EPSA’s new Competitive Electricity Markets Spotlight details the benefits competition brings to California, how CAISO grid operators plan for extreme temperatures, what’s needed to promote reliable service and how competitive power suppliers are investing in the Golden State’s energy future.
After experiencing rolling blackouts last August and new calls to conserve energy during periods of extreme heat and drought this summer, Californians are confronting how to transition to a lower-carbon power grid without sacrificing reliable service. In EPSA’s new Competitive Electricity Markets Spotlight, we examine how energy is bought, sold and managed in the Golden State, what is straining the electric system, and how competitive power suppliers are investing in California’s energy future.
More than 20 years ago, competitive wholesale electricity markets were established in many parts of the U.S. to help reduce power generation costs, increase competition and provide choice for consumers. Since then, these markets have consistently driven innovation, enhanced efficiency and reduced costs. This new competitive era replaced an inflexible, vertically-integrated utility model that was costly and failed to advance the power sector.
The California Independent System Operator (CAISO) is the only independent grid operator in the western United States and manages the flow of electricity for the grid that serves 80 percent of California and part of Nevada. Customers have benefited from CAISO’s competitive markets, while competition has accelerated the adoption of new, more efficient and cleaner technology. Today competitive power suppliers provide a variety of traditional and renewable generation resources – including leading innovation in battery storage projects.
As competitive power suppliers, EPSA members have delivered substantial economic benefits to consumers and businesses in California – by quickly adapting and investing in cleaner, lower-cost, efficient resources needed to support a reliable grid. In addition to natural gas, geothermal, and wind and solar resources, EPSA members own and operate the state’s largest battery storage projects to support renewable growth totaling more than 12,600 MW of generation capacity, with an additional 761 MW in development.
Recent energy reliability concerns in California demonstrate a need for CAISO planners to ensure enough electricity is available to meet demand. As the states seek to meet decarbonization goals, it’s imperative that CAISO operators also strive to ensure reliability with the same vigor.
Learn more about why reliability cannot be sacrificed as we work to decarbonize the power grid.
Despite these challenges, CAISO has taken steps to help ensure reliability, including administering an ancillary services market that has both reliability requirements and resource adequacy programs, which complement the state’s requirements.
CAISO’s market structure, coupled with competitive power suppliers in the region, helps ensure reliable and affordable service while moving toward a lower-carbon generation mix – because all resources can thrive and contribute to a more resilient grid when there’s a level playing field.
EPSA member companies in California – Calpine, Diamond Generating, ECP, GenOn, J-Power, LS Power, NRG, Tenaska, and Vistra – bring substantial benefits and cutting-edge technologies to the region, including three of the world’s largest battery storage systems.
- Calpine: In July 2021, Calpine and GE Renewable Energy announced the completion of the Santa Ana Storage Project (SASP) in Santa Ana, California. The project contains a 20MW/80MWh (4hr) standalone battery energy storage system using GE’s Reservoir energy storage technology. The system, now in commercial operation, is supported by a 20-year Resource Adequacy Power Purchase Agreement (PPA). The project will be able to provide energy to up to 12,000 households during peak events, and 24,000 households during normal load conditions.
- LS Power: Operational since August 2020, the Gateway Energy Storage project provides 250 MW of battery storage and is one of the largest storage projects in the world. LS Power also developed Vistra Energy Storage, a 40 MW project outside of San Diego and has another 325 MW of battery storage under construction in the state.
- Vistra: In December 2020, Vistra began operating a 300 MW/1,200 MWh lithium-ion battery storage system at its Moss Landing site in Monterey County, California. This installation is only the first phase of a project that could support up to 1,500 MW/6,000 MWh of storage capacity.
Battery storage projects built by EPSA member companies help support California’s large dependence on intermittent renewable resources like wind and solar, but EPSA members also bring over 10,700 MW of natural gas to the state, which adds sufficient flexible, firm resources to help provide power when the sun doesn’t shine and wind doesn’t blow.
Together, competitive power suppliers can improve the environment, advance our economy, protect low-income customers, and ensure reliability – but we must preserve and expand competitive processes to accomplish this.
Through better price transparency and a structure that encourages new companies to enter the market, competitive power suppliers in CAISO are helping California meet its climate goals and improve efficiency.
Why is the power system in California and the rest of the nation under stress? In EPSA’s “Energy Solutions” podcast, Jim Robb, president and CEO of the North American Electric Reliability Corporation (NERC) shares what threats are presenting new challenges for keeping the lights on — and why it’s time to recommit to reliability as the energy landscape evolves.