Renewable procurement gaps pose risk for California’s climate goals, but what solution is best?

Gaps in resource procurement by California’s proliferating load serving entities (LSEs) could prevent the state from achieving its nation-leading renewable energy and climate goals.

The state’s massive renewable resource portfolio has gaps in it that threaten the reliable delivery of electricity, according to a March 18 proposed decision in the California Public Utilities Commission (CPUC) integrated resource planning docket. The docket was designed to address reliability in planning by assuring that variable resources are adequately balanced by resources that are available when needed.

The CPUC must decide whether the LSEs’ combined plans will deliver “a reliable and affordable electric system” while meeting California’s mandated climate goals, Administrative Law Judge Julie Fitch wrote in the March 18 proposed decision.

That will require balancing “existing and new resources” with “baseload and intermittent resources” made up of “renewable, storage, and conventional fossil-fueled resources,” Fitch wrote. In the LSEs’ filings, “there is inconsistent, and in some cases, nonexistent, recognition of these realities.”

Participants in the planning process were concerned that California was going off course, until agreement began to emerge that Assembly Bill (AB) 56’s “backstop procurement entity” points toward a solution to the gaps in procurement. The bill got a big boost when an April 12 report from Governor Gavin Newsom’s specially-appointed “Strike Force” endorsed the backstop concept as a way to make procurement more efficient.

IRPs collectively deficient

In 2015, California had three investor-owned utilities (IOUs), two community choice aggregation (CCA) programs and a few electric service providers (ESPs), but over 40 LSEs’ filings were evaluated in Fitch’s proposed decision. Many factors contribute to the gaps in procurement, but the key is this proliferation of California LSEs.

IOUs have not been procuring new generation because their customers are departing to community choice aggregators (CCAs) and electricity service providers (ESPs). But many LSEs are new and still getting financial and organizational foundations in place for procuring generation, many stakeholders, including CCA spokespeople, told Utility Dive.

With these changes impeding progress, prospects for meeting California’s 60% by 2030 Renewable Portfolio Standard (RPS) and its aspirational, economy-wide zero greenhouse gas (GHG) emissions by 2045 goal are threatened, despite some smaller LSEs procuring more aggressively, stakeholders told Utility Dive. Reliability remains the big concern.

When procurement was largely shared by Pacific Gas and Electric (PG&E), Southern California Edison (SCE) and San Diego Gas and Electric (SDG&E), each managed reliability in its territory. With procurement now disaggregated among many locally-focused LSEs, and levels of low-cost wind and solar rising, the system’s needs are evolving.

Firm resources like geothermal, biogas, pumped hydro and types of storage are needed to replace natural gas generation by 2030, studies from California agencies and research groups have reported. But those technologies are not yet cost-competitive, and CPUC analyses show they are not being procured by the new, cost-minded LSEs, which insist on making independent procurement decisions.