CAISO to study gas generation units susceptible to early retirement

Dive Brief:

The California ISO is planning to conduct a study of gas-fired plants susceptible to early retirement, wary that the state's push to expand cleaner energy is forcing resources offline that may be necessary down the road, RTO Insider reports.
Comments on the need for the proposed study are due today, RTO Insider reports. Results could impact the 2016-2017 transmission planning cycle and the state's long-term energy planning.
But the ISO is considering using capacity utilization and market factors to identify at-risk plants, while some generators have indicated using financial measures would give a better indication of a plant's risk for early closure.

Dive Insight:

In some parts of the country, cheap gas is forcing nuclear plants offline. In California the Aliso Canyon methane leak has raised questions about California's reliance on natural gas, but regulators still foresee a significant role for the resource in supplementing variable wind and solar generation. However, the state is worried that cheaper renewables are forcing gas plants to shutter early, potentially leaving some areas vulnerable to a lack of generation.

RTO Insider reports that state's grid operator wants to study gas plants in local capacity requirement areas, including the largest areas around Los Angeles, San Diego and San Francisco. CAISO would use three main criteria to identify at-risk plants, including capacity factors and whether the plan is needed to meet LCR. Whether a facility generates revenues form ancillary services would also be a factor.

However, Calpine Corp. Vice President Mark Smith told RTO Insider those may not be the most effective ways to determine a plant's risk for closure. “You know retirement is fundamentally an economic decision [for generating companies],” he said. “Why aren’t you using financial information to assess this rather than the criteria you’ve chosen?”

As California pushes to source half of its energy from carbon-free sources by 2030, regulators believe the state will need flexible gas generation to back up intermittent resources.

Last month, the California Public Utilities Commission approved Southern California Edison's request to move forward with its proposed 262 Puente Power Project, a fast-ramping natural gas plant scheduled to replace an existing natural gas plant by 2020.