The California ISO will have a host of new zero-emission resources at its disposal as it prepares to ride through another summer of potentially precarious grid conditions. The state's primary transmission grid operator will also call on aging fossil fuel assets, some perhaps for the last time, as California utilities push toward cleaner power portfolios.

Lithium-ion battery stations installed alongside large-scale solar farms, adjacent to natural gas-fired generators and in stand-alone configuration account for many of CAISO's new tools for keeping the lights on. Mostly designed with four hours of energy storage capacity, the CAISO-connected battery fleet is on pace to add another 3.3 GW in 2023, growing to a total installed capacity of 7.8 GW by year's end, according to S&P Global Market Intelligence data encompassing plants in at least early development.

In addition, 4.7 GW of solar photovoltaic (PV) capacity is scheduled to enter operation this year, which would drive cumulative large-scale solar capacity over 22 GW, the data indicates. For a third consecutive year, PV and batteries are lined up as the dominant new additions for utilities within CAISO's footprint.

"Battery energy storage helps integrate renewable energy sources onto the grid, such as solar, enhancing the overall reliability of an ever-changing energy supply," Pacific Gas and Electric Co. (PG&E) spokesperson Paul Doherty said in an email.

The PG&E Corp. utility subsidiary has contracted for several big battery stations to start up this year. Among them is a 350-MW/1,400-MWh third phase of Vistra Corp.'s Moss Landing Battery Storage Facility, planned up to 1,500 MW/6,000 MWh and located next to the natural gas-fired Moss Landing CC plant in Monterey Bay. Phase three is under construction and scheduled for completion in June, according to Market Intelligence data.

Including the first two tranches, also under contract with PG&E, the project will have 750 MW/3,000 MWh of operating capacity. Touted as the world's largest such facility, Vistra's Moss Landing battery complex is located adjacent to the PG&E-owned 182.5-MW/730-MWh Elkhorn battery system, which restarted in late December 2022, three months after a fire temporarily suspended operations.

The incident, likely caused by an installation issue affecting one of the project's 256 Tesla Inc. Megapacks, reflects some of the early growing pains experienced by US battery storage projects. Now back online and participating in CAISO wholesale markets, the system serves as "an operating reserve that can quickly be dispatched to ensure there is sufficient energy to meet demand," Doherty said.

Strategic Reliability Reserve

Overall, nearly 8.3 GW of capacity additions, mostly solar and batteries, are planned in CAISO territory this year, Market Intelligence data shows. That total is offset somewhat by 2.3 GW of scheduled retirements, largely gas-fired generation. But retirements will pivot on a forthcoming state decision on extending the operation of several facilities on CAISO's system.

The State Water Resources Control Board will vote later this year on whether to effectively extend the lives of three decades-old gas-fired plants in Southern California, combining for 2.8 GW of capacity, which are currently scheduled to be retired in December 2023 and January 2024.

The agency previously gave the projects — AES Corp.'s Huntington Beach and Alamitos facilities and GenOn Holdings Inc.'s Ormond Beach Generating Station — an additional three years to comply with a state policy to phase out or upgrade facilities reliant on aquatic cooling systems that are harmful to marine life.

The water board will consider a recommendation from a committee including members of CAISO, the California Energy Commission and the California Public Utilities Commission to extend operation of the facilities until the end of 2026. The projects would be added to the state-run Strategic Reliability Reserve, created last year through legislation signed by Gov. Gavin Newsom.

The committee did not recommend an extension for AES' 841-MW Redondo Beach plant, which remains on track to be retired at the end of 2023, according to Mark Miller, the company's market business leader and general manager for California.

"If the state extension plan is adopted, AES is prepared to continue to operate the Alamitos Generating Station and Huntington Beach Generating Station within the California strategic reserve," Miller said in an emailed statement. "Our facilities have demonstrated that they are ready and will be able to support California's grid reliability needs as they arise."

The company on April 26 announced it signed agreements with the California Department of Water Resources to operate the Alamitos and Huntington units through 2026 as part of the Strategic Reliability Reserve, pending a state water board vote anticipated in the second half of the year.

AES also has more than 1.5 GW of renewables and battery storage in operation in California and another 8 GW in development. That includes the AES Alamitos Energy Battery Storage Array, next to the Alamitos gas plant in Long Beach, Calf. The project features 100 MW/400 MWh in operation and under contract with Edison International subsidiary Southern California Edison Co., another 100 MW/400 MWh on track for completion in August and a third phase of the same size under development.

Hydro 'in good shape'

As the peak summer demand season approaches, CAISO appears poised to benefit from a robust winter that dropped the biggest snowpack in decades in the Sierra Nevada mountains, with the potential to reverse several years of diminished hydro generation.

As of April 1, the statewide snowpack was 237% of normal, according to a California Department of Water Resources survey.

"Of course, the snow is welcome and much needed, and if the trend continues ... into the spring, it will put us in good shape with in-state hydro resources this summer," CAISO President and CEO Elliot Mainzer said in a memorandum to the grid operator's governing board in March.

"This year's potentially historic snowpack and above average rainfall has helped relieve drought conditions for much of California and will ensure PG&E has adequate hydropower to help meet peak demand periods this summer," added utility spokesperson Doherty.

CAISO has nearly 9.2 GW of hydroelectric capacity, according to Market Intelligence data, with 1 MW of additions planned for this year.

Wholesale power prices in the CAISO market are expected to peak in August in Southern California, with forward prices reaching $109.47/MWh in the SP-15 zone. In Northern California, forward prices peak in December, at $118.20/MWh in the NP-15 zone.

Prices are lowest in the spring, when California typically has lower demand coupled with excess renewable energy. In SP-15, forward prices bottom out in May at $37.08/MWh and hit $48.25/MWh in NP-15.

Forward natural gas prices are expected to peak in December at $10.33/MMBtu at the SoCal Citygate and $8.67/MMBtu at the PG&E Gate. Forward natural gas prices are also at their lowest in May, at $3.85/MMBtu at the SoCal Citygate and $5.66/MMBtu at the PG&E Gate.

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