The California Independent System Operator is proposing to create a flexible resources product market to help ensure adequate flexible resources to back up intermittent renewable energy. The new market is expected to provide additional payments to generators for the flexible attributes of their gas-fired generation plants--quickly ramping power up and down. Some are skeptical about the need for the new market. Center for Energy Efficiency & Renewable Technologies executive director V. John White said that gas-fired plants should be the last flexible resource employed in integrating renewable energy. Instead, he’s urging the state’s energy agencies to first pursue demand-response programs, energy efficiency, and distributed generation, including in areas where localized resources are needed to provide voltage support or serve load pockets. With increasing renewables on the system, fossil fuel plants will not be providing as much energy, while at the same time the energy they do supply will need to be delivered in a more flexible manner, according to David Miller, CEERT low-carbon grid coordinator. This will cause more wear and tear on the generators. The conundrum is that payments to fossil generators for the ancillary services under the current market system may be insufficient. Under the current 20 percent renewable energy supply, revenues for combined cycle plants are expected to decline 16 percent, according to the grid operator, with even greater decreases for simple cycle plants. The key to being able to maintain the plants, Miller said, is to make existing markets more flexible before resorting to creating complex new markets, and also injecting life into the state’s moribund demand-response programs. Increased use of demand-response, he said, is another form of flexibility that has the potential to be a cost-effective way to back up renewable energy. Mark Rothleder, grid operator market analysis and development executive director, Aug. 13 outlined the changing conditions on the grid due to more renewable energy to the California Public Utilities Commission as part of its proceeding on resource adequacy. The commission is trying to figure out how utilities should procure backup power to maintain reliability as more renewable power comes onto the grid. Even before the state meets its 33 percent renewables portfolio standard goal, renewables growth is creating a power surplus at times. That’s leading to increased out-of-state exports and beginning to crowd out fossil-fuel plants, according to state grid operator officials. “There’s a strong potential for overgeneration conditions,” Rothleder said. Commission member Mike Florio said regulators are concerned about the appropriate level of flexible resources in both the short- and long-term as they also examine utility power procurement plans in a separate proceeding. For now, the growing amount of renewable resources may not be a big problem, but complications are expected to mount. In terms of imports and exports, for instance, it’s unclear if other western states--which also are building more renewable energy generation plants in hopes of selling power to California--will be able to absorb excess power, according to CAISO executives. As a result, Rothleder said, by mid-decade the grid operator may have to ramp down fossil fuel plants at times to accommodate the overload of renewable energy. “The 33 percent RPS,” according to the grid operator proposal “will decrease the need for energy from many existing conventional gas-fired resources even further.” Ironically, though, with increased intermittency on the grid “the need to ensure that a sufficient fleet of flexible resources is maintained will only increase.” As a result of the changing dynamics, commissioner Mark Ferron said his agency is striving through its resource adequacy proceeding to establish “a market signal on the value of flexible attributes” in the state’s generating fleet.
