Valley Clean Energy Board Meeting – Thursday, May 9, 2024 Item 11 – Resource Adequacy (RA) Slice of Day Presentation (Information) 1 yvonnehunterphotography.com
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RESOURCE ADEQUACY
SLICE OF DAY TRAINING
THE ENERGY AUTHORITY
MAY 9TH, 2024
AGENDA
o Purpose of Resource Adequacy
o Changes to the RA Paradigm under Slice-of-Day
o Impacts of Slice-of-Day
4 WHAT IS RESOURCE ADEQUACY AND WHY DOES IT EXIST?
o Capacity Products, boiled down: a regulatory construct developed to ensure the region has sufficient resources available to serve electric demand under all but the most extreme conditions
o Resource Adequacy in California:
o After the California Energy Crisis in 2001, the State Legislature enacted Section 380 of the Public Utility Code instructing the CPUC, in cooperation with the CAISO, to develop the RA program to “maintain physical generating capacity and electrical demand response adequate to meet its load requirements, including, but not limited to, peak demand and planning and operating reserves” o Bilaterally-structured program (unlike all other organized markets with a capacity paradigm) o Load Serving Entities, such as VCE, must purchase RA directly from suppliers/developers to meet their compliance obligation
o This origin story & structure explain most of the insanity of the RA market in California October 15, 2018 5
Confidential & Proprietary
TRADITIONAL RESOURCE ADEQUACY PRODUCTS
October 15, 2018 6
• Goal: Grid has enough resources to meet monthly system peak • Supply: Any generator in the CAISO footprint or out-of-state resources that have transmission rights to flow into CAISO
System RA
• Goal: Grid has enough resources in local load pockets to maintain grid reliability amid transmission constraints
• Supply: Any System RA resource located in the area of need on transmission system Local
RA
• Goal: Grid has enough dispatchable & ramping resources committed as RA to meet load as it changes throughout the day
• Supply: Separate attribute that some generators in CAISO have; providing Flex RA brings additional bidding & operational obligations in the CAISO market Flexible
RA
est. 2004
est. 2007
est. 2016
Changing
Under
SOD
ISSUES WITH THE TRADITIONAL RA PROGRAM
2006 Landscape 2024 Landscape
3 IOUs serving vast majority of load 3 IOUs, 25+ CCAs, 10+ ESPs Relatively few renewables and use-limited
generation
New generation is variable solar & wind and use-limited demand response & battery storage Plenty of hydro, nuke, and gas-fired generation in
WECC
Drought/warming conditions reducing hydro
reliability on an annual basis
On-going nuke & gas-fired retirements
May 10, 2024 7 CONFIDENTIAL & PROPRIETARY
• Flex RA was a band-aid applied to the RA program in 2016; cracks have been growing since then
• Each year has new RA policy decisions, resulting in a complex web of rule minutiae − Job security for RA policy wonks and RA procurement teams, questionable improvements to system reliability taken broadly
• In late 2019 CPUC decided to wipe the slate clean via Restructuring of RA Program − Slice of Day is the result, after 2.5 years of policy discussion CPUC’S GOALS IN RESTRUCTURING OF RA D.21-07-014
1. Balance ensuring a reliable grid while minimizing customer costs
2. Balance hourly energy sufficiency with CA environmental goals
3. Balance granularity & precision of meeting hourly RA needs with reasonable simplicity for users
4. Near-term implementation (2024)
5. Durable and adaptable grid
8 MOVING TO A SLICE-OF-DAY PARADIGM FOR RA
9 o Resource Counting: how much is each resource expected to contribute on an hourly basis on the day the grid is most strained for each month (12 * 24 = 288 capacity values per resource) o LSE Compliance: each LSE procures to meet its hourly load + X planning reserve margin on the day the grid is most strained for each month (12 * 24 = 288 compliance targets per LSE) Trad SOD
o Resource Counting: how much can each resource contribute during the hour the grid is most strained for each month (12 capacity values per resource)
o LSE Compliance: each LSE procures to meet its load + 15% planning reserve margin for peak hour for each month (12 compliance targets per LSE)
SLICE OF DAY SYSTEM VIEW – SEPTEMBER 2024
10 CHALLENGES OF SOD – PROCURING TO AN HOURLY POSITION
11 0
20 40
60 80
100
120
140
160
180
200
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 MW
Hourly Slices
VCE Initial September 2025 Position
Baseload Solar Storage Storage-Charging Solar VCE Requirement
ILLUSTRATIVE
Note: This position is for RA planning and compliance purposes only; operationally, VCE’s load will always be served by the CAISO Day Ahead market regardless of RA position CHALLENGES OF SOD – PROCURING TO AN HOURLY POSITION
12 0
50 100
150
200
250
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 MW
Hourly Slices
VCE Sep 2025 Position - Buy Wind
Baseload Solar Storage
Possible Wind Procurement Storage-Charging Solar VCE Requirement
ILLUSTRATIVE
CHALLENGES OF SOD – PROCURING TO AN HOURLY POSITION
13 0
50 100
150
200
250
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 MW
Hourly Slices
VCE Sep 2025 Position - Redeploy Storage
Baseload Solar Storage
Possible Wind Procurement Storage-Charging Solar VCE Requirement
ILLUSTRATIVE
SLICE-OF-DAY RA BOTTOM LINE
o RA restructuring is necessary for a 100% clean grid; RA Slice-Of Day is challenging for the current transitioning grid
o Significant cost increases likely for LSEs with predominately solar, wind, and storage portfolios – in a market up 300% in the past two years o Policy decisions have not considered complex commercial realities of a bilateral market
o 2025 will be a game of musical chairs with large number of losers o “Reasonable simplicity” and “minimizing customer costs” goals not achieved 14 Valley Clean Energy Board Meeting – Thursday, May 9, 2024 Item 12 – VCE’s Load Management Standards Plan 15
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PUBLIC COMMENTS
16 To Provide Public Comment on any agenda item please:
➢ E-mail 300 words or less to: [email protected] OR
Join the Public Comment Queue by
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ITEM X – SHORT TITLE AND SLIDE DESCRIPTION [CALIBRI (BODY) 29 FONT (NOT BOLD)]
“Aligning
electricity use
with generation
and capacity
using energy
storage” –
Load Management Standards
17 Item 12 – VCE’s LMS Plan
ITEM X – SHORT TITLE AND SLIDE DESCRIPTION [CALIBRI (BODY) 29 FONT (NOT BOLD)]
Achieving
Alignment
Utilizing smart devices and
incentivizing behavior to reduce,
shift, and shape energy usage
according to the needs of the
grid - dynamic hourly prices
18 Item 12 – VCE’s LMS Plan
ITEM X – SHORT TITLE AND SLIDE DESCRIPTION [CALIBRI (BODY) 29 FONT (NOT BOLD)]
Load Management
Standards (LMS)
Requirements
1. Maintain the publicly available rate
database with all time varying rates
2. Support 3rd party demand response and
load management services with access to
rate information
3. Develop and submit hourly locational rates
that reflect marginal wholesale costs –
dynamic rates
4. Educate customers on rates and
automation technologies 19
Item 12 – VCE’s LMS Plan
ITEM X – SHORT TITLE AND SLIDE DESCRIPTION [CALIBRI (BODY) 29 FONT (NOT BOLD)]
VCE’s LMS Plan Analyses
To understand the potential of dynamic rates/programs across all customer classes, VCE studied the:
1. Cost Effectiveness
2. Equity
3. Technological Feasibility
4. Customer and Grid Benefits
VCE researched the works of other CCAs, PG&E, and SMUD, as well as studies by Lawrence Berkely National Laboratory and the California Energy Commission for our analyses on dynamic prices
20 Item 12 – VCE’s LMS Plan
ITEM X – SHORT TITLE AND SLIDE DESCRIPTION [CALIBRI (BODY) 29 FONT (NOT BOLD)]
Future of VCE’s LMS Plan
When approved, our LMS Plan will be finalized and delivered to the CEC within 30 days Going Foreword
o LMS Plan will be updated every three years
o Implementation efforts will be evaluated on a yearly basis and reported to the CEC o Any significant changes to the plan will be brought before the Board 21 Item 12 – VCE’s LMS Plan
ITEM X – SHORT TITLE AND SLIDE DESCRIPTION [CALIBRI (BODY) 29 FONT (NOT BOLD)]
Conclusion and Staff Recommendation
Currently there is insufficient data available to recommend the development and implementation of one or more marginal cost-based rates for all customer classes
VCE seeks to:
o Continue to spearhead and participate in dynamic price pilots o Research and collect new data on dynamic rates and the success of pilot programs o Remain flexible and open to new information and opportunities Staff recommends that the Board approve VCE’s Draft LMS Plan 22 Item 12 – VCE’s LMS Plan
Valley Clean Energy Board Meeting – Thursday, May 9, 2024 Item 12 – Recap of CalCCA 2024 Annual Conference (Information) 23 yvonnehunterphotography.com
PUBLIC COMMENTS
24 To Provide Public Comment on any agenda item please:
➢ E-mail 300 words or less to: [email protected] OR
Join the Public Comment Queue by
➢ “Raising Hand” on Zoom Meeting
OR
➢ Press *9 if joining by phone
Emailed comments received before the item has concluded will be read into the record.
Emailed comments received after the item has concluded but before the end of the meeting will not be read but will be included in the meeting record.