The deck is stacked

Prepared by By Ziad Alaywan, P.E.

With California’s heathy appetite for renewables and the shortage of energy and capacity, as demonstrated last August, one might ask why generation development is not catching up with reliability needs. Is it the lack interest by investors? Or perhaps stringent environmental regulation or even availability of suitable sites. In my opinion, it appears the main obstacle is CAISO’s Generation Interconnection Process (GIP). Generally speaking, the CAISO has three interconnection request processes for transmission-connected resources: (1) the annual cluster study process, (2) the fast track process (limited to 5 MW), and (2) the independent study process. Despite all the efforts by CAISO staff, here are some real numbers on the interconnection request processes that might shock you:

  1. From 2000 to 2020, there were 1,911 generation interconnection applications submitted to CAISO, for a total of 387 GW. With an approximately $250,000 application fee, developers posted a mostly non-refundable amount of over half a billion dollars. That’s proof there is no shortage of investors. Remember, the developers must have site control, so I assume land availability is not an issue.
  2. As of the last CAISO posting dated May 8, 2021, 1,434 applications were withdrawn constituting 97 GW or 77% of the total applications submitted since 2000. Only 6% of the total are online, amounting to 22 GW. The remaining 16% comprising 68 GW are still active. Most of the 68 GW active projects were submitted prior to 2016. Why? One reason is the extremely high interconnection cost. For instance, Phase 1 System Upgrade costs in 2017 were estimated at $5.5 Billion under Cluster 10, $21 Billion under Cluster 12 in 2019 and $25 Billion under Cluster 13 and 2020, It is worth noting. that the number of applications withdrawn has spiked from 8 GW in 2018 to 26 GW, 26 GW and 27 GW from 2019 to 2020, respectively. Although some of these costs are refundable, it’s a large financial commitment.

If the state’s goal is to have 27 GW of new generation by 2025 (according to IRP), serious reform of the GIP will be required.

One way to expedite the process is to lift the 5 MW threshold for fast-track projects. Second, the deliverability analysis needs a major overhaul, including improving transparency and expediting the interconnection process as it is taking 2 to 3 years.

One last note on deliverability: a recent report “CAISO 2021 DG Resource Adequacy Deliverability dated Feb. 26, 2021”, concluded that the total available deliverability in the PG&E distribution system is 50.9 MW, SCE is 6.1 MW and SDGE is zero. How is it possible that DG in a load center has no deliverability?

This makes no sense! Time for a policy change that sends the correct signals to solve our reliability issues while growing our renewable (and reliability) resources.

Published April 30, 2022, to the Western Power Trading Forum’s “The Friday Burrito”