The September heat storm drove up the average daily energy costs for ratepayers in the California grid operators’ market to $100 million, far above daily average prices earlier this summer and in previous summers. Last week, the California Independent System Operator revealed the costs in an analysis of the Aug. 31- Sept. 9. heat wave.
In August of this year, daily average prices were $84 million. The average daily costs in July were $56.9 million, and mostly below $100 MWh, and in June it was $54.66 million, or an average of $86.29/MWh, according to CAISO.
During the 10-day heat storm, daily average prices rose to $600 MWh and peaked at $2,000/MWh in the real-time market. Day ahead average prices reached $300/MWh.
Much of the cost increase during the heat storm was because of high natural gas prices, reaching up to $15 per million British Thermal Units, and higher demand, the grid operator reported.
“The heat wave of September 2022 was one of the most challenging events in the history of the ISO grid,” Elliot Mainzer, CAISO president and CEO, said Nov. 2.
But unprecedented levels of energy storage, conservation from commercial and residential consumers, and “critical” power imports allowed the grid operator to keep power flowing during the intense heat storm.
In addition to increased resource adequacy in California, “new state programs that provided non-market resources to address extreme events [and] enhanced collaboration with state and federal agencies” also contributed to keeping the lights on, CAISO said.
CAISO reported there were more than 60 resources with 4 GW/15,000 MWh of energy storage, including 3.5 GW of lithium-ion battery storage, participating in the market.
The aging natural gas plants helped the grid but when it was most stressed some of the facilities “still experienced high levels of unavailability,” CAISO said. Intense heat also often keeps these plants from running at their maximum output.
The hottest day
Sept. 6 was the hottest day and had the highest demand. The peak load soared to 52,061 MW, with unprecedented temperatures, including 116 degrees in Sacramento and Livermore.
Resource adequacy and non-resource adequacy imports provided 6,300 MW of net imports that day. While the heat wave affected all of western North America, it was not as brutal in the Pacific Northwest and Desert Southwest, allowing power to be sent into California from those areas. The Western Energy Imbalance Market transferred another 1,000 MW into the market, CAISO reported.
Also helping the grid on Sept. 6 was 1,510 MW from consumers reducing their energy in response to flex alerts. The grid operator also called on 1,300 MW of demand response—800 MW of emergency and 500 MW of voluntary demand response—late in the day as solar resources diminished. The performance of demand response won’t be known until the end of the year, CAISO said.
Mainzer said it was important to understand what went right during the relentless heat wave but also what needs to go better.
That includes improving the timing of batteries charging and discharging.
Battery operators typically charge when prices are low and sell when they are high. The timing can be critical because battery output is limited and they may be unable to discharge into the market when most needed because of insufficient charge beforehand.
“Some resources were not charged early in the day due to high energy bids combined with a software issue” on Sept. 6, according to CAISO. Resources “with bids to charge above $150/MWh were not considered even when they had economic merit…[and] prevented these resources from charging to increase their state of charge in the early hours of the day.”
The grid operator acknowledged it is still figuring out how best to integrate storage into the market, stating that high prices experienced during the heatwave “presented the complexities and challenges of managing battery state of charge.”
CAISO concluded there was also a software problem “associated with how the market allows or curtails low-priority exports under very high demand conditions.” It added a software upgrade it hopes will address the issue. It will also alter its calculations used in the Western Energy Imbalance Market resource sufficiency test to avoid over or underestimating available capacity.
CAISO will hold a stakeholder meeting next Thursday to discuss its 2022 Summer Market Performance Report.