The final report on California’s rolling blackouts in August is out — and its key findings for what caused the state’s heatwave-driven grid emergency haven’t changed much from initial findings. Simply put, the heat waves that blanketed the U.S. West pushed electricity demand past available supply, and problems with California’s resource adequacy program and market practices for ensuring adequate grid capacity failed to correct the imbalance. 

The steps the report lays out for state agencies, utilities and energy technology companies to forestall another emergency this coming summer, meanwhile, will face a tight deadline for completion by the summer fire season. And some of the state's plans are already under fire from behind-the-meter energy providers who say their role in helping stop even more blackouts last summer is being undervalued by state policies. 

Last week’s final “root cause analysis” report from the California Public Utilities Commission, the California Energy Commission and state grid operator CAISO underscores the challenges faced by a state that’s relying more and more on solar power — and closing natural gas and nuclear power plants — to meet its clean energy goals

It also highlights the threat climate change poses to maintaining grid reliability while using traditional methods to calculate the reserves needed to keep demand from outstripping supply. California’s utilities and community choice aggregators (CCAs) underestimated how much demand they would need in the midst of a record-breaking heatwave, leaving CAISO’s markets without the day-ahead commitments to make up for unexpected loss of generation from natural gas plants during the days of the emergencies.  

The resulting supply-demand imbalances threatened to cause a grid collapse that could expand beyond California to the broader grid interconnecting the U.S. West. That forced CAISO to institute a “Stage 3 emergency” calling for utilities to shut off grid supply for hundreds of thousands of customers for about an hour at a time in the evenings of Aug. 14 and 15. 

The final report noted that California’s resource adequacy construct not only fails to consider the extreme temperatures the state experienced, it also doesn’t adequately prepare resources to fill in for the “net peak” in electricity demand — the evening hours when solar power has faded from the grid, but electricity demand remains high. 

“Our responsibility and commitment going forward is to be better prepared for extreme climate change-induced weather events and other operational challenges facing our evolving power system,” the report authors wrote. 

No quick fixes to grid challenges

CAISO and the CPUC have a long list of steps to take to try to prevent the same thing from happening next summer. Many deal with complex changes to the state’s resource adequacy regime, which parties across the spectrum agree relies on outdated assumptions and metrics that don’t match today’s renewable energy-driven grid realities. 

In November, the CPUC issued an order laying out multiple options for supply and demand-side mitigations that could help prevent more emergencies in 2021. On the supply side, the CPUC has ordered utilities to speed the build-out of gigawatts of energy storage and solar-battery capacity on track for completion by August, although those projects are already under very tight deadlines.

The CPUC has also asked utilities to examine how gas-fired power plants could be made more reliable during heatwaves, given that two power plant outages were factors in the Aug. 14 and 15 emergencies. And CAISO is considering expanding its procurement targets for resource adequacy with an eye to supplying the post-solar “net peak,” as well as improving its understanding of the role batteries play in balancing the state’s increasing share of solar generation. 

Utilities are getting on board with the CPUC's fast-track efforts. “We look forward to working with the California Public Utilities Commission, California Energy Commission, California Independent System Operator and others to address the short-term and long-term actions the agencies outline in their report to mitigate electricity shortages,” PG&E spokesperson James Noonan said in a prepared statement 

The CEC is also working with CPUC, CAISO and other state agencies to create a contingency plan that could quickly turn to the same emergency mix of resources that were pulled together on an ad-hoc basis to prevent even more rolling blackouts in August and September. 

Those included CAISO sending mass-market “Flex Alert” pleas to cut energy use, turning on emergency generation capacity from factories, refineries, U.S. Navy ships and microgrids, and asking demand response providers and behind-the-meter battery aggregators to reduce loads beyond their market commitments. 

A debate over supply vs. demand solutions 

But so far, the CPUC and CAISO have not taken up demands from a wide array of demand response aggregators and behind-the-meter energy technology vendors to make changes they say are needed to boost the grid-balancing value of smart thermostats, solar-battery systems, electric vehicle chargers and other distributed energy resources

The final root cause analysis report shares data indicating that the state's demand response resources failed to provide the load reduction they are being credited for delivering under resource adequacy rules. One of the report's recommendations is for the CPUC and CAISO to "evaluate performance incentives and penalties for the RA fleet," and singled out non-utility providers that "may not be accurately estimating available capacity.

But commercial, industrial and agricultural demand response providers like Enel X, CPower and Polaris Energy Services, as well as residential distributed energy companies like Google Nest, OhmConnect and Leap, argue that a long-running reconfiguration of California’s demand response program rules and market policies is undercounting their grid value. Big problems include standards that measure load reductions during the hottest days of the year against baselines set when temperatures are much lower, which makes it appear that homes aren't reducing load when they are, as well as complex participation requirements that can end up penalizing customers even when they do their best to cut energy use, these groups say. 

There’s not much time between now and summer 2021 for California to do what’s needed to avoid more blackouts, said Jeff Hamel, head of energy partnerships for Google Nest, in an interview last week. 

“We’ve got hundreds of megawatts of latent capacity that we could be putting to work,” he said. While seeking out new supply-side resources is an important part of the state’s efforts, “we’re really excited to see what comes out of the CPUC and all the legwork that we and our partners are doing to put demand as a solution on the table here.”