CAISO Expansion, 100% Zero-Carbon Bids Flatline, But Bills for Energy Storage, DERs Thrive

California’s legislature last week wrapped up its 2017 session without authorizing the broad expansion of the California Independent System Operator (CAISO) into other Western states or passing a zero-carbon bill, which would have put the state on a path to 100% clean energy by 2045. It did, however, succeed in passing bills to encourage development of energy storage and distributed energy resources to reduce its reliance on gas-fired generation in light of the Aliso Canyon debacle.

A Freeze on CAISO Regionalization

CAISO and a number of participants within the Western Interconnection have been exploring the creation of a more fully integrated regional electricity market that would be managed by a single system operator and include day-ahead and real-time markets, but the measure will now need to be revived next year.

As some of the initiative’s proponents point out, power within the Western Interconnection is managed by 38 separate balancing authorities in the U.S., Canada, and Mexico. While all balancing authorities, including CAISO, are part of a synchronized grid, each authority is responsible for its own territorial supply and demand balance. A number of balancing authorities have partnered—to improve reliability, cut costs, and increase efficiency—in the October 2014–launched Western Energy Imbalance Market (EIM), and  several others have announced their intention to join the EIM.

After a law enacted in 2015 (SB 350) required CAISO to consider the environmental and economic impacts of a regional grid, CAISO submitted a proposal for an enhanced grid integration to the governor in September 2016, essentially finding that by expanding the organized wholesale electricity market to other Western states, California could reach its 50% renewable energy goal while saving consumers up to $1.5 billion annually by 2030.

In August 2016, Gov. Jerry Brown (D) voiced his support for a regional grid operator and urged the legislature to take up the measure in 2017.

But pushback against the measure picked up momentum, fueled by fears about ceding state authority, by concerns that a regional grid would provide new markets for coal power—undermining climate goals—along with larger cost and management worries.

On September 13, Assembly member Chris Holden (D) announced that legislative bills to set out the next steps for CAISO to follow to boost regionalization (AB 726 and 813) “will not move forward this year.” Holden noted, however: “After several months of questions and reviews of the ISO studies, including an informational hearing of the Assembly Committee on Utilities & Energy, there has been constructive dialogue on the process that the ISO should utilize in further consideration of regionalization.”

CAISO, which has been reluctant to proceed too rapidly with the expansion, told POWER on September 20 that it was committed to incorporating renewables into its grid, and it would continually look for paths to maximize clean energy while maintaining a reliable electric system.

“We remain certain that regional collaboration is recognized as one of the most cost-efficient and timely methods for reaching the state’s renewable energy targets and realizing the full economic and environmental benefits of a wider ISO footprint,” it said.

100% Zero-Carbon Bid Fizzles

Also falling by the wayside before legislature ended its session on September 14 was SB 100, a bill proposed by Senate President pro Tempore Kevin de Leon that would have raised the state’s current renewables portfolio standard (RPS) from 50% to 60% by 2030 and required that 100% of all electricity produced in the state came from zero-carbon sources by 2045.

The bill sparked a raging debate in California. It was fiercely supported by environmental groups and renewables proponents—and which had the backing of celebrities Leonardo DiCaprio, Bill Nye, Mark Ruffalo and several others.


Efforts failed, however, to find consensus between unions and utilities, environmentalists and lawmakers. However, proponents of the measure expressed optimism that the debate would be renewed when legislature reconvenes in January.

A Boost for Energy Storage, DERs, But a Defeat for Natural Gas Power

Earlier this September, legislature passed AB 546, a bill aimed at cutting red tape and permitting times for energy storage installations by allowing online form submissions and other measures.  California’s Gov. Brown is expected to sign the measure.

On September 12 and 13, both the Assembly and Senate also passed SB 801, “Aliso Canyon natural gas storage facility: electrical grid data: electricity demand reduction and response: energy storage solutions,” a bill that requires the publicly owned LADWP to maximize the use of demand response, renewables, and energy efficiency to reduce demand in the area where power reliability was impacted by the major 2015 Aliso Canyon natural gas storage facility leak.

In a bid to reduce reliance on natural gas, the bill introduced by Sen. Henry Stern (D) also calls on LADWP to study the deployment of 100 MW of energy storage by June 2018, and it requires Southern California Edison (SCE) to deploy 20 MW of energy storage. (For more on SCE’s energy storage efforts, see: “Two SCE Gas-Battery Hybrid Projects Revolutionize Peaker Performance.”)

AB 2514, a California bill enacted in September 2010, had already prompted LADWP to adopt an energy storage target of 178 MW by December 2021, but as an August presentation shows, by December 2016, LADWP had only achieved 22.6 MW of energy storage.

CAISO, meanwhile, has yet to clarify rules through which energy storage can participate in its market. It told POWER on September 20 it has about 119 MW of interconnected and active storage in its market, not including pumped storage, and it is “actively engaged” with storage developers and utilities to clarify rules.

About 5,000 MW of energy storage is also in its  study queue, it said. “Although it is unlikely that all those projects will be built, it does indicate strong interest in developing energy storage projects. As with any resource seeking interconnection, storage projects will be studied as to feasibility and if it passes, the project sponsor can proceed with the permitting and siting processes at the state’s energy agencies.”

—Sonal Patel is a POWER associate editor (@sonalcpatel, @POWERmagazine)