(Bloomberg) – Signs of a problem within California’s power system arose a full day before the blackouts hit.
Trader Dov Quint sat in his basement outside Boulder, Colorado, scouring the state’s current power market for opportunities to take advantage of California’s heatwave. He saw something strange: Prices for electricity to be delivered the next day – the day of the blackouts – were about $ 1000 per megawatt-hour, more than 26 times higher than last year’s average.
The last time this happened, in July 2018, the forecast for demand was much higher. There was something wrong – were energy supplies lower than normal?
In Folsom, California, systems companies for the state’s large electrical network saw the same numbers – and predicted a significant power shortage beginning at 6 p.m. on Friday, August 14th.
They had a full day to trade. And yet, as Friday night wore on, nearly 2 million Californians were plunged into darkness to plunge the state since the energy crisis 20 years ago. Without warning, utilities cut power to blocks of communities in an effort to save the state’s electrical network from cascading power outages amid the worst heat wave in generations.
There is a lot to blame for, from the state network that failed to prevent the crisis despite the market signals it presented, to regulators who for years ignored pleas from power generators to increase more emergency resources. to a climate-led human-led climate crisis that produces extreme, unpredictable weather. Breaks in government resulted in a power outage that could have implications for how the state manages electricity from here on out.
On that Friday morning, netizens were not panicking – yet. While the heat certainly increased the demand, they had seen far fewer days, as in July 2006 when demand hit a whopping 50.3 gigawatts at a deadly heat wave.
The California Independent System Operator, which runs most of the state’s net, asked neighboring utilities if they could save some extra power, said John Phipps, director of real-time operations at ISO, at a public meeting the following Monday. But there was none. When utilities had extra supplies, they kept them to themselves in case they needed the power because the heat intensified. That the ISO sent out a warning asking residents to comply.
108 degrees
But as temperatures rose, peaking at 108 degrees Fahrenheit (42 degrees Celsius) in Sacramento, demand rose and supply looked more and more unsatisfactory.
Gas users began to draw fuel from the Aliso Canyon storage facility, operated by Soempal Energy’s Sempra Energy SCPGG utility, which supplies gas-fired power generators. That was an unusual move for the time of year, according to traders, but supplies probably cordoned off the shock for power prices in Southern California.
At 14:56 hours, a plant fired unexpectedly, sucking 475 megawatts to the net. The state ordered energy suppliers to shoot up spare gas units to make up the difference, Phipps said.
But there was not enough generation of reserve gas to go around. The state, led by one of the most ambitious climate policies in the US, has retired 9 gigawatts of gas capacity in the past five years – enough to send 6.8 million homes – to retirement. The state is also seeking closure of Aliso Canyon, which has been operating with reduced capacity after the largest gas leak in U.S. history was discovered there in 2015.
The ISO has been warning state regulators for years that there were insufficient power supplies during the net peak period in the summer and that it had to deal with a potential shortage of 4.7 gigawatts in the evening hours starting in 2020, Steve Berberich said , head of the non-operator. While the California Public Utilities Commission, which is responsible for ensuring that the state’s large utilities buy enough investors, has approved 3.3 gigawatts of new capacity, it will only come online until 2021.
Read: Next Electricity Headache in California is a Serious Deficit
The commission echoed Berberich’s comments, saying utilities and other power distributors had purchased the resources needed to meet demand on Friday and Saturday, according to spokeswoman Terrie Prosper.
“This is a shared responsibility, and we are working with our sister agencies to better understand why this happened,” she said.
Solar Sets
By late Friday afternoon, as the state’s substantial solar production began to decline as the sun set, California’s ISO network system in its control room in Folsom knew they were in trouble.
The sustainable supply fell, and there was not enough gas to replace it. The only indication was to import power from neighboring states. Unfortunately, imports on a major transmission line connecting Northern California to sources in the Pacific Northwest were cut short as network operators in the region cut off supplies due to the extreme heat, according to Wood Mackenzie analyst John McMahon and the ISO.
Another problem also arose: In order to import power through the Market Energy Unbalance Market, which plans deliveries across regions in real time, California had to pass what is called a flexible ramping test – a way to prove that it is not too much. is dependent on imports to meet demand.
The ISO failed the ramping test at 15-minute intervals from 5:30 to 7 p.m., according to data verified by Bloomberg. That reduced imports by about 446 megawatts during the peak demand hour.
The network had previously warned about imports, saying in June that the state could be vulnerable to blackouts if there was a regional heat wave that restricted supplies from neighboring states.
“We have repeatedly told regulators that imports should be dry and more imports should be contracted,” Berberich said. “That was brought back.”
The commission made changes to the way it predicts imported energy that will go into operation in 2021, Prosper said.
Rolling Blackouts
Electricity prices rose, making that Friday the most profitable day to sell electricity from a gas plant to the grid – until the following Monday, when prices went up even more, according to McMahon.
With no more means to tap, the shift manager in Folsom declared a level 3 emergency at 6:36 p.m. – meaning the state needed to use rolling blackouts to keep it from crashing at all. It was the first time California had to use such an extreme measure since the energy crisis of 2000 and 2001, when hundreds of thousands of homes and businesses went bankrupt, power prices soared to a record and the state’s greatest utility was forced into bankruptcy. .
Utilities Pacific Gas & Electric Co., Southern California Edison Co. and San Diego Gas & Electric Co. cut power within minutes, with software that utilizes blockages throughout their entire service area. They did not have much time to warn customers what was coming.
In Santa Clarita, the ventilation system at the Salt Creek Grille was dismantled and the dining room soon filled with smoke, killing 70% of the company that night. Forty miles away, 82-year-old Bob Proulx and his wife found themselves trapped in a more-than-90-degree home when their air conditioner shut down unexpectedly and the garage door would not open. Further south, Yasmine Hairat looked up from her laptop to find that every light in her neighborhood was dark.
“We had no notice,” said Jennifer Chadwick, director of sales and marketing for the Salt Creek Grille. ‘We looked at each other and said,’ Oh my God another thing. Can anything else happen? ‘”
The lights were out for just a few hours, but the blackouts were not over yet – and they added to a long list of misery for Californians who are already struggling with the most cases of coronavirus in the country, the lowest unemployment rate in the West, and rampant wildfires drive away tens of thousands of people.
Round two
Saturday it all happened again.
Network operators started the day confident that they could prevent another round of outages. Demand was lower than the day before, and deliveries appeared plentiful. But shortly after 5pm, a 1 gigawatt wind farm suddenly went down. An hour later, a natural gas unit shut down. Nearly 1 million people lost power.
In the coming days, as the heatwave continued, the risk of more blackouts was great. At one point, the ISO warned that it might have to emit 4.4 gigawatts, until 10 million people went black. But then large power users began to cut their energy consumption in response to personal harassment of people in Governor Gavin Newsom’s office. It was enough to put an end to the outbursts, for now.
In a letter sent to Newsom late Wednesday, the heads of the agencies overseeing the state’s electricity system said they were investigating what went wrong. One question comes up again and again. Why did this happen when California saw much hotter days, and a much higher demand? Simply put, experts say, it has been a problem for years – from killing gas plants without replacing them to designing a brand that is more focused on manipulating wrestlers than stimulating backup generation.
Regulators, network operators, utilities and industry experts all saw this moment coming. They just did not think it would come here so quickly.
“I thought this was going to be a 2021, 2022, 2023 issue,” said Quint, who previously worked as a senior specialty marketing engineer at ISO. From here, “the disaster will only get steeper and will not go away.”
Please visit us at bloomberg.com for more articles like this
Subscribe now to stay ahead with the most trusted business news source.
© 2020 Bloomberg LP
