As we move into the summer, the spring has experienced abundant resources, record curtailments and negative pricing.
The CAISO 2024 Summer Loads and Resources Assessment shows sufficient resources to meet forecasted demand plus an 18.5 percent reserve margin for all summer months . Specifically, the CAISO estimates “3,500 MW of surplus over forecasted demand plus an 18.5 percent reserve margin during peak net load hours 18 through 22 in September.” Expected peak demand for this July is 46.3 GW. Looks like the summer will be just fine. But we know never to say that because transmission constraints, wildfires, generator outages and regional heat waves can throw a wrench into the best forecasts. No crystal balls in this business!
Apart from that, what is stirring concern (and controversy) is the Interconnection Process Enhancement (IPE) reform. This is a particularly difficult issue to resolve due to the large number of requests. The CAISO Board of Governors will have on June 12 a special meeting to vote on the final proposal.
The CAISO proposal includes the introduction of scoring criteria into the new interconnection process. Project scores would be based on indicators related to commercial interest (30%), project viability (35%), and system need (35%). In evaluating commercial interest, the ISO would incorporate preliminary scoring on specific projects from load-serving entities (LSEs). In short, each LSE would be awarded capacity, proportionate to that LSE’s load share obligation to specific projects. Projects can receive between 0 and 100 points in the LSE allocation process. The CAISO proposes limitations on the amount of capacity LSEs can award to their LSE-sponsored projects in order to maintain historical ratios of utilityowned generation and independently developed projects in the queue.
I appreciate the work the ISO staff has done to balance the various interests. However, I am bothered by the commercial interest (30%) criteria. If two equally situated projects scored equally in the second and third criteria, but an LSE selects one project, the second project will be denied interconnection. This seems highly capricious. Some LSEs may seek to extract concessions in advance from developers in return for early points allocated for the commercial interest criteria.
The other LSE allocation criteria appear to be transparent and fair. The point is that the ISO should exercise its full independence and be the only entity that determines the projects that will be interconnected. The decision should be based on project viability and system needs without getting into the commercial issues.