An unintended consequence of the transition to a supply portfolio dominated by solar has been an oversupply of energy in hours when solar energy is the highest and an undersupply when solar energy is the lowest (which the CAISO termed more than a decade ago the “Duck Curve”). As a result, the Resource Adequacy Program (RAP) could no longer focus on a single peak hour.
Fast forward to January 2025 as the CPUC implemented its program called the “Slice of Day” framework (SOD). The effort arose as a response to the 2020 Backout (Final-Root-Cause-Analysis-Mid-August-2020-Extreme-Heat-Wave.pdf). The new SOD framework requires a review of supply sufficiency for not just a single hour but for all hours of a monthly peak day.
The SOD framework divides the day into different time periods, or “slices.” Load Serving Entities (LSEs) must now ensure they have enough resources available during each of these slices, rather than just focusing on peak demand. This approach aims to address the variability of renewable energy, particularly solar and wind generation that fluctuate throughout the day. For a SOD example, see this ZGlobal article.
The SOD framework has several benefits because the program will enhance grid stability and better align with renewables integration. On the other hand, SOD has three important shortcomings that I explain below:
Cons of the Slice of Day Framework
- Increased Complexity for LSEs and Generator Owners: The SOD framework significantly complicates resource planning and procurement. LSEs and generator owners must now account for resource availability across 24 hourly slices, rather than focusing solely on peak periods. This requires more sophisticated forecasting and planning tools.
- Higher Costs for Consumers: The increased complexity and the need to secure flexible resources could lead to higher costs, which will be passed on to consumers. Resources that can operate during critical slices are likely to be in high demand, potentially driving up prices in the RA market. Resource Adequacy contracts are private bilateral agreements. However, a CalCCA Report shares some interesting data: In terms of the impact of RA on consumers, the CALCCA best described the higher cost:
“Under these conditions, RA program compliance has become a game of musical chairs: Some chairs are occupied by the IOUs and some have been grabbed by out-of-state entities, leaving some California LSEs without a chair when the music stops. Until more new resources come online, the race to find a chair in the game will have detrimental consequences for all consumers. The RA shortfall has driven up prices paid by consumers. RA prices for resources averaged $3.63 kilowatt (kW)-month in 2019. Summer 2023 saw individual transactions at prices over $60 kW-month – the highest for CCAs being $82.94/kW-month – and resources are increasingly unavailable at any price. Sellers are the only market participants who benefit from this pressure.”
This pattern has continued throughout 2024 and is expected to persist in the years to come. Furthermore, in the traditional RA stack, solar resources contribute up to 11 percent of their nameplate capacity toward the RA supply. The contribution of solar to supply in hour ending 20 is zero based on the calculated exceedance values. A shift to SOD thus eliminates 1,790 MW of RA supply from September 2025 supply stack in the net peak hours resulting in higher cost to consumers. - Challenges to Regulators: Regulators including the CPUC need to re-evaluate the unnecessary and bogus restrictive requirements for energy imports under CPUC’s RA program as well as the reduced availability of imports to the CPUC-jurisdictional RA market and other rules that artificially restrict supply. The CALCCA report indicates that under extreme weather an estimated supply deficit of 2,642 MW and 1,887 MW may occur in September 2025 and 2026, respectively. The challenge in meeting RA requirements is exacerbated by rising loads, increasing planning reserve margin requirements, and retirement or removal from the RA market of resources like several once-through cooling plants. Scary scenario!