A New Song for Electricity in Southern California

Southern California Edison made the decision to shut down the San Onofre nuclear power plant (SONGS) eighteen months after a radioactive leak was discovered. Grid planners and policymakers in California are now trying to figure out how to replace SONGS while maintaining reliability and minimizing greenhouse gas emissions. As the California legislature holds hearings on the closure, lawmakers have expressed concern about fossil fuels as a replacement and want to learn more about how renewables can fill the void left by the closure at SONGS.

SONGS has played an important role in Southern California grid operations. Its two reactors provided 2.2 gigawatts of capacity and enough electricity to power 1.4 million homes annually. SONGS also played a key role in maintaining reliability in the region and providing ancillary services, including voltage support needed to keep the grid operating safely and reliably. If you look at a map of the So Cal grid, you can see that the planners built their system around San Onofre. But with SONGS shuttered, how will planners replace its generation while maintaining grid reliability and not increasing greenhouse gas emissions?

The scramble to keep the lights on

With the plant down, grid planners and operators have had to scramble to keep the lights on. They’ve done an excellent job and deserve more credit than they’ve received. Last summer, Southern California didn’t see any major blackouts. This summer, the California Independent System Operator CAISO and So Cal Edison have put together plans that should ensure reliability needs are met once again.

Still, there’s a great deal of uncertainty as Southern California operates the grid without the nuclear power plant. Michael Peevy, chairman of the PUC, told the Los Angeles Times, "How much we pay for power, how much we need, what kind of summers we have for the next couple of years, these are all matters of some uncertainty."

Right now, the short-term plans rely mostly on a combination of natural gas and emergency demand response (in California, called "Flex Alerts”). While these strategies may be adequate for ensuring near-term reliability targets, there are bigger questions about Southern California’s appetite (or lack thereof) for such large increases in natural gas generation. While prices for natural gas have remained low and relatively stable since SONGS stopped operating, the fuel has a long history of price volatility. Furthermore, since natural gas is replacing a carbon-free resource, carbon emissions will rise when it’s in everyone’s interest to see them continue to decline.

Distributed energy resources’ time to shine

As demand is expected to rise and California continues to try to meet its greenhouse gas emissions goals, there are many possible approaches for replacing SONGS. California could continue to build large utility-scale renewables and more transmission lines in the region. Or distributed resources could provide a significant part of the gap left by San Onofre, improving the resiliency and increasing the security of the grid. Stakeholders—including the utilities, regulatory bodies, environmental groups, and customers—will have to decide what mix of these approaches will be most appropriate.

Distributed resources should be particularly noted given California’s past successes and ambitious future goals. California has a long legacy of energy efficiency, proudly boasting its ability to keep per-capita demand constant over the last 30 years. The investor-owned utilities are on track to meet their RPS goals of 33 percent renewables by 2020. Governor Brown has set a statewide goal to produce 12 gigawatts of distributed generation by 2020. And a combination of utilities and entrepreneurs has been finding and embracing new approaches, such as So Cal Edison’s pilot program with Nest thermostats.

Still, even in California, the playing field hasn’t been level to allow distributed resources to fully compete. Rather than evaluating the tradeoffs between centralized resources and distributed resources and then making decisions, distributed resources are regarded as "noise." As California moves forward, there’s a great deal of opportunity for embracing distributed resources as planning resources that are capable of meeting the physical requirements of the grid and deferring the need for construction of natural gas plants and transmission upgrades.

Giving DERs honest and fair consideration

There’s still work to be done in changing the way that distributed resources are treated. In order to ensure that these resources are given appropriate consideration, California will need to:

• understand the value. Since distributed resources are dispersed, modular, and small compared to conventional power plants, they create different types of costs and benefits. While the approaches for understanding the value are improving, there are still gaps that need to be filled for policymakers and regulators.
• promote new pricing models. In order to reflect the costs and benefits of distributed resources, pricing models will need to provide more accurate signals to customers.
• spur innovation of new business models. California has gone farther than most states in terms of adapting existing business models to tap the potential value of distributed resources, with measures like decoupling. Still, achieving the optimal integration of distributed resources will require more change in order manage complexity in an increasingly customer-centric system.

The unexpected shutdown of SONGS has created a unique situation for distributed resources. In most places today, these resources are considered part of the future but not necessarily a critical component of the grid. That’s not the case in Southern California. The urgency of the situation demands stakeholders seriously look at all resources and understand their tradeoffs. While looking to fill a sudden vacuum of long-standing central thermal generation, distributed resources demand real consideration as a way to maintain and improve reliability and limit greenhouse gas emissions.

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