Water Reliability and Renewable Energy Overgeneration

The issue of renewable energy integration and overgeneration is square and center in California. The California System Operator (CAISO) along with other state regulators have studied or commissioned third-party studies to evaluate both the scope of overgeneration and means to address it. The CAISO instituted an Energy Imbalance Market that increases the transmission system’s operational footprint to integrate renewables and efficiently provide reserves, as needed. The CAISO is presently studying a possible regional expansion to help address renewable integration, among other things (see our previous posts on SB 350 regional expansion and effects of the Clean Power Plans stay on regional expansion). At the state level, the Governor’s Executive Order B-16-2012 calls for 1.5 million zero emission vehicles by 2025 with statutes, policy, and California Public Utilities Commission (CPUC) decisions seeking to use these vehicles as load during the day when solar is creating overgeneration. AB 2514 and CPUC D.10-03-040 created a 1,325 megawatt energy storage procurement target for 2020 (link to the CPUC’s Energy Storage website) to provide distribution level services, wholesale level services, and renewable integration.

SB 919 (Hertzberg) seeks to address the oversupply of renewable energy resources through a CPUC distribution level tariff or other economic incentive – in consultation with the CAISO – for the electricity purchased by customers who operate facilities that create or augment local water supplies (including desalination, brackish water desalting, water recycling, water reuse, and groundwater recharge facilities). The bill’s legislative intent responds to California’s current drought, future climate change effects, limits on interregional water transfers, groundwater limits, a lack of reliable local water supply, and the energy intensity of moving and treating water. The bill proposes to reduce the cost of electricity to producers of reliable water supply by utilizing renewable energy overgeneration. This in turn, could facilitate renewable energy integration by potentially adding load, providing regulatory incentives to customers, and creating more demand response.

Understanding Renewable Energy Overgeneration

California’s Renewable Portfolio Standard now requires that 50% of electricity procured by investor owned utilities (IOUs), electric service providers, and community choice aggregators come from eligible renewable energy resources (such as wind, solar, geothermal, and small hydro) by 2030 under SB 350. According to the CPUC, Pacific Gas & Electric, Southern California Edison, and San Diego Gas & Electric procured 28%, 23.2%, and 36.4% of their electric needs from eligible renewable resources in 2014, respectively.

This procurement has increased the penetration of renewables, generally considered variable generation resources, on the CAISO transmission system. This in turn has begun to create instances of overgeneration during certain times of the day and/or year and likely will create more overgeneration events in the future (See NREL’s Overgenertion from Solar Energy in California: A Field Guide to the Duck Chart). Overgeneration occurs when generation exceeds demand due to variable generation resources coming online, the need for long-start generators to be online prior and after solar ramping occurs, the inability of online conventional generation to ramp down further to compensate for the variable generation supply, and output from non-dispatchable, must-take resources providing supply in times of low demand (to meet voltage support and local or system reliability requirements). Long-term contracts, self-scheduling of certain power plants, and transmission constrains also combine to make this a complex problem. The CAISO has illustrated this in its infamous “duck chart”, which describes one day of the year where this occurs. It can also be described as the inflexibility of the current system to meet reliability and contractual requirements while at the same time integrating variable renewable generation.

When an overgeneration condition occurs, the scheduled generation exceeds schedule demand in the hour-ahead market. This causes the price of energy to fall below zero in an attempt to balance supply and demand, which means generators must pay others to take the excess energy produced. When generation exceeds load and remaining generators are unwilling to accept payment to reduce their production after accounting for changes in supply and demand between the hour-ahead and real-time markets, the CAISO orders generators to curtail output to maintain system frequency. This means that a wind plant is curtailed by changing the energy captured and that a solar plant decreases output from the invertor or disconnects from the system altogether.  In 2014, there was 2271 MWh of manual curtailment and 33265 MWh of economic curtailment in the CAISO system (Beyond 33% Renewables: Grid Integration Policy for a Low-Carbon Future (November 2015), p. 14). The CAISO and CPUC have made and proposed various changes to account for overgeneration in the wholesale market and in long term planning procurement and other ruling makings at the retail level.

Solutions to Overgeneration

Multiple solutions are needed to increase system flexibility. These include:

  • Changing operational practices to allow more frequent cycling and unit starts and stops;
  • Minimizing the amount of thermal units held at part load by improving variable generation forecasting and not holding excessive reserves;
  • Shifting supply and demand patterns through demand response or supply using energy storage. (P. Denholm, et al., NREL: Overgeneration from Solar Energy in California: A Field Guide to the Duck Chart (November 2015), p. 24-25).

SB 919 falls under the third bullet of shifting supply and demand. Specifically, the bill calls for the use of tariffs or other economic incentives that include time-of-use rates or demand response to reduce the cost of electricity to defined water facilities. Time-of-use rates can provide the market-incentive to shift load while demand response opens the door to use these facilities for frequency response or other grid stability services. These options need to be further explored to determine if they are cost-effective and viable based on the actual load of these types of facilities. Utilization of these types of tariffs or incentives across a broader range of facilities could provide additional flexibility needed to integrate a higher percentage of variable generators in California and avoid curtailment, negative wholesale pricing, and consequent export to out of state balancing authorities. SB 919 appears to be stepping in the right direction to integrate renewables by providing additional flexibility to the grid while at the same time providing benefits to local water supply facilities.

About Joe Kaatz

Staff Attorney at the Energy Policy Initiatives Center, University of San Diego School of Law.
This entry was posted in Energy, Legislation, Renewable Energy, Water and tagged , , , , , , . Bookmark the permalink.

2 Responses to Water Reliability and Renewable Energy Overgeneration

  1. Jim Lazar says:

    Once concern about desalinization: the facilities are so capital intensive, that running only select hours is likely to prove uneconomic.

    Water pumping, on the other hand, has much lower capital costs, and getting water systems to install additional pumps, so they can run half as many hours (when the sun is shining or the wind is blowing only) is a quite cheap strategy.

    We address that in Strategy 3 of Teaching the Duck to Fly (10 Strategies to Align Loads to Resources and Resources to Loads), available at http://www.raponline.org/document/download/id/7956

  2. Mike Evans says:

    A fourth possible solution to mitigating the overgeneration problem could be to create a “solar strip” energy product, from approximately 9 a.m. to 4 p.m., in which consumers could purchase lower priced energy on a long term basis, and then design/utilize energy consuming processes to use energy during these periods of excess generation.

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