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.