flow in the state.
Back to the Present
The study finds potentially large benefits for California from a regional market for electricity. The benefits increase substantially as the scope of the regional market expands. This is unsurprising. The 50%-by-2030 renewable mandate assumed in the study, coupled with the retirement of the the Diablo Canyon commercial nuclear reactors in 2024 and 2025, will require California to get power from a very different set of sources than it currently uses. Building in California is expensive. Additionally, intermittent renewable sources become less intermittent overall as type and geographic diversity increases. 1 Purchasing renewable electricity from outside California will be cheaper, even with the costs of transmission links.
Generally unaddressed by the study is the question, “Is a regional market good for western states other than California?” CAISO is the only ISO in the US portion of the Western Interconnect. In order to expand its market outside of California, CAISO would have to reach agreements with the other states. This would represent a substantial change: many of those states operate under traditional arrangements where utilities operate all of power generation, transmission, and distribution. Additionally, portions of the grid in the West is owned and operated by the federal government through the Bonneville Power Administration and the Western Area Power Administration. In the short term, that may be an unreasonable amount of cooperation to expect.
In the longer term, a regional market with the necessary additional transmission links will be good for the other states. California is not the only state with a substantial renewable mandate. All but two of the Western Interconnect states have such a mandate 2, several in the 20-30% range, and the trend is towards higher mandated percentages. Renewables’ intermittency is just as much a problem for those states as it is for California. So long as the expanded transmission network necessary to move large amounts of power to California can also move power to and from other places, it will benefit all of the states.
To some degree the question is immaterial. California is the 400-pound gorilla in the Western Interconnect and already imports significant amounts of electricity from as far away as Washington and Utah. For example, the Intermountain Power Plant at Delta, UT is largely owned and completely operated by the Los Angeles Department of Water and Power. 75% of the plant’s output goes directly to the LA area. Caifornia’s reach will increase further sometime in the next few years when the Transwest Express HVDC transmission line opens to move Wyoming wind power to the Southern California-Phoenix-Las Vegas triangle. California is rich enough to finance its own generation and transmission systems and can undoubtedly find willing private sector partners across the West. An economist friend of mine often says, “The Mountain West is going to be somebody’s energy colony.” He also remarks that California will almost certainly treat the Mountain West states better than the East Coast would.
I’ve written here regularly that the western states are committing themselves to a long-term renewable dependency, even if the details on how to achieve that are fuzzy. One of the necessary conditions for that effort to be successful is much greater regional cooperation in grid operation. An expanded CAISO market is a step in that direction, and I support it.
Image credit: Pacific Gas & Electric transmission lines near Vacaville, CA, Wikimedia Commons.
- This has been modeled extensively in a variety of national laboratory studies on the feasibility of low-carbon power in the Western Interconnect going back many years.
- Idaho and Wyoming. 75% of Idaho’s in-state generation is renewable already, and Wyoming is adding large amounts of wind generation even without a mandate.
The fact that each state has its own dispatch arrangement and rules even though you have a common interconnected grid is another case where the “laboratories of democracy” get in the way of efficiently providing services, and, btw, creating massive loopholes by using the gaps between the different regulations, through with they capture rents that should belong to the end user.
If something is one unified electrical grid, it should be run under common rules. The USA is one big country. It should have uniform rules for most day to day activities. Having fifty plus rule books is just to the advantage of those able to play one rule book against the other. This benefits neither the California nor the Utah end user.Report
Given the nature of the Western Interconnect, a set of federal rules might not be ideal, but the affected states most certainly should have some kind of compact amongst themselves regarding dispatch, etc.Report
The compact should be the floor, not the ceilingReport
Admittedly I’m not well versed in dispatching rules, etc., but my concern would be to make sure the east coast (you know, home to the federal government) isn’t crafting rules that benefit the east coast at the expense of the western interconnect. So perhaps the feds could write rules that form the floor, but the member states of an interconnect would write the final rules on top of that floor.Report
“The Mountain West is going to be somebody’s energy colony.”
Damn straight.
I’m waiting to see what happens with Yucca after Reid retires.Report
Could be interesting. The decision to limit study areas to just Yucca Mountain was passed by Dems in 1987. Back just before Reid put the brakes on, the Senators from Nebraska discovered (ie, had pointed out to them) that the preferred route for much of the Midwestern and some of the Southern reactor fuel was to unload about 300 barges per year worth of stuff at Omaha to put on rail cars, then transport it the length of the state. The Wyoming Senators discovered that the preferred route ran within about a mile of their state capitol building. Suddenly, not so eager. Last year President Obama designated a national monument that blocks the proposed 320-mile rail line that would have bypassed Las Vegas. Absent that line, pretty much everything has to be routed through the middle of the LV metro area.Report
There’s caring about the environment and there’s *CARING* about the *ENVIRONMENT*.Report
Though I didn’t know about the national monument.
I think that that makes me irritated. Though I understand, of course, why Reid wouldn’t want Yucca to be made into a waste repository… maybe we’ll have to explore sites other than Yucca.
What’s Minnesota doing? Anything?Report
So would this be how we get that “pave the Mojave with solar panels” thing that we keep hearing about? Because it does seem like a pretty straightforward way to get the job done.Report
Not much environmental impact with that plan. Nope.Report
Actually I have seen proposals to put up solar farms east of the Rockies in NM and take the power back to the Four Corners area and then to Ca. Eastern NM land is measured in acres per cow is not particularly scenic etc. Of course this would make the duck curve problem for Ca far worse as the solar would cut out before peak demand in Ca. (the sun sets 1+ hours earlier in NM). But you could also put up wind. The borders of the 3 interconnects now result in not enough power lines from Eastern NM west to where power would be used.Report
If built, the High Plains Express transmission line will tie NM wind and solar to the Southern California-Phoenix-Las Vegas demand triangle (and to the Colorado Front Range). I believe that it will be built eventually as the demand for renewable power increases. Transwest gets built first to take advantage of the freak wind conditions that exist in the outflow from the South Pass gap in the Rockies in Wyoming.Report
The part of it that feels weird to me is, California is effectively outsourcing all of its energy infrastructure to other states. LADWP owns 75% of this massive plant in Utah. Okay, I get that it has to be somewhere — but why did it have to be in Utah particularly? Don’t Utahns have power needs of their own? Isn’t there a lot of energy lost in transmission, moving that electricity hundreds of miles across the Mojave? And don’t we want those jobs? Seems to me that having generation closer to home makes a whole lot of sense.Report
Without having any clue about the specific project we are talking about, good power plant locations are quite scarce (fuel transportation logistics, environmental constraints, “this is where the wind/water is”, etc.). In comparison, transmission is cheap and easy.
If you find a good place, go for it. Then throw a transmission line on top.Report
Transmission line placement in the West is somewhat more constrained, given all of the federal land, a fair portion of it with designations that preclude construction. There are now designated utility corridors, although those don’t go everywhere useful. The best solar resources in Colorado are in the San Luis Valley, a poor area which could certainly use the investment. Unfortunately, the direct route to the Front Range markets isn’t available because of federal land. The San Luis resources will eventually be developed, but only after a different transmission project, being built for different reasons, is finished and provides an alternate route.Report
@burt-likko
“….but why did it have to be in Utah particularly? Don’t Utahns have power needs of their own?”
Burt, I’ll let you into a trade secret. There are no purple and yellow electrons. The energy generated by this plant is mostly staying in Utah, freeing up energy generated somewhere else that is now going to Los Angeles.
The rest is all contractualual price balancing. Los Angeles pays the real producer the cost of the UT plant, and the UT plant pays to/collects from the real provider the difference between the UT plant price and the provider’s price (*). If the LA utility finds a good generation spot in Maine it could theoretically do the same (except for the very weak interconnect between CA ans MN)
(*) It’s way more complicated than that. There’s like scores of plants and offtakers involved, but this is the principle.Report
Air pollution and water, Burt. Southern California needed more base load electricity which, at the time, meant a thermal power plant. Post Three Mile Island and given natural gas prices at the time, that meant coal. No way a coal-fired plant met Southern California emissions standards. For efficiency, thermal plants need cooling water, and the nearest available water was in Utah, with the added advantages that Utah was already going to build a small power station and there was plenty of coal practically in the power plant’s back yard. LADWP made an offer no one could refuse, and it became a big power plant. A few years back an investment group made a semi-serious run at siting a new nuclear plant to produce electricity to sell into the lucrative Southern California market. The nearest available water — given all the peculiarities of western water law — was still in Utah, although a couple hundred miles farther east. One of the factors driving wind and solar PV in the West is that they don’t need cooling water.
Transmission losses in a modern HVDC system are usually well below 1% per hundred miles, which is acceptable. Most losses in the power grids happen in the distribution network, which operates at much lower voltages.
California’s making the right choice.Report