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16 February 2022

California embraces solar, energy storage plans, slashing emissions

The main Californian electricity regulator, the CPUC, has issued a radical plan to rely almost totally on solar and battery power for its electricity through 2032. The new plan is the latest edition of its System Plan, which rules the behavior of all of the California ISO (Caiso) utilities and CCAs operating in, or supplying California. It will make California’s electricity 82% non-emitting by 2032.

Caiso will adopt some 25.5 GW of new renewables, and 15 GW of battery storage by 2032 in an attempt to bring down its emissions by then from what had been 46 million metric tons, to 35 million, slashing 25% from its previous emissions budget.

But this is not a “pie in the sky” radical wish list, and it has come about through extensive modelling, taking in experiences and pricing from its current installations, and making space for new technologies such as long term storage, and created through consultation with every energy supplier operating in the sector. It began in 2020 with IRPs suggested by each major utility, and through iterations and rejections, and further consultation, resulted in the cheapest, most reliable low emissions system you could plan today. As such it acts as a blueprint for all other US states to head for decarbonization – methodically and logically, and on a least cost basis. The diagram below shows how the plans has altered this time.

The plan sees an almost total rejection of gas turbines, an accommodation of 1.7 GW of offshore wind by 2032, an acknowledgement that by 2032 Geothermal will have come of age. We would expect that future iterations of this plan will take note of radically falling prices on energy stories and increased reliability from both lithium ion and emerging alternative chemistries, and see the energy storage increased further still.

It is clear from recent changes of direction by many major US investor owned utilities, which had previously been focused solely on fossil fuels, who are now shifting in the clear direction of the trail that California has blazed on the renewables front.

If you have followed the CPUC closely this is not that much of a variation from its previous plan, which anticipated energy storage in this timeframe would be between 11.3 GW and 19 GW across its various scenarios, which is why our own global forecast on energy storage at Rethink Energy attributed 13.74 GW of energy storage by 2030 purely in California, some 22% of the total forecast for utility US energy storage of 63.3 GW by 2030.

What has perhaps shocked some onlookers is how successful California’s early incursions have been into lithium ion based energy storage during the past two years, despite the Pandemic – which has only slowed its planned installs from 3 GW, to what  will be 2.5 GW by the end of 2022.

This State wide plan is already well reflected within the IRPs of each of the state utilities, and they are already setting about the early years of procurements to meet these numbers. It is heavily in favor of solar with utility solar jumping from 3 GW at the end of 2022, to 18.8 GW, while total wind, with contributions made from in state onshore, out of state onshore and offshore, all totaling just 6.7 GW. There is a small consideration for demand response to be accelerated also by utilities.

The plan above for 38 million metric ton (MMT) of emissions was the only one stated in full in documents filed by the CPUC, but there is a parallel version shooting for 35 MMT, which pushed up the amount of renewables still further with 8,551 MW of mostly solar, more out-of-state wind and also increased battery storage capacity.

Interestingly the long duration storage element of 1 GW is already well under way with Canada’s Hydrostor recently revealing two contracts in California to build 1,000 MW of adiabatic compressed air based long duration energy storage of 8 hour duration costing $1.5 billion.

Also investor owned utility PG&E said in January that it has ratified 9 projects totaling 1,600 MW of lithium ion energy storage to come online by 2026. These are all four hour in duration.

The CPUC issues these plans as preliminary and Caiso will have to go through them in detail to ensure it has the capacity to build in any transmission upgrades – so the plan could have minor adjustments as it rolls out.

While it is customary to quote energy storage in MW, typically each of these short term energy storage installations will have to be able to operate for 4 hours, making this a procurement plan for some 59 GWh of mostly lithium ion battery.

In 2019 there was only 1.1 GW of lithium ion short term energy storage in the entire US, until CPUC first issued plans to upgrade its systems with mass storage. Now as CPUC finds more confidence in its energy storage approach, its expertise will be keenly sought by other utilities in the US which are duty-bound by their Utilities Commissions to head for zero emissions long before 2050. Its iterative and even handed approach to sieving through IRPs and challenging their conclusions and guiding its utilities deliberately to lower emissions, will become a template for other US States and we can expect other those who have ratified zero emission stances to be no more than a year behind California’s plans.