California`s resource adequacy requirements are important because they help ensure the state has enough power generation resources in the right places. As of August 5, 2020, CAISO ordered utilities operating on its grid to cut off electricity to 200,000 to 250,000 customers. Although caISO noted that the high temperatures and the corresponding high demand for air conditioners required bearing failures, it implemented the power outages with significant power reserves that were still available. [14] In causing the power outages, CAISO acted contrary to its own policy, with its 2019 resource assessment [15] requiring only a Level 3 emergency with 3% or less of available electrical resources. When Stage 3 came into effect on 15.08., the CAISO power grid had 8.9% of resources available, about three times the required threshold. There will be no one-size-fits-all solution to this challenge, and we will probably need to take a holistic approach. But by reducing resource adequacy requirements and meeting those requirements with clean resources, California will be better able to meet its ambitious clean energy goals. The PUC and CAISO have made a number of decisions over the years to develop the RA program as it exists today. While other markets in the U.S., such as PJM and ISO New England, operate centrally managed capacity markets, the California market is bilateral and relies on individual transactions between large companies and resource owners. At the most basic level, large companies must have sufficient resources or contracts to meet their share of the peak demand of the CAISO system, plus a planning reserve margin («PMR») of 15%.

This AR system commitment ensures that these resources are available to meet caISO demand when needed. A resource (supply or demand) that commits to providing a RA commits to offering its capacity to the CAISO market or planning for itself. The actual use of resources for loading the load in real time takes place on an economic basis, with the resources with the lowest (variable) costs being linked first. Therefore, an AR resource must be offered in the marketplace, but it must not be shipped to serve the load when cheaper offers of non-AR resources are available. The California program has three different types of resource adequacy requirements, each designed to keep the grid running under different conditions: For resource owners, the AR program provides an additional revenue stream beyond actual energy sales to cover their fixed costs of service delivery. To be eligible for the sale of AR, a resource must register with CAISO and be tested to determine if it is «deliverable» when the transmission system is burdened by high demand. Each resource is assigned a Net Allowable Capacity Value (NQC) that defines the amount of AR it can sell. For intermittent resources such as wind and solar, this value is usually well below the nominal capacity of the plant, reflecting the probability that they will produce at the peak of the system. Demand response and storage resources are allowed to provide AR, while energy efficiency is typically subtracted from load forecasting. CAISO has also recently changed its tariffs to allow the aggregation of distributed resources to participate in its markets. Over the past two years, troubled companies and producers have contracted for AR, with the troubled company acquiring the right to claim the megawatts contracted as AR capacity in its compliance filing with the CPUC after the generator committed to making that capacity available to CAISO.

Pacific Gas and Electric Co. and Southern California Edison Co. have filed form contracts with the CPUC. From the point of view of contraction, these forms establish a strange relationship. That is, the carrier unit acquires generator power obligations in favor of CAISO. CAISO rarely enters the contract battle, but relies on the results of this contract to grant it sufficient rights to production capacity to maintain reliability in a way no less meaningful than the RMR agreements. Battery storage is likely to play an important role in meeting California`s resource adequacy requirements. The right type of battery in the right place can count towards many of these requirements, and a recent analysis by the Union of Concerned Scientists found that strategically placing batteries in the right places in the California grid could allow for the decommissioning of many more natural gas-fired power plants.

But it would take a lot of batteries for the grid to work reliably without natural gas plants, so we also need other solutions. .