CAISO Expecting Another Tight Summer

By April 15, 2021 News

The California PUC continued its push to shore up generation resource adequacy against a backdrop of potential challenges in the upcoming summer. The CPUC recently approved an increase in the planning reserve margin from 15% to 17.5% thus requiring the amount of local and system resource adequacy the needs to be procured by load serving entities. Heading into the summer, the CAISO market is already facing an extended outage at one unit of the lone remaining nuclear plant (Diablo Canyon 2) and lower than typical hydro generation output levels due to lower than average snowpack. All of this has combined to push CAISO futures prices up for summer of 2021.

Longer term, focus will be on the massive changes required to the grid to meet California’s 100% carbon free electricity goal in 2045. The state recently issued a report that illustrated the significance of the changes and investment needed in the state’s generation fleet to meet the goal. The report estimated that the state could need to add as much as 77 GW of new solar (utility scale and distributed), 50 GW of new battery storage (against 0.55 GW that’s currently operating), and 16 GW of new wind. In total, that amounts to 143 GW of new generation capacity that will need to be built over the next 30 years in a state that currently has about 50 GW of installed capacity.

The state is likely to continue to purse policies that will make market conditions conducive to constructing that much new renewable generation. That will likely come in the form of growing mandates, like the existing storage mandate that applies to load serving entities. Additionally, policies that will make operating thermal generation more expensive or less practical will also be in play.

Market Alert

Market Alert

If you are a non-residential consumer of power or natural gas in Texas or the Midwest, you may have been exposed to extremely high prices from February 11th to February 21st due to the extreme weather. If you need assistance with any of the following items, please click on the link below:

  • Estimating your invoice
  • Validating utility invoices once issued by your supplier
  • Understanding your contractual rights and remedies
  • Disputes with your supplier

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