October 19, 2022
The Leap Team
California reached a major milestone this spring when the state supplied enough renewable energy to meet 100% of energy demand for the first time on the afternoon of May 8th.
According to data released by the California Energy Commission (CEC) earlier this year, the state is ahead of its goal of 100% of retail electricity sales coming from renewable or zero-carbon sources by 2045. In 2020, 59% of the state’s total electricity consumption came from zero-carbon sources.
However, in order to fully decarbonize, California’s grid will need to become much more flexible as intermittent energy sources like wind and solar become the primary power supply. Ensuring sufficient supply of electricity to reliably meet demand can already be a struggle for California – a fact that was made painfully clear when a record-breaking heat wave in early September pushed the grid to the brink and threatened blackouts. Completing the transition to a resilient grid powered by 100% clean energy will require solutions that effectively balance energy supply and demand throughout the day.
Navigating a shifting energy mix
The traditional California generation portfolio has been shrinking for years. Natural gas production has been steadily declining for decades, including the recent retirement of three large Southern California facilities. Severe drought conditions have also forced some long-operating hydropower plants to cease operations and lower their production.
As California policymakers and regulators seek to achieve their decarbonization goals, they have taken steps to ensure that demand for electricity will be met by carbon-free generation. For example, in June 2021, the California Public Utilities Commission (CPUC) directed the state’s load-serving entities (LSEs), including investor owned utilities (IOUs), to procure 11.5 GW of new electricity resources, with 2,000 MW to come online in 2023, 6,000 MW in 2024, 1,500 MW in 2025 and 2,000 MW in 2026.
The deployment of renewable energy sources will continue to accelerate in California. Yet, the state won’t be able to fully quit fossil fuels until the power system can meet demand during peak periods - which don’t always align with periods of abundant solar and wind energy supply. While California does have the ability to import energy, the recent grid emergency in September was a stark reminder that supplies might not be available at times when demand is high across much of the Western U.S.
Leveraging demand-side solutions to support a carbon-free grid
Demand flexibility solutions can play a strong role in maintaining grid reliability at times when supply is lacking. By incentivising energy customers to reduce or shift their electricity consumption during periods of peak demand, grid operators can help solve the mismatch between electricity demand and renewable energy supply. Robust demand flexibility capabilities make it easier to integrate higher penetrations of variable renewable energy sources without creating gaps in load balancing.
Demand-side flexibility solutions demonstrated their capability to bolster grid reliability this September, when grid operators in California successfully called on energy consumers to reduce demand and stave off rolling outages during the heat wave. However, much of this demand-side curtailment was voluntary, meaning that energy users were not compensated for their conservation efforts.
To ensure that demand-side resources reliably show up to support the grid when they are needed, the owners and operators of these devices need to be incentivized for their contributions to grid stability. For example, Leap mobilized over 21,000 unique energy devices in California to serve as paid grid resources throughout the heat wave emergency, dispatching over 1.2 GWh to reduce strain on the grid and generating revenue for our technology partners.
Recent state actions demonstrate that California is starting to recognize the crucial role of demand flexibility in completing the transition to a fully decarbonized - and fully reliable - electric grid.
This July, the CPUC opened a proceeding to explore how to leverage electric rates to scale demand flexibility solutions. As stated by CPUC President Alice Reynolds, “Creative approaches to customer demand management can help to ensure reliability, increase affordability, support equitable rates, and reduce greenhouse gas emissions, taking us further on the path toward meeting our ambitious climate goals.”
Just last week, the CEC approved new Load Management Standards that require large electricity providers to offer opt-in time-dependent rates to energy customers based on real-time electricity prices. This update will encourage customers to curtail their energy usage when demand is high and renewable energy sources are in short supply. As energy consumers shift their usage to off-peak hours - when electricity is typically both cheaper and cleaner - they enable the grid to accommodate higher penetrations of renewable energy.
By continuing to take steps to strengthen demand-side energy solutions, the state empowers homes and businesses to play a more active role in creating a cleaner, more resilient energy system. Embracing a more rigorous approach to demand flexibility will help California conquer the last mile to reach a 100% decarbonized electric grid.
