Dive Brief:
- California lawmakers on Wednesday passed a bill that establishes a new certification process for solar, wind and other non-fossil fuel power plants that are larger than 50 MW, as the state works to build out the renewable projects it needs to ensure grid reliability.
- The bill also creates a strategic electricity reliability reserve fund, authorizing funding for resources that can help keep the lights on. California Gov. Gavin Newsom, D, allocated $5.2 billion in his May revised budget proposal to create such a reserve, an up to 5,000 MW pool of resources.
- “We view this as the governor looking for an ’insurance policy’ to tide the state over in the event that we fall short of available market-based generation to keep the lights on,” said Jan Smutny-Jones, CEO of the Independent Energy Producers Association.
Dive Insight:
Although California has added over 4 GW of resources in the last year, state officials worry that the ongoing drought, heat waves and other issues could still jeopardize the reliability of its electric supply. The California Independent System Operator estimates that the state is facing a capacity shortfall of 1,700 MW, which could be as high as 5,000 MW if California is hit with multiple extreme events at the same time.
The strategic electricity reliability reserve pitched by the governor in his budget proposal would help the state meet electricity demand quickly if needed. In the budget proposal, Newsom’s administration said the reserve could include existing generation capacity that was scheduled to retire, new storage projects, as well as diesel and natural gas back-up generation. State regulators have acknowledged that a large portion of the pool could come from natural gas-fired generation.
The bill passed by lawmakers Wednesday would create that strategic reliability reserve fund, and authorize funding to add resources that can help ensure electrical grid reliability, and tasks the California Department of Water Resources to implement those projects and contracts.
One concern is that, as the department procures those resources, it does not affect California’s competitive market which has thus far worked pretty well in attracting private capital to build power plants — both conventional plants as well as the renewable fleet, said Smutny-Jones.
“If the markets are skewed, you’re going to drive those private investment dollars away. I don’t think that’s their intent,” he added.
The new certification process outlined in the bill would apply to solar and wind facilities that have a generating capacity above 50 MW, and energy storage systems capable of storing more than 200 MWh of electricity, among other projects. The agency has a lot of experience with siting power plants, said Seth Hilton, partner at Stoel Rives, who represents energy developers and generation owners, including fossil fuel-fired generation owners.
“I think it potentially provides a centralized process that could be more expedited to allow improvements to the siting process for clean energy projects,” he said, of the new framework.
The legislation, however, received criticism from multiple stakeholders, including some California lawmakers. State Assemblymember Al Muratsuchi, D, said during a Wednesday hearing that the trailer bill is “a rushed, unvetted and fossil fuel-heavy response.”
“[T]o have more taxpayer dollars to fund and to continue to operate fossil fuel-powered plants is not the right path to go,” he said.
Trade association Advanced Energy Economy, meanwhile, said in a statement that the budget agreement “opens [the] door to extending the life of fossil fuel generation and misses the mark on creating a more reliable, clean and affordable grid system.”
“Better planning to meet near, medium- and long-term needs will set California up for success,” Emilie Olson, policy principal at AEE, said in a statement.
Other lawmakers, however, said the bill, while not great, is California’s best alternative to ensure the reliability of its electric grid.
“Yeah, it’s a lousy bill, but it’s the best hope we have for keeping the lights on,” state Assemblymember Bill Quirk, D, said during the hearing.
