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Alberta Electricity Market Reform reshapes policy under the UCP, weighing a capacity market versus energy-only design, AESO reliability rules, renewables targets, coal phase-out, carbon pricing, consumer rates, and investment certainty before AUC decisions.

Key Points

Alberta Electricity Market Reform is the UCP plan to reassess capacity vs energy-only, renewables, and carbon pricing.

✅ Reviews capacity market timeline and AESO procurement

✅ Alters subsidies for renewables; slows wind and solar growth

✅ Adjusts industrial carbon levy; audits Balancing Pool losses

Hearings kicked off this week into the future of the province’s electricity market design, amid an electricity market reshuffle pledged by the province, but a high-stakes decision about the industry’s fate — affecting billions of dollars in investment and consumer costs — won’t be made inside the meeting room of the Alberta Utilities Commission.

Instead, it will take place in the office of Jason Kenney, as the incoming premier prepares to pivot away from the seismic reforms to Alberta’s electricity sector introduced by the Notley government.

The United Conservative Party has promised to adopt market-based policies, reflecting changes to how Alberta produces and pays for power, that will reset how the sector operates, from its approach to renewable energy and carbon pricing to re-evaluating the planned transition to an electricity “capacity market.”

“Every ball in electricity is up in the air right now,” Vittoria Bellissimo, of the Industrial Power Consumers Association of Alberta, said Tuesday during a break in the commission hearings.

Industry players are uncertain how quickly the UCP will change direction on power policies, but there’s little doubt Kenney’s government will take a strikingly different approach to the sector that keeps the lights on in Alberta.

“There’s some things they are going to change that are going to impact the electricity industry significantly,” said Duane Reid-Carlson, chief executive of consultancy EDC Associates.

“But I don’t think it’s going to be upheaval. I think the new government will proceed with caution because electricity is the foundation of our economy.”

Alberta’s electricity market has been turned on its head in recent years due to the recession, power prices dropping to near two-decade lows and several transformative policies initiated by the NDP.

The Notley government’s climate plan included an accelerated phase-out of all coal-fired generation and set targets for more renewable energy.

The most significant, but least-understood, move has been the planned shift to an electricity capacity market in 2021.

Under the strategy, generators will no longer solely be paid for the power produced and sold into the market; they will also receive payments for having electricity capacity available to the grid on demand.

The change was recommended by the Alberta Electric System Operator (AESO) as a way to reduce price volatility and provide more reliability than the current energy-only market, which some argue needs more competition to deliver better outcomes.

The independent system operator and industry officials have spent more than two years planning the transition since the switch was announced in late 2016. Proposed rules for the new system, outlining market changes, are now being discussed at the Alberta Utilities Commission hearings.

However, there is no ironclad guarantee the system remake will go ahead following the UCP’s election victory last week — amid calls to scrap the overhaul from a Calgary retailer — it plans to study the issue further — while other substantive electricity changes are already in store.

The UCP has promised to end “costly subsidies” to renewable energy developments and abandon the NDP’s pledge to have such energy sources make up 30 per cent of all power generation by 2030.

It will remove the planned phase-out of coal-fired electricity generation, although federal regulations for a 2030 prohibition remain in place.

It will also ask the auditor general to conduct a special audit of the massive losses sustained by the province’s Balancing Pool due to power purchase arrangements being handed back to the agency three years ago.

While Kenney has pledged to cancel the provincewide carbon tax, a levy on large industrial greenhouse gas emitters (such has power plants) will still be charged, although at a reduced rate of $20 a tonne.

The biggest unknown remains the power market’s structure, which underpins how the entire system operates.

The UCP has promised to consult on the shift to the capacity market and report back to Albertans within 90 days.

The complex issue may sound like an eye-glazer, but it will have a profound effect on industry investment, as well as how much consumers pay on their monthly electricity bills.

A number of industry players worry the capacity market will lead AESO to procure more power than is necessary, foisting unnecessary costs onto all Albertans.

“I still have concerns for what the impact on consumers is going to be,” said energy market consultant Sheldon Fulton. “I’d love to see the capacity market go away.”

An analysis by EDC Associates found the transition to a capacity market will procure additional electricity before it’s needed, requiring consumers to pay up to 40 per cent more — an extra $1.4 billion — for power in 2021-22 than under the existing market structure.

“I don’t think there’s any prejudged outcome,” said Blake Shaffer, former head trader at TransAlta Corp. and a fellow-in-residence at the C.D. Howe Institute.

“But it really matters about getting this right.”

Evan Bahry, executive director of the Independent Power Producers Society of Alberta, said the fact the UCP’s review was confined to just 90 days is helpful, as it avoids throwing the entire industry into a prolonged period of uncertainty.

As for the greening of Alberta’s power grid, amid growing attention to clean grids and storage, the demise of the NDP’s Renewable Electricity Program will likely slow down the rapid pace of wind and solar development. But it’s unlikely to stop the growth trend as costs continue to fall for such developments.

“Renewables over the last number of years have evolved to the point that they make sense on a subsidy-free basis,” said Dan Balaban, CEO of Greengate Power Corp., which has developed 480 MW of wind power in Alberta and Ontario.

“There is a path to clean electricity ahead.”

Chris Varcoe is a Calgary Herald columnist.

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California Rolling Blackouts expose grid reliability risks amid a heatwave, as CAISO curtails power while solar output fades at sunset, wind stalls, and scarce natural gas and nuclear capacity plus PG&E issues strain imports.

Key Points

Grid outages during heatwaves from low reserves, fading solar, weak wind, and limited firm capacity.

✅ Heatwave demand rose as solar output dropped at sunset

✅ Limited imports and gas, nuclear shortfalls cut reserves

✅ Policy, pricing, and maintenance gaps increased outage risk

Millions of Californians were denied electrical power and thus air conditioning during a heatwave, raising the risk of heatstroke and death, particularly among the elderly and sick. 

The blackouts come at a time when people, particularly the elderly, are forced to remain indoors due to Covid-19, and as later heat waves would test the grid again statewide.

At first, the state’s electrical grid operator last night asked customers to voluntarily reduce electricity use. But after lapses in power supply pushed reserves to dangerous levels it declared a “Stage 3 emergency” cutting off power to people across the state at 6:30 pm.

The immediate reason for the black-outs was the failure of a 500-megawatt power plant and an out-of-service 750-megawatt unit not being available. “There is nothing nefarious going on here,” said a spokeswoman for California Independent System Operator (CAISO). “We are just trying to run the grid.”

But the underlying reasons that California is experiencing rolling black-outs for the second time in less than a year stem from the state’s climate policies, which California policymakers have justified as necessary to prevent deaths from heatwaves, and which it is increasingly exporting to Western states as a model.

In October, Pacific Gas and Electric cut off power to homes across California to avoid starting forest fires after reports that its power lines may have started fires in recent seasons. The utility and California’s leaders had over the previous decade diverted billions meant for grid maintenance to renewables. 

And yesterday, California had to impose rolling blackouts because it had failed to maintain sufficient reliable power from natural gas and nuclear plants, or pay in advance for enough guaranteed electricity imports from other states.

It may be that California’s utilities and their regulator, the California Public Utilities Commission, which is also controlled by Gov. Newsom, didn’t want to spend the extra money to guarantee the additional electricity out of fears of raising California’s electricity prices even more than they had already raised them.

California saw its electricity prices rise six times more than the rest of the United States from 2011 to 2019, helping explain why electricity prices are soaring across the state, due to its huge expansion of renewables. Republicans in the U.S. Congress point to that massive increase to challenge justifications by Democrats to spend $2 trillion on renewables in the name of climate change.

Even though the cost of solar panels declined dramatically between 2011 and 2019, their unreliable and weather-dependent nature meant that they imposed large new costs in the form of storage and transmission to keep electricity as reliable. California’s solar panels and farms were all turning off as the blackouts began, with no help available from the states to the East already in nightfall.

Electricity from solar goes away at the very moment when the demand for electricity rises. “The peak demand was steady in late hours,” said the spokesperson for CAISO, which is controlled by Gov. Gavin Newsom, “and we had thousands of megawatts of solar reducing their output as the sunset.”

The two blackouts in less than a year are strong evidence that the tens of billions that Californians have spent on renewables come with high human, economic, and environmental costs.

Last December, a report by done for PG&E concluded that the utility’s customers could see blackouts double over the next 15 years and quadruple over the next 30.

California’s anti-nuclear policies also contributed to the blackouts. In 2013, Gov. Jerry Brown forced a nuclear power plant, San Onofre, in southern California to close.

Had San Onofre still been operating, there almost certainly would not have been blackouts on Friday as the reserve margin would have been significantly larger. The capacity of San Onofre was double that of the lost generation capacity that triggered the blackout.

California's current and former large nuclear plants are located on the coast, which allows for their electricity to travel shorter distances, and through less-constrained transmission lines than the state’s industrial solar farms, to get to the coastal cities where electricity is in highest demand.

There has been very little electricity from wind during the summer heatwave in California and the broader western U.S., further driving up demand. In fact, the same weather pattern, a stable high-pressure bubble, is the cause of heatwaves, since it brought very low wind for days on end along with very high temperatures.

Things won’t be any better, and may be worse, in the winter, with a looming shortage as it produces far less solar electricity than the summer. Solar plus storage, an expensive attempt to fix problems like what led to this blackout, cannot help through long winters of low output.

California’s electricity prices will continue to rise if it continues to add more renewables to its grid, and goes forward with plans to shut down its last nuclear plant, Diablo Canyon, in 2025.

Had California spent an estimated $100 billion on nuclear instead of on wind and solar, it would have had enough energy to replace all fossil fuels in its in-state electricity mix.

To manage the increasingly unreliable grid, California will either need to keep its nuclear plant operating, build more natural gas plants, underscoring its reliance on fossil fuels for reliability, or pay ever more money annually to reserve emergency electricity supplies from its neighbors.

After the blackouts last October, Gov. Newsom attacked PG&E Corp. for “greed and mismanagement” and named a top aide, Ana Matosantos, to be his “energy czar.” 

“This is not the new normal, and this does not take 10 years to solve,” Newsom said. “The entire system needs to be reimagined.”

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China Power Rationing disrupts the solar supply chain as coal shortages, price controls, and dual-control emissions policy curb electricity, squeezing polysilicon, aluminum, and module production and raising equipment costs amid surging post-Covid industrial demand.

Key Points

China's electricity curbs from coal shortages, price caps, and emissions targets disrupt solar output and materials.

✅ Polysilicon and aluminum output cut by power rationing

✅ Coal price spikes and power price caps squeeze generators

✅ Dual-control emissions policy triggers provincial curbs

The solar manufacturing supply chain is among the industries being affected by a combination of soaring power demand, coal shortages, and carbon emission reduction measures which have seen widespread power cuts in China.

In Yunnan province, in southwest China, producers of the silicon metal which feeds polysilicon have been operating at 10% of the output they achieved in August. They are expected to continue to do so for the rest of the year as provincial authorities try to control electricity demand with a measure that is also affecting the phosphorus industry.

Fellow solar supply chain members from the aluminum industry in Guangxi province, in the south, have been forced to operate just two days per week, alongside peers in the concrete, steel, lime, and ceramics segments. Manufacturers in neighboring Guangdong have access to normal power supplies only on Fridays and Saturdays with electricity rationed to a 15% grid security load for the rest of the time.

pv magazine USA reported that a Tier 1 solar module manufacturer warned customers in an email that energy shortages in China have forced it to reduce or stop production at its Chinese manufacturing sites. The company warned the event will also affect output from its downstream cell and module production facilities in Southeast Asia.

The memo said that in order to recover from the effects of the “potential Force Majeure event,” it may delay or stop equipment delivery or seek to renegotiate contracts to pass through higher prices.

Raw material sourcing
With reports of drastic power shortages emerging from China in recent days, the country has actually been experiencing problems since late June, and similar pressures have seen India ration coal supplies this year, but rationing is not unusual during the peak summer hours.

What has changed this time is that the outages have continued and prompted rationing measures across 19 of the nation’s provinces for the rest of the year. The problems have been caused by a combination of rising post-Covid electricity demand at a time when the politically-motivated ban on imports of Australian coal has tightened supply; and the manner in which Beijing controls power prices, with the situation further exacerbated by carbon emissions reduction policy.

Demand
Electricity demand from industry, underscoring China’s electricity appetite, was 13.5 percentage points higher in the first eight months of the year than in the same period of 2020, at 3,585 TWh. That reflected a 13.8% year-on-year rise in total consumption, following earlier power demand drops when coronavirus shuttered plants, to 5.47 PWh, according to data from state energy industry trade body the China Electricity Council.

Figures produced by the China General Administration of Customs tell the same story: a rebound driven by the global recovery from the pandemic, as global power demand surges above pre-pandemic levels, with China recording import and export trade worth RMB2.48 trillion ($385 billion) in January-to-August. That was up 23.7% on the same period of last year and 22.8% higher than in the first eight months of 2019.

With Beijing having enforced an unofficial ban on imports of Australian coal for the last year or so – as the result of an ongoing diplomatic spat with Australia – rising demand for coal (which provided around 73% of Chinese electricity in the first half of the year) has further raised prices for the fossil fuel.

The problem for Chinese coal-fired power generators is that Beijing maintains strict controls on the price of electricity. As a result, input costs cannot be passed on to consumers. The mismatch between a liberalized coal market and centrally controlled end-user prices is illustrated by the current situation in Guangdong. There, a coal price of RMB1,560 per ton ($242) has pushed the cost of coal-fired electricity up to RMB0.472 per kilowatt-hour ($0.073). With coal power companies facing an electricity price ceiling of around RMB0.463/kWh ($0.071), generators are losing around RMB0.12 for every kilowatt-hour they generate. In that situation, rationing electricity supplies is an obvious remedy.

The crisis has been worsened by the introduction of China’s “dual control” energy policy, which aims to help meet President Xi Jinping’s climate change pledge of hitting peak carbon emissions this decade and a net zero economy by 2060, and to reduce coal power production over time. Dual control refers to attempts to wind down greenhouse gas emissions at both a national level and in more local areas, such as provinces and cities.

Red status
With the finer details of the carbon reduction policy yet to be ironed out, government departments and provincial and city authorities have started to set their own emission-reduction targets. In mid-August, state planning body the China National Development and Reform Commission (NDRC) published a table of the energy control situation across the nation. With nine provinces marked red for their energy consumption, and a further 10 highlighted as yellow, officials received another motivation to introduce power rationing.

China’s solar industry is being impacted by coal shortages for electric power generation. In this 2014 photo, a thermal generating plant’s cooling towers loom over a street in Henan Province.
Image: flickr/V.T. Polywoda

The current approach of rolling blackouts seems unlikely to be a sustainable solution, as surging electricity demand strains power systems worldwide, given the damage it could inflict on industry and the resentment it would cause in parts of the nation already preparing for winter.

The choice facing China’s policymakers is whether to ramp up coal supplies to force prices down by using decommissioned domestic supplies and halting the ban on Australian imports, or to raise electricity prices to prompt generators to get the lights back on. While the drawbacks of raising household electricity bills seem obvious, the first approach of using more coal could endanger the nation’s climate change commitments on the even of the COP26 meeting in Glasgow, Scotland, in November. Sources close to the NDRC have suggested the electricity price may be set to rise soon.

GDP
What is clear is the effect the energy crisis is having on the Chinese economy and on the solar supply chain. Leading up to a  national day holiday in China, the coal price in northern China rose to around RMB2,000 per ton ($310), three times higher than at the beginning of the year.

Investment bank China International Capital Corp. blamed the dual control emission reduction policy for the electricity shortages. It predicted a 0.1-0.15 percentage point impact on economic growth in the last quarter of 2021.  Morgan Stanley has put that figure at 1% in the current quarter, if industrial output restrictions continue. And Japan’s Nomura Securities revised down its annual forecast on Chinese growth from 8.2% to 7.7%. It now expects GDP gains in the third and fourth quarters to cool from 5.1% to 4.7%, and from 4.4% to 3%, respectively.

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Calgary Winter Storm and Extreme Cold delivers heavy snowfall, ECCC warnings, blowing snow, icy roads, and dangerous wind chill across southern Alberta, as a low-pressure system and northerly inflow fuel hazardous travel and frostbite risks.

Key Points

A severe Alberta storm with heavy snow, strong winds, ECCC warnings, dangerous wind chill, and high frostbite risk.

✅ ECCC extends snowfall and winter storm warnings regionwide.

✅ Wind chill -28 to -47; frostbite possible within 5-30 minutes.

✅ AMA rescues surge; non-essential travel strongly discouraged.

Calgary and much of southern Alberta faced a significant winter storm that brought heavy snowfall, strong winds, and dangerously low temperatures. Environment and Climate Change Canada (ECCC) issued extended and expanded snowfall and winter storm warnings as persistent precipitation streamed along the southern borders. The combination of a low-pressure system off the West Coast, where a B.C. 'bomb cyclone' had left tens of thousands without power, and a northerly inflow at the surface led to significant snow accumulations in a short period.

The storm resulted in poor driving conditions across much of southern Alberta, with snow-packed and icy roads, as well as limited visibility due to blowing snow. ECCC advised postponing non-essential travel until conditions improved. As of 10 a.m. on January 17, the 511 Alberta map showed poor driving conditions throughout the region, while B.C. electricity demand hit an all-time high amid the cold.

In Calgary, the city recorded four centimeters of snow on January 16, with an additional four centimeters expected on January 17. Temperatures remained far below seasonal averages until the end of the week, and Calgary electricity use tends to surge during such cold snaps according to Enmax, with improvements starting on Sunday.

The extreme cold posed significant risks, with wind chills of -28 to -39 capable of causing frostbite in 10 to 30 minutes, as a Quebec power demand record illustrated during the deep freeze. When wind chills dropped to -40 to -47, frostbite could occur in as little as five to 10 minutes. Residents were advised to watch for signs of frostbite, including color changes on fingers and toes, pain, numbness, tingling sensations, or swelling. Those most at risk included young children, older adults, people with chronic illnesses, individuals working or exercising outdoors, and those without proper shelter.

In response to the severe weather, the Alberta Motor Association (AMA) experienced a surge in calls for roadside assistance. Between January 12 and 14, there were approximately 32,000 calls, with about 22,000 of those requiring rescues between January 12 and 14. The high volume of requests led the AMA to temporarily cease providing wait time updates on their website due to the inability to provide accurate information, while debates over Alberta electricity prices also intensified during the cold.

The storm also had broader implications across Canada. Heavy snow was expected to fall across wide swaths of southern British Columbia and parts of southern Alberta, as BC Hydro's winter payment plan offered billing relief to customers during the stretch. Northern Alberta was under extreme cold warnings, with temperatures expected to dip to -40°C through the rest of the week. Similar extreme cold was forecast for southern Ontario, with wind chill values reaching -30°C.

As the storm progressed, conditions began to improve. The wind warning for central Alberta ended by January 17, though a blowing snow advisory remained in effect for the southeast corner of the province. Northwest winds gusting up to 90 km/h combined with falling snow continued to cause poor visibility in some areas, while California power outages and landslides were reported amid concurrent severe storms along the coast. Conditions were expected to improve by mid-morning.

In the aftermath of the storm, residents were reminded of the importance of preparedness and caution during severe winter weather. Staying informed through official weather advisories, adjusting travel plans, and taking necessary precautions can help mitigate the risks associated with such extreme conditions.

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US energy mix shows how the electric grid blends renewables, fossil fuels, nuclear, and hydro, varying by ISO/RTO markets, utilities, and state policies, affecting carbon emissions, pricing, reliability, and access.

Key Points

The US energy mix is the grid's source breakdown by region: fossil fuels, renewables, nuclear, and hydro.

✅ Check ISO or RTO dashboards for real-time generation by fuel source.

✅ Utilities may offer green power plans or RECs at modest premiums.

✅ Energy mix shifts with policy, pricing, and grid reliability needs.

There are few resources more important than energy. Sure, you may die if you don't eat for days. But your phone will die if you go too long without charging it. Energy feeds tech, the internet, city infrastructure, refrigerators, lights, and has evolved throughout U.S. history in profound ways. You get the idea. Yet unlike our other common needs, such as food, energy sources aren't exactly front of mind for most people. 

"I think a lot of people don't put a lot of bandwidth into thinking about this part of their lives," said Richard McMahon, the SVP of energy supply and finance at Edison Electric Institute, a trade group that represents investor-owned electric companies in the US. 

It makes sense. For most Americans, electricity is always there, and in many locations, there's not much of a choice involved, even as electricity demand is flat across the U.S. today. You sign up with a utility when you move into a new residence and pay your bills when they're due. 

But there's an important reality that indifference eschews: In 2018, a third of the energy-related carbon-dioxide emissions in the US came from the electric power sector, according to the US Energy Information Administration (EIA). 

A good chunk of that is from the residential sector, which consistently uses more energy than commercial customers, per EIA data.

Just as many people exercise choice when they eat, you typically also have a choice when it comes to your energy supply. That's not to say your current offering isn't what you want, or that switching will be easy or affordable, but "if you're a customer and want power with a certain attribute," McMahon said, "you can pretty much get it wherever you are." 

But first, you need to know the energy mix you have right now. As it turns out, it's not so straightforward. At all.

This brief guide may help. 

For some utility providers, you can find out if it publishes the energy mix online. Dominion Energy, which serves Idaho, North Carolina, Ohio, South Carolina, Utah, Virginia, West Virginia, and Wyoming, provides this information in a colored graphic. 

"Once you figure out who your utility is you can figure out what mix of resources they use," said Heidi Ratz, an electricity markets researcher at the World Resources Institute.

But not all utilities publish this information.

It has to do with their role in the grid and reflects utility industry trends in structure and markets. Some utility companies are vertically integrated; they generate power through nuclear plants or wind farms and distribute those electrons directly to their customers. Other utilities just distribute the power that different companies produce. 

Consider Consolidated Edison, or Con Ed, which distributes energy to parts of New York City. While reporting this story, Business Insider could not find information about the utility's energy mix online. When reached for comment, a spokesperson said, "we're indifferent to where it comes from."

That's because, in New York, distribution utilities like Con Ed often buy energy through a wholesale marketplace.

Take a look at this map. If you live in one of the colored regions, your electricity is sold on a wholesale market regulated by an organization called a regional transmission organization (RTO) or independent system operator (ISO). Distribution utilities like Con Ed often buy their energy through these markets, based on availability and cost, while raising questions about future utility revenue models as prices shift. 

Still, it's pretty easy to figure out where your energy comes from. Just look up the ISO or RTO website (such as NYISO or CAISO). Usually, these organizations will provide energy supply information in near-real time. 

That's exactly what Con Edison (which buys energy on the NYISO marketplace) suggested. As of Friday morning, roughly 40% of the energy on the market place was natural gas or other fossil fuels, 34% was nuclear, and about 22% was hydro. 

If you live in another region governed by an ISO or RTO, such as in most of California, you can do the same thing. Like NYISO, CAISO has a dashboard that shows (again, as of Friday morning) about 36% of the energy on the market comes from natural gas and more than 20% comes from renewables. 

In the map linked above, you'll notice that some of the ISOs and RTOs like MISO encompass enormous regions. That means that even if you figure out where the energy in your market comes from, it's not going to be geographically specific. But there are a couple of ways to drill down even further. 

The Environmental Protection Agency has a straightforward tool called Power Profiler. You can enter your zip code to see the fuel mix in your area. But it's not perfect. The data are from 2016 and, in some regions of the country like the upper Midwest, they aren't much more localized, and some import dirty electricity due to regional trading. 

The World Resources Institute also has a tool that allows you to see the electricity mix by state, based on 2017 data from EIA. These numbers represent power generation, not the electricity actually flowing into your sockets, but they offer a rough idea of what energy resources are operating in your state. 

One option is to check with your utility to see if it has a "green power" offering. Over 600 utilities across the country have one, according to the Climate Reality Project, though they often come at a slightly higher cost. It's typically on the scale of just a few more cents per kilowatt-hour. 

There are also independent, consumer-facing companies like Arcadia and Green Mountain Energy that allow you to source renewable energy, by virtually connecting you to community solar projects or purchasing Renewable Energy Certificates, or RECs, on your behalf, as America goes electric and more options emerge. 

"RECs measure an investment in a clean energy resource," Ratz said, in an email. "The goal of putting that resource on the grid is to push out the need for dirtier resources."

The good news: Even if you do nothing, your energy mix will get cleaner. Coal production has fallen to lows not seen since the 1980s, amid disruptions in coal and nuclear sectors that affect reliability and costs, while renewable electricity generation has doubled since 2008. So whether you like it or not, you'll be roped into the clean energy boom one way or another. 

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CAISO Clean Energy Transition outlines California's path to 100% carbon-free power by 2045, scaling renewables, battery storage, and offshore wind while safeguarding grid reliability, managing natural gas, and leveraging Western markets like EDAM.

Key Points

CAISO Clean Energy Transition is the plan to reach 100% carbon-free power by 2045 while maintaining grid reliability.

✅ Target: add 7 GW/year to reach 120 GW capacity by 2045

✅ Battery storage up 30x; smooths intermittent solar and wind

✅ EDAM and WEIM enhance imports, savings, and reliability

Mark Rothleder, Chief Operating Officer and Senior Vice President at the California Independent System Operator (CAISO), which manages roughly 80% of California’s electric grid, has expressed cautious optimism about meeting the state's ambitious clean energy targets while keeping the lights on across the grid. However, he acknowledges that this journey will not be without its challenges.

California aims to transition its power system to 100% carbon-free sources by 2045, ensuring a reliable electricity supply at reasonable costs for consumers. Rothleder, aware of the task's enormity, likens it to a complex car repair performed while the vehicle is in motion.

Recent achievements have demonstrated California's ability to temporarily sustain its grid using clean energy sources. According to Rothleder, the real challenge lies in maintaining this performance round the clock, every day of the year.

Adding thousands of megawatts of renewable energy into California’s existing 50-gigawatt system, which needs to expand to 120 gigawatts to meet the 2045 goal, poses a significant challenge, though recent grid upgrade funding offers some support for needed infrastructure. CAISO estimates that an addition of 7 gigawatts of clean power per year for the next two decades is necessary, all while ensuring uninterrupted power delivery.

While natural gas currently constitutes California's largest single source of power, Rothleder notes the need to gradually decrease reliance on it, even as it remains an operational necessity in the transition phase.

In 2023, CAISO added 5,660 megawatts of new power to the grid, with plans to integrate over 1,100 additional megawatts in the next six to eight months of 2024. Battery storage, crucial for mitigating the intermittent nature of wind and solar power, has seen substantial growth as California turns to batteries for grid support, increasing 30-fold in three years.

Rothleder emphasizes that electricity reliability is paramount, as consumers always expect power availability. He also highlights the potential of offshore wind projects to significantly contribute to California's power mix by 2045.

The offshore wind industry faces financial and supply chain challenges despite these plans. CAISO’s 20-year outlook indicates a significant increase in utility-scale solar, requiring extensive land use and wider deployment of advanced inverters for grid stability.

Addressing affordability is vital, especially as California residents face increasing utility bills. Rothleder suggests a broader energy cost perspective, encompassing utility and transportation expenses.

Despite smooth grid operations in 2023, challenges in previous years, including extreme weather-induced power outages driven by climate change, underscore the need for a robust, adaptable grid. California imports about a quarter of its power from neighbouring states and participates in the Western Energy Imbalance Market, which has yielded significant savings.

CAISO is also working on establishing an extended day-ahead electricity market (EDAM) to enhance the current energy market's success, building on insights from a Western grid integration report that supports expanded coordination.

Rothleder believes that a thoughtfully designed, diverse power system can offer greater reliability and resilience in the long run. A future grid reliant on multiple, smaller power sources such as microgrids could better absorb potential losses, ensuring a more reliable electricity supply for California.

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